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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 29th Aug 2019, 02:05
  #61 (permalink)  
 
Join Date: Nov 2007
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Originally Posted by Berealgetreal View Post
Golden opportunity about nine years ago. Branding, paint scheme the works. Wish Scurrah got the job back then. Imagine he did and JB took the top job at QF..
How people all forget. When JB went to Virgin he was held up as the messiah! Very pleased you all were that you had stolen him away from Qantas after he missed out on the top job there.
Even Qantas people were crying in their beer that they had got the wrong bloke.
So if he had got the job you ask? My guess Qantas would be in much the same place as it is now and so would Virgin unless they didn't try to take on Qantas full on. Virgin just does not have the economy of scale Qantas does which really hurts when things get tough.
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Old 29th Aug 2019, 02:10
  #62 (permalink)  
 
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Virgin started out as a low cost carrier and came close to going under, only being saved by the demise of Ansett. It then rapidly ramped up to fill the void, changed to a full service airline, and is now looking like Ansett did before the collapse. An unnecessary mix of aircraft types, bloated office structure, unprofitable routes and a series of "why on earth did they do that ? " decisions have all added up.

With the benefit of hindsight, they would probably have been better of had they stuck to the low cost formulae of one aircraft type and strict cost control. Qantas would have let them have 1/3 of the domestic market and everyone would have been happy. Customers would have been able to choose between a premium carrier or an Australian version of Southwest Air, with the appropriate price differential.
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Old 29th Aug 2019, 02:57
  #63 (permalink)  
 
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Originally Posted by krismiler View Post
Virgin started out as a low cost carrier and came close to going under, only being saved by the demise of Ansett. It then rapidly ramped up to fill the void, changed to a full service airline, and is now looking like Ansett did before the collapse. An unnecessary mix of aircraft types, bloated office structure, unprofitable routes and a series of "why on earth did they do that ? " decisions have all added up.

With the benefit of hindsight, they would probably have been better of had they stuck to the low cost formulae of one aircraft type and strict cost control. Qantas would have let them have 1/3 of the domestic market and everyone would have been happy. Customers would have been able to choose between a premium carrier or an Australian version of Southwest Air, with the appropriate price differential.
I'm not sure that's quite right. Qantas invested heavily in setting up Jetstar to 'pincer' Virgin Blue with an even lower cost product, leaving Qantas itself free to specialise as a full service carrier. JB's move to the current VA model was a response to the fact that VB was caught in the middle, and not winning.

The alternative wouldn't have been to leave VB as it was - it would have been to strip it back to a ULCC model, and JB's view at the time was that there wasn't space in Australia for two, full-size LCCs, and that they stood a better chance of taking corporate marketshare from Qantas.

That's not a defence of JB - I think he lost sight of the need for cost control - but I do think he was right that there wasn't space for multiple LCCs. SQ learnt that with Tiger (and then JB bought it...), and NZ seem to realise this - hence their complete disinterest in entering the domestic market (well, that and having been burnt by Ansett).
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Old 29th Aug 2019, 03:18
  #64 (permalink)  
 
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It surely doesn't help when they are still paying for leases of E190 aircraft parked in Nashville, USA. How much is that costing them per year?
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Old 29th Aug 2019, 03:21
  #65 (permalink)  
 
Join Date: Jun 2005
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To trade losses for so long is not really sustainable, unless the profits were deliberately sent back to the overseas owners , maybe they are holding the aircraft leases at exorbitant rate, hi interest rate loans etc .
has anyone pulled the financials apart to see where the money really went .
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Old 29th Aug 2019, 03:21
  #66 (permalink)  
 
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You are right many did see him as the Messiah, personally I listened and gave him the benefit of the doubt as with any new employee. I became concerned when he purchased Skywest as I knew Alliance or Network were the pick of the bunch. I was indeed shouted down and told by one colleague I should leave because I wasnít singing from the same song sheet.

Regardless, when I met him I treated him with respect and would have had I run into him on his last day. Itís just my opinion that the new CEO would have done a better job had he been afforded the opportunity 9 years ago. Maybe Iím wrong.

Iíve always believed Qf did a better job as they had that economy of scale you mention plus years more experience. I recall paxing one time on a QF 330 in uniform last minute and couldnít believe how well I was treated, it was incredible they couldnít do enough for me despite me being the opposition. I also noted how clean, quiet and calm the atmosphere was in the Qf terminals, I was certainly envious as the opposite is true at Virgin.

Anyway, there are a lot of valid comments on here but some are a little gleeful and I think this is concerning. If Virgin collapsed it would no doubt be replaced be a very low condition competitor with serious clout.

Last edited by Berealgetreal; 29th Aug 2019 at 06:56.
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Old 29th Aug 2019, 03:32
  #67 (permalink)  
 
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Qantas had a "line in the sand" that they wanted 2/3 of the market. With most of the growth being in low cost they needed Jetstar to avoid stagnating. If Virgin hadn't tried to take on QF head on at the premium end, there could have been a cosy duopoly with Virgin and Jetstar not competing too aggressively while mainline carried the full service/high fare pax.

If Qantas had been too aggressive, the ACCC might have become involved, a single domestic airline with no competition wouldn't have been acceptable and QF new this, hence they were willing to allow a competitor 1/3 of the market. Virgin could have been an Australian Southwest Air with Jetstar operating on routes were mainline couldn't compete with a low cost, such as SYD - OOL.
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Old 29th Aug 2019, 03:38
  #68 (permalink)  
 
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I think Virgin Blue had run its course, the execution and speed at which the conversion was done was a factor in my book.

Last edited by Berealgetreal; 29th Aug 2019 at 06:52.
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Old 29th Aug 2019, 03:48
  #69 (permalink)  
 
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Colonel Klink
This one I might cop some stick for - but when Sydney goes down to one runway, that is not the Company’s fault. When you hear multiple crews getting on to AMCO and telling them to tell crewing that they won’t be extending, you have to wonder. Now sometimes crew are legitimately tired, and they should get off the aircraft no questions asked. But when people decide at the start of the day before it all turns to crap that they won’t be extending, then perhaps that’s part of the culture issue too. Who does the ‘screw the company’ attitude really hurt?
I will take you to task on this point as your reasoning that pilots won’t extend because they want to “screw the company” is false and malicious.

Virgin Australia has an approved FRMS (Fatigue Risk Management System) in place whereby experts have calculated what is safe and what is not.

If a pilot chooses to exercise discretion, they are in effect saying that they have a greater level of expertise in Fatigue Risk Management than those who designed and implemented the FRMS.

Now if an incident occurs whilst that pilot is operating with the 2 hour discretion period, the pilot is the only one who can be held accountable as he has made a conscious decision to operate outside of the approved FRMS. This could be interpreted as negligence.

And as you say, many pilots make their decision at the start of the day not to extend.

That is in fact the wisest thing to do, rather than making a decision to extend at the end of an already long day where stress and fatigue may impair ones judgement and decision making ability.

And in one well documented case where a pilot did the “company” thing and chose to extend only to incur further delays which took the duty period beyond the allowable 2 hours of discretion, the pilot was thrown to the wolves (CASA) with no support from the company.

The reason that I will always make the decision not to extend is to protect the company, not to screw the company.

And in doing so, I will also protect my passengers, my crew, my aircraft and my licence.


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Old 29th Aug 2019, 03:55
  #70 (permalink)  
 
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Klink, all pilots are tired and the only way to counter the culture at the top is with an inverse culture at the bottom. I donít extend because Iíve been extending/extended for a decade or more.
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Old 29th Aug 2019, 04:23
  #71 (permalink)  
 
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If VA were to wind up the Tiger operation, what would happen to the VA pilots that have transferred over Tiger operation? Would they be able to transfer back to VA or would the be given redundancies like the rest of the TT crew?

Seriously asking for a mate.
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Old 29th Aug 2019, 04:56
  #72 (permalink)  
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Originally Posted by smiling monkey View Post
It surely doesn't help when they are still paying for leases of E190 aircraft parked in Nashville, USA. How much is that costing them per year?
about a million per week - 47.4 million just in lease fees excluding other ancillary costs
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Old 29th Aug 2019, 05:07
  #73 (permalink)  
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Originally Posted by fmcinop View Post
The 777 is making money whilst the A330 has done nothing but bleed it from day one. My bet is the A330'w will depart the business within the next few years.

Unfortunately when they quote international performance that includes all international flying. VANZ, VAI 737, A330 and B777. VANZ, VAI 737 and the A330 are nothing more then a boat anchor. Shutdown the VAI 737 operation, merge VANZ into VAA and get rid of those A330's.
Do you have a link to financials showing the 777 is operating with a profit?
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Old 29th Aug 2019, 05:38
  #74 (permalink)  
 
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Do you have a link to suggest that it isn’t?

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Old 29th Aug 2019, 05:39
  #75 (permalink)  
 
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Pacific would be on and off profitability. The off season United are pulling back 3 weekly to Sydney and Melbourne so obvious over capacity exists.

PS reaffirmed then importance of USA and the impact it has on its corporate accounts on Sky Mews yesterday. Hong Kong was quoted as early days.
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Old 29th Aug 2019, 05:55
  #76 (permalink)  
 
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My prediction only; The token fleet of 5 thirsty 777’s could eventually go and the codeshare with Delta will take it over, and they will persist with the A330’s (after renegotiating leasing costs as said by PS) on building up HKG which has important China and Virgin Atlantic connections. None of their partners or codeshare airlines connect HKG directly with Australian ports as far as I know. The A330’s will continue on transcon domestic to keep a wide body presence, and to maintain business class contractual arrangements.

Last edited by Capt Basil Brush; 30th Aug 2019 at 01:42.
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Old 29th Aug 2019, 06:04
  #77 (permalink)  
 
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What about the yearly $45m annual bill for the parked Airbus props and embrear jets. How long does that actually go on for?
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Old 29th Aug 2019, 06:14
  #78 (permalink)  
 
Join Date: May 2019
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Originally Posted by juliusg View Post
Colonel Klink is right on. Couple more points, lot of disparagement in these posts and some who clearly don't fly on VA. (I am VA and QF plat). The VA Business class exceeds QF every time in catering. Flew QF business yesterday Cairns-Sydney; one white, one red wine. That's a choice? No salad. Seeded sourdough or seeded sourdough. Fly VA business often interstate and USA & HK. VA can't be beaten in J. I suspect international will go as well as Tiger, since the results show a decent profit on domestic and 7% revenue growth. Get rid of the stuff that doesn't work, and possibly even ditch the Virgin branding as this costs millions each year too.
OMG, could you imagine no salad for a 2-3 hour flight and only one choice of wine or bread roll, oh the humanity!
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Old 29th Aug 2019, 06:22
  #79 (permalink)  
 
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The 777 is not a big money making machine. Occasionally it may make a bit however if you look at what it brings compared to the cost of running it over the years it has existed, then it is obviously better to use that money somewhere else. At 5 airframes it is a token toy operation. I think, as others have said, they will give the pacific flying to partners in the next couple of years if not sooner.
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Old 29th Aug 2019, 06:24
  #80 (permalink)  
 
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the pilot was thrown to the wolves (CASA) with no support from the company.
Iíve asked about this and its scaremongering.

If you feel you can extend then do so if not get off.

The problems started in 2014 ish when a certain chap started sitting people at airports all day then flying them home at max duty -15 minutes. Rosters and crewing practices followed on the downhill slope to gain ďefficienciesĒ. Crew responded with sick leave, inflexibility and not extending.

With SA now appointed permanently as COO I would expect practices to improve in the long term. There is no point pretending like we are still at Brighton Le Sands because weíre not. Certainly thereís room for improvement but it will take time.

Totally get the frustrations but I just say judge it on the day. Having a blanket angry policy just isnít healthy.

Would they be able to transfer back to VA or would the be given redundancies like the rest of the TT crew?
Transfer back GDOJ would be my guess. It was all outlined in a company email and also in union newsletters. The company isnít closing Tiger, if anything looking to fix things and have it around for the long term.
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