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Virgin Australia : 315 Million Loss - How long can they survive?

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Virgin Australia : 315 Million Loss - How long can they survive?

Old 7th Sep 2019, 05:36
  #241 (permalink)  
 
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Well spoken Minigundiplomat
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Old 7th Sep 2019, 06:02
  #242 (permalink)  
 
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Not so sure

Originally Posted by minigundiplomat View Post
Bullwinkle,

the days of airlines consisting of a few planes, a few pilots and some engineers finished in the 1980's. I don't really like the fact that planes are now 'assets', pilots are 'systems operators' and there seems to be 10 regulations for every heartbeat, but airlines are now owned by pension funds, regulated by everyone, attacked by insane and used by the masses.

Never has there been so much competition amongst airlines. If you like your airlines thin on staff, go work for a LCC like Wow, Whizz or Ryanair.... watch your salary drop, start buying your own uniform/lunch and pay for your own ratings; they share your opinion on managers and staff. If you don't like that plan, you're working for an airline that needs to stand out from the crowd.and has to offer all the extra guff which requires people to manage the aforementioned extra guff, like FFP, customer service, catering, lounges etc etc.

I have been on both sides of the fence, and don't work for VA, so I don't really give a dingoes p1ss what goes on there, but you do sound like a cynical whinger who is probably in either the wrong airline or the wrong job.
Respectfully, I think you're missing the point. There痴 no such thing as Whizz or Ryanair in Australia, nor the room or motivation for anything else like it. We have a highly captive audience shared amongst two airlines. There痴 absolutely no reason, other than mismanagement, why Virgin can稚 survive indefinitely whilst providing excellent terms and conditions for all its employees. Australia is very fortunate in this way and there痴 no need for another Ansett. Better management is all that痴 required, no question.
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Old 7th Sep 2019, 07:07
  #243 (permalink)  
 
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but airlines are now owned by pension funds
Some are but not the one we are talking about on this thread.

Singapore Airlines 20%
Etihad 21%
HNA Group 13 %
Nanshan Group 23%
Virgin Group 10%
Shares at market ~11%

Give or take a few percent.
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Old 7th Sep 2019, 08:50
  #244 (permalink)  
 
Join Date: Dec 2007
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That’s correct, if a little linear.

and who owns them? Private equity, sovereign wealth funds and shareholders who have expectations. My point remains, it’s no longer a hands on owner, making decisions over a scotch at 10am.

Shareholders mean graphs,data, presentations, forecasts and a lot of ancillary office work that is connected to reporting on investments and returns, rather than hitting FL360 or swinging spanners.

is it a waste of time, yes, very probably. Can you do away with it and fund an airline in the modern age? Probably not, And I’ll bet the ones that miss the cull are the excel ninjas that do the financial reporting.
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Old 7th Sep 2019, 12:10
  #245 (permalink)  
 
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I don稚 think the notion of anybody losing their job wouldn稚 be sad regardless of their role. I知 pretty sure virtually none the 750 are directly responsible for the current financial situation (maybe one or two had a hand at best).

It would be great to see some questions asked of the very top end of town as to how all of this came
about. Perhaps a few forensic accountants could have a bit a poke around so to speak. Quite a bit of money involved really. I guess that痴 just the corporate world for you, no matter where you live.

Jethro_27痴 post really struck a chord with me. Pretty human side to someone losing a job, it痴 a serious business no matter where you sit.

I recall hearing that when Ansett went under that some took their lives, so I壇 caution anyone using words like 登xygen thieves or wishing that a third of pilots were part of the number.

It was good to see and hear how much the CEO and HR manager talked of their plan to try and find employment for those affected. A lot of places just turf you out. I致e been turfed, it痴 tough going.

Anyway, most pilots aren稚 concerned with feedback on reports and care little of staff travel. They致e been around long enough and are probably too flogged to take any interest. There will always be the 3% that type away about this issue and that meal the rest simply could not be bothered.

It痴 great hearing about how aviation has evolved, but at the end of the day most of us just want to get from a to b safely without getting into any trouble.

Fingers crossed the new leadership can undo the tangle and that the recession that the media excitedly promise us every second day, holds off for a few more years. If not we will all be packing our bags!

Last edited by Berealgetreal; 7th Sep 2019 at 20:30.
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Old 7th Sep 2019, 14:21
  #246 (permalink)  
 
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If you like your airlines thin on staff, go work for a LCC like Wow, Whizz or Ryanair.... watch your salary drop, start buying your own uniform/lunch and pay for your own ratings; they share your opinion on managers and staff. If you don't like that plan, you're working for an airline that needs to stand out from the crowd.and has to offer all the extra guff which requires people to manage the aforementioned extra guff, like FFP, customer service, catering, lounges etc etc.
I’ve never said anything like what you are insinuating.
Never have I said that the airline should be thin on staff. It should have the correct number of staff in the necessary positions and those staff should be the best available.
And I absolutely believe that the new CEO has evaluated the situation quite accurately and determined where the business needs to focus its attention in order not only to survive but to prosper.
And I’m well aware that the airline needs managers and again, the new CEO is putting some excellent people into the necessary positions, the permanent appointment of the new COO being a perfect example.
The previous CEO brought all his talentless mates from QANTAS and paid them ridiculous salaries and all they did was feather their own nests, to the detriment of the company.
Obviously it’s unfortunate when anybody loses their jobs and I’m sure the new CEO did not take this decision lightly. Quite the opposite in fact.
But something had to be done to repair the damage done by his predecessor and I believe that he is making decisions with the company’s best interests at heart.
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Old 9th Sep 2019, 05:45
  #247 (permalink)  
 
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The situation reminds me of the Air Berlin desaster .i do hope it does not lead to the same result..
BTW: Does anyone know woho replaced Judith Crompton as CCO ?
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Old 9th Sep 2019, 06:33
  #248 (permalink)  
 
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Unwinding the Borghetti experiment at Virgin


"Right-sizing", "strategic review" and "organisational change". Translate the corporate speak, and it means there's an enormous clean-up job underway at the country's second airline group.

Scurrah is unwinding many of his predecessor's decisions as he seeks to make the airline profitable. Janie Barrett
Less than six months into his new role at Virgin Airways, Paul Scurrah won't say it, but everyone else is: he's effectively reversing the strategy so carefully crafted over nine years by his predecessor, John Borghetti.

And Scurrah has barely started. Cutting 750 head office roles; delaying large aircraft orders; chopping routes and overhauling his management team is just the beginning.

He's even unwinding some of Borghetti's demands for formality, relaxing cabin crew dress codes - glossy red lipstick is no longer compulsory.

Staff can now make their own choice about what to wear when flying Virgin on their holidays, rather than relying on a rule book and being monitored by ground staff.

Everything is up for grabs. And what the market really wants to know is, will Scurrah take Virgin back to its low-cost roots, and what does that mean for its budget brand Tiger, and the international division?

Borghetti was mainly praised for developing the airline from a low-cost carrier to a multi-brand carrier. Louie Douvis
Scurrah won't provide more detail on the future strategy of the group, because he hasn't gone through a complete review yet.

But questions include: has the country's second airline really been doing it that tough? Was Scurrah truly handed such a mess? Or is this a standard new CEO re-set, masquerading as something more serious?

"It just feels like Paul needs to make an early statement ... I've never seen a new CEO come in and not do that," says a person who has worked at Virgin.

Borghetti, whose own early changes included introducing pilot uniforms and insisting on senior executives wearing ties, announced his departure in June last year.

He was mainly praised for developing the airline from a low-cost carrier to a multi-brand carrier, and building the airline's frequent flyer program - expected to be floated, as 35 per cent shareholder Affinity looks to exit its investment - to 9 million members.

Over the years, the expensive strategy had attracted some criticism, most notably from then shareholder Air New Zealand in 2016, which sold in part because losses weren't being stemmed fast enough.
In a breathtaking display of other-world airline-speak, Borghetti himself declared the job done in June last year. "The company is in great shape, and it's a good starting point. The transformation has been done," Borghetti said, while at the same time acknowledging the airline industry was always subject to external hits, mainly in the form of economic swings, fuel prices and foreign exchange fluctuations.

But how can a company that is now cutting 750 jobs in its head office and just posted a $75.6 million annual loss have been in great shape a year ago?

Australia cabin crew no longer have to wear red lipstick. Graham Denholm
Borghetti, now a non-executive director at soft drink group Coca-Cola Amatil, doesn't want to weigh back in. "After 46 years I am no longer involved in the industry. I am doing other things," he texted in quick response to a request for an interview.

Scurrah says the environment has got worse far more quickly than anticipated, and his overhaul is about preparing the airline to weather tougher economic conditions.

(His counterpart at Qantas, Alan Joyce, isn't quite as bearish, preferring to characterise domestic demand as "mixed", while acknowledging headwinds of higher fuel costs and a lower Australian dollar.)

In a conversation about the organisation's culture, Scurrah wants to make sure he's not seen to be drawing comparisons with his predecessor. He wants the changes he is implementing at Virgin to be simply seen as his way of doing business.

"I've been an ex-CEO of other companies as well. You can't understand the previous circumstances in which decisions were done," he says. Scurrah has previously run DP World and Queensland Rail.

That's perhaps even more true at Virgin than other companies. Some 90 per cent of its shares are owned by five airlines: the financially struggling Etihad, Nanshan Group, Singapore Airlines, HNA Group and Virgin Group.

Originally, the idea was that airline shareholders would help support Virgin's expansion and networks. In practice, perhaps unsurprisingly, each airlines' own issues have tended to dictate their approach to Virgin, which may have confused the strategy.

Right now, the airline, chaired by Elizabeth Bryan since 2015, would seem to be on a clearer course: return to profitability and, in Scurrah's words, "honour the investments that have been made to get where we are today".

In response to a question, Scurrah says he is aware the board and shareholder base are often considered dysfunctional. But he's found "the alignment and unity really pleasing. All of us want to be a successful airline".

But to blame the airline's shareholders for Virgin's strategy under its previous chief executive misses the point, say others.

"Under Borghetti, the airline went upmarket without profit," says one aviation analyst. "He undermined their natural advantage on costs, gave it away. And now they are in no-man's land."

He traces this back to when Qantas grounded its planes and Borghetti gave his pilots a pay rise. It's one of the biggest criticisms of the Borghetti era: that the man passed over for the Qantas top job spent his time at Virgin creating a mini-Qantas rather than a profitable airline.


The analyst points out that as a low-cost airline, in calendar year 2007, Virgin delivered profits of $348.1 million.

"The opportunity for Scurrah is big," says the aviation analyst. "Stop the bleeding, bring some stability into the earnings profile, sharpen the cost base and become a more effective competitor to Qantas."

It's not a new idea: Borghetti talked in various ways about the path back to profitability, at one point calling it "fourth phase" of the airline - sustainable earnings growth, after years of investment, a capacity war with Qantas and recapitalising.

Scurrah, who usually splits his time between Brisbane and Sydney, has spent the past week in meetings with staff around the country to discuss the job cuts. He says individuals are "concerned" but "there's been an acceptance that it is necessary for us, given the headwinds we see coming".

Scurrah says keeping a company's staff happy - at least most of the time - is a crucial part of balancing the three stakeholder groups: employees, customers and shareholders. But he's aware that they can't all be happy.

"If you say yes all of the time to one of the groups, it will weigh on the other two ... if we provide everything customers want - and in an airline, that's cheap airfares - shareholders don't get the returns they want. You have to get the balance right," he says.

Defining the existing Virgin culture and what Scurrah wants to ensure stays is harder. But Scurrah says "command and control" has never been his style. Rather, he wants to ensure a positive, vibrant and high-trust culture where people's opinions are respected, even as he's presiding over job cuts.

So he's introduced a "safety share" and "people share" as the first agenda item at each management meeting, of which there are dozens a week.


"People share is about recognition and gratitude. It's where we invite the group in that meeting to bring to our attention something of excellence that would not otherwise get the attention of senior management," he says.

Emails are sent to acknowledge the excellence, though not always with "safety shares", which can be more sensitive.

Scurrah's favourite to date? During the Sydney storms, a customer who lived two hours from the city couldn't get home because there weren't any taxis, Ubers or Olas (Virgin's partner) available. The solution? A staff member drove the customer home.

As for the few shareholders left on the register that aren't airlines, his largest institutional shareholder is Wilson Asset Management.

Geoff Wilson, a vocal advocate of privatising in the airline, says he's looking forward to sitting down with Scurrah to understand the strategy.

"Unfortunately, we haven't had the opportunity to meet him yet," he says. As well as pushing for a privatisation, Wilson has also got another idea.

"Assuming Velocity is floated, with Virgin keeping a majority position and potentially selling down, I think it's a fantastic opportunity for the Virgin board to reward Virgin shareholders and give them an entitlement."



Last edited by John Citizen; 9th Sep 2019 at 07:05.
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Old 9th Sep 2019, 16:41
  #249 (permalink)  
 
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Hi John ,
thanks a lot .

if i have understand corecctly merren Mc arthur left the company `?
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Old 10th Sep 2019, 00:52
  #250 (permalink)  

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says a person who has worked at Virgin.
I might give Investigative Journalism a go.

"The new colours are a disaster" says a person who Virgin flew over recently.
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Old 10th Sep 2019, 02:13
  #251 (permalink)  
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Originally Posted by dcten View Post
Hi John ,
thanks a lot .

if i have understand corecctly merren Mc arthur left the company `?
In theory she stays around until the end of the year to "assist with the transition" to the new CCO and the new EGM of Tiger, but likely she'll be on gardening leave for large part of it.
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Old 10th Sep 2019, 13:58
  #252 (permalink)  
 
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Tigerair CEO Merren McArthur痴 top packing hacks (Tip #1: don稚 forget your undies)
https://www.escape.com.au/travel-adv...1570540dfaad6c
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Old 15th Sep 2019, 03:18
  #253 (permalink)  
 
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[QUOTE]VA has training managers for every fleet. It has standards managers for every fleet. It has a manager who oversees the training managers and standards managers. It has a fleet manager for every fleet. It has a manager who oversees all the fleet managers. It has base managers in every base. It has a manager to oversee the base managers. It has a manager to oversee all the EBAs. And it finally has a GMFO who oversees all the managers who oversee the managers. (Confused yet?). When a Standards Manager of a fleet of 5 or 6 aeroplanes is on Check Captain pay plus 20% (give or take) one has to wonder if those roles are safe in this right sizing[QUOTE]

Funny how the person who put this expanded Flight Ops structure in place, is now the permanent COO charged with restructuring, mmm
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Old 15th Sep 2019, 03:30
  #254 (permalink)  
 
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Looks like another headwind in about 12 months with the events in Saudi overnight. Would have been a good time to be making some cash a few years ago cause this might hurt a little.
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Old 15th Sep 2019, 10:35
  #255 (permalink)  
 
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Originally Posted by minigundiplomat View Post
Bullwinkle,..........
........If you like your airlines thin on staff, go work for a LCC like Wow, Whizz or Ryanair.... watch your salary drop, start buying your own uniform/lunch and pay for your own ratings; they share your opinion on managers and staff. If you don't like that plan, you're working for an airline that needs to stand out from the crowd.and has to offer all the extra guff which requires people to manage the aforementioned extra guff, like FFP, customer service, catering, lounges etc etc.
........
Hey, they have that in the Virgin group...... its called Tigerair! Except the muppet show in HQ in Melb has like hundreds of staff for the same amount of a/c TT was running 8 years ago!!!!! LOL .... morons!
Tiger, where you get NO meals, meal breaks or meal pay, no bidding system, you buy your own uniforms (oh,now they take weeks to get it to you, EBA from June 2019), VARA doing Tiger rosters and they are SH*THouse! Useless safety dept, no accountability for managment and 11hr planned duties are the norm! (eg SY BN AD BN SY and SY BN ML BN SY).
Yes, come on over, you wont regret it VA peeps lol.... you'll hate it in about T minus 3 seconds.
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Old 15th Sep 2019, 19:08
  #256 (permalink)  
 
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Originally Posted by burned_out View Post
Hey, they have that in the Virgin group...... its called Tigerair! Except the muppet show in HQ in Melb has like hundreds of staff for the same amount of a/c TT was running 8 years ago!!!!! LOL .... morons!
Tiger, where you get NO meals, meal breaks or meal pay, no bidding system, you buy your own uniforms (oh,now they take weeks to get it to you, EBA from June 2019), VARA doing Tiger rosters and they are SH*THouse! Useless safety dept, no accountability for managment and 11hr planned duties are the norm! (eg SY BN AD BN SY and SY BN ML BN SY).
Yes, come on over, you wont regret it VA peeps lol.... you'll hate it in about T minus 3 seconds.
I love it when people take the time to use correct grammar, spelling etc.

In regards to meals, I couldn稚 think of anything worse than eating the onboard crap all the time. Much happier taking my own meals, and much healthier.

Sounds like you didn稚 do your homework about what it痴 like to work there burned_out. So quit whinging.
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Old 16th Sep 2019, 05:47
  #257 (permalink)  
 
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https://www.smh.com.au/business/comp...16-p52rqa.html

So where are cash strapped VA going to get $700 million to buy back Velocity? Good idea in the long term given how profitable it is however, can稚 help but think how ridiculous this is with the current finances.
More debt
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Old 16th Sep 2019, 05:57
  #258 (permalink)  
 
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Virgin sold the stake in Velocity to Affinity in 2014 for $335 million, now they are buying it back for $700 million.

Great business for Affinity, not so slick for VA.
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Old 16th Sep 2019, 06:00
  #259 (permalink)  
 
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Originally Posted by burned_out View Post
Hey, they have that in the Virgin group...... its called Tigerair! Except the muppet show in HQ in Melb has like hundreds of staff for the same amount of a/c TT was running 8 years ago!!!!! LOL .... morons!
Tiger, where you get NO meals, meal breaks or meal pay, no bidding system, you buy your own uniforms (oh,now they take weeks to get it to you, EBA from June 2019), VARA doing Tiger rosters and they are SH*THouse! Useless safety dept, no accountability for managment and 11hr planned duties are the norm! (eg SY BN AD BN SY and SY BN ML BN SY).
Yes, come on over, you wont regret it VA peeps lol.... you'll hate it in about T minus 3 seconds.
Oh its not that bad. Bloody hell go back to GA and work 12 hour days and get paid [email protected]#k all.
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Old 16th Sep 2019, 06:13
  #260 (permalink)  
 
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The affinity thing was all just like one of those pay day loans. They needed the cash to pay bonds, and are now paying it back at what 50% interest.

Its like maxing out out all off your credit cards and bank account with a bill due before the next pay check.

Was an act of desperation. Cost them 350 million.
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