Virgin Australia : 315 Million Loss - How long can they survive?
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Aurthur - Virgin is cash flow positive. They're not burning through any cash stores. They don't need to. Depending on what they do for the bond that is maturing - they may either refinance it or use cash to fund it, but either way - the busines is generating free cash. They just need to increase that substantially.
Lenders don’t lend, lessors don’t lease and shareholders don’t invest on free cash flow. With $1.9 Billion in sustained losses, VA is a poor story.
Ansett actually produced a profit in the last few years, more than I can say for VA
T - airline businesses are very good cash cows. Nothing surprising there. Profitability on the other hand......
Lenders don’t lend, lessors don’t lease and shareholders don’t invest on free cash flow. With $1.9 Billion in sustained losses, VA is a poor story.
Ansett actually produced a profit in the last few years, more than I can say for VA
Companies don’t shut up shop when they’re not ‘profiting’ as murky as that word is these days.
they close up when they can’t pay the interest and wages and costs. With 1.74B cash and 6B revenue people think a loan extension is going to be the death of the company. Lol
why haven’t virgin just closed up then if Ansett made a profit before they collapsed? On the logic being put forward here? Surely a company not profiting can’t continue??? (This is sarcasm for anyone playing at home)
Companies don’t shut up shop when they’re not ‘profiting’ as murky as that word is these days.
they close up when they can’t pay the interest and wages and costs. With 1.74B cash and 6B revenue people think a loan extension is going to be the death of the company. Lol
Here the CEO trying to broadcast, confidence in the Airline, with an A330 model in the back ground with a missing engine? And then also having huge spotlight highlighting the fact displaying the airline is in disrepair,just like an rudderless ship, an engineless aircraft how symbolic reflects just how poorly managed this airline is, especially from staff within the Virgin Australia headquarters.
First to be shown the door should be the CEO PA and PR department for Blatantly exhibiting such levels of incompetence and a poor corporate image.
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Every six months another rubbish forum pops up full of “experts” claiming the doom and gloom, and the certainty of demise within months ��.
They won’t pull out of the Tasman or pacific. Downsizing is required on Borghettis ridiculous extra capacity and routes put in post nz break up. Pulling out of the international market completely, will have flow on effects to the domestic model, giving even more of a monopoly to the competition, and when the business returns to profitability will limit it as they would be muscled out of the Tasman/pacific. Being east coast based but talking to colleagues that work within the VANZ contingent, load factors have steadily increased on all routes and a strategical frequency plan, particularly on the Sydney flights would see consistently adequate loads.
Theres still plenty of positives for the guys and gals at virgin. Here’s to looking forward to the next expert forum.
They won’t pull out of the Tasman or pacific. Downsizing is required on Borghettis ridiculous extra capacity and routes put in post nz break up. Pulling out of the international market completely, will have flow on effects to the domestic model, giving even more of a monopoly to the competition, and when the business returns to profitability will limit it as they would be muscled out of the Tasman/pacific. Being east coast based but talking to colleagues that work within the VANZ contingent, load factors have steadily increased on all routes and a strategical frequency plan, particularly on the Sydney flights would see consistently adequate loads.
Theres still plenty of positives for the guys and gals at virgin. Here’s to looking forward to the next expert forum.
Last edited by Kittykat2704; 9th Oct 2019 at 19:17.
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T - airline businesses are very good cash cows. Nothing surprising there. Profitability on the other hand......
Lenders don’t lend, lessors don’t lease and shareholders don’t invest on free cash flow. With $1.9 Billion in sustained losses, VA is a poor story.
Lenders don’t lend, lessors don’t lease and shareholders don’t invest on free cash flow. With $1.9 Billion in sustained losses, VA is a poor story.
What it does not show is the potential future costs and for poor prior decisions i.e. non-cash expense.
But I come back to your original post where my response was specifically targeted towards, and that is VA is not burning through cash. They have free cash remaining to do anything they like with e.g. share buyback, dividends, pay down debt, reinvest into product etc.
I don't have the documents to view, but I can't see that Ansett would have been cash flow positive otherwise it would have been able to continue trading. I am sure it ran out of cash.
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Ansett ran out of cash. Once their market share went below 36% they couldn't keep their heads above water. If you look at the cash flows for VA though there was $250 from another debt raising and some asset sales. Problem with not being profitable is that the financial institutions such as banks, Investors and leasing companies require a higher risk premium. The more you borrow the more it costs. So if VA did indeed try to order 787's then the lease factor required by any of the main leasing companies would be above .75 I suspect replacing expensive leased A330's with more expensive B787's. Time will tell.
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T- I can Google FCF as well.
Your straw man argument suggesting that all is good at VA because they have free cash is a distraction.
AN tried this argument too, as they say, money talks, BS walks.
To suggest their situation is anything short of parlous is at best wishful thinking. This is a business that has chewed nearly $2 Billion dollars of investors money without producing a return. It has brutally punished those poor shareholders who bought into the IPO.
This, in a market where their competitor just posted nearly $1 billion in profit from their domestic business alone! This off the back of consistent year on year profits. On a market share basis, VA’s share of the profits pie should have been at least a $300m PROFIT. Where is it? Clearly the issue is not the market.
To paraphrase Rod Eddington - it might be a great airline, but its a poor business. Problem is, unlike AN, this is not even a great airline.
But hey, you might be right, all of this will rapidly change, the new CEO will discover what clearly eluded previous management, the board and long suffering shareholders and voila....... profit.
Your straw man argument suggesting that all is good at VA because they have free cash is a distraction.
AN tried this argument too, as they say, money talks, BS walks.
To suggest their situation is anything short of parlous is at best wishful thinking. This is a business that has chewed nearly $2 Billion dollars of investors money without producing a return. It has brutally punished those poor shareholders who bought into the IPO.
This, in a market where their competitor just posted nearly $1 billion in profit from their domestic business alone! This off the back of consistent year on year profits. On a market share basis, VA’s share of the profits pie should have been at least a $300m PROFIT. Where is it? Clearly the issue is not the market.
To paraphrase Rod Eddington - it might be a great airline, but its a poor business. Problem is, unlike AN, this is not even a great airline.
But hey, you might be right, all of this will rapidly change, the new CEO will discover what clearly eluded previous management, the board and long suffering shareholders and voila....... profit.
Reuters Jamie Freed, suggests otherwise
“Virgin has had negative free cash flow for the last 11 financial years, according to Refinitiv data, which has led it to rely heavily on funding from equity, debt and asset sales. It has a non-investment grade credit rating because of its high debt levels.”
surely a non investment grade credit rating will bring problems refinancing.
How long will the cash reserve last with a crisis that slows revenue, it’s not “doom and gloom” to proof the business to survive a crisis.
An expert named Herb Kelleher said you get two crisis’s per decade, that sort of “negativity” (or sky is falling mentality) helped southwest thru 11th Sept 2001 attacks. The “think small” model, works as evidenced with Southwests 46th consecutive year in profit.
“Virgin has had negative free cash flow for the last 11 financial years, according to Refinitiv data, which has led it to rely heavily on funding from equity, debt and asset sales. It has a non-investment grade credit rating because of its high debt levels.”
surely a non investment grade credit rating will bring problems refinancing.
How long will the cash reserve last with a crisis that slows revenue, it’s not “doom and gloom” to proof the business to survive a crisis.
An expert named Herb Kelleher said you get two crisis’s per decade, that sort of “negativity” (or sky is falling mentality) helped southwest thru 11th Sept 2001 attacks. The “think small” model, works as evidenced with Southwests 46th consecutive year in profit.
I think unless you work in Finance it’s pretty hard to understand what the figures really mean. Certainly, anyone can see QF is in a much stronger position, they own everything and have lots of profitable ancillary businesses. QF vs VA group isn’t even a comparison. The only bit you could compare, as they look similar (I think), is the B737 operation.
My contacts say that over the past few years debt has been getting paid down. Again, I’m no expert. There was a lot of expense associated with the transformation of VB to VA and they would have had to borrow significantly to do this.
The group is obviously still finding its feet after 10 years of significant change. Obviously the likes of TT are inefficient at the moment as they’re half way between a paused fleet transition.
I think the new CEO is moving in the right direction. If it was an emergency the A330 would have been cut on the spot. Obviously he feels they can manoeuvre the company into a position without cutting a fleet, losing slots and cutting pilots.
I would have thought recent announcements would indicate he’s clearly get the priorities in order.
My contacts say that over the past few years debt has been getting paid down. Again, I’m no expert. There was a lot of expense associated with the transformation of VB to VA and they would have had to borrow significantly to do this.
The group is obviously still finding its feet after 10 years of significant change. Obviously the likes of TT are inefficient at the moment as they’re half way between a paused fleet transition.
I think the new CEO is moving in the right direction. If it was an emergency the A330 would have been cut on the spot. Obviously he feels they can manoeuvre the company into a position without cutting a fleet, losing slots and cutting pilots.
I would have thought recent announcements would indicate he’s clearly get the priorities in order.
It’d be interesting if someone got on the phone and offered the entire 777 fleet (and pilots during the establishment phase, and then seniority where it took them) to Qantas. They’d be able to cull the 747 operation early and use the VA 777s to get the sunrise operation up and running.
The 777s would also be ideal for Haneda and Joberg.
The 777s would also be ideal for Haneda and Joberg.
Evertonian
On a side note, despite all of the above facts most of the aforementioned VA pilots still welcomed Tiger pilots when they were recently training on VA metal. The same would happen for VARA crew. There are high levels of professionalism on display of you look beyond the bar talk.
Couple of “special” people we know of indeed. Bound to find that anywhere particularly in a big group.
Overall the guys are good and certainly there’s no us and them attitude in the flight deck. From what is see/hear over in the QF group there’s no comparison.
Overall the guys are good and certainly there’s no us and them attitude in the flight deck. From what is see/hear over in the QF group there’s no comparison.
Last edited by Berealgetreal; 1st Sep 2019 at 08:22.
T- I can Google FCF as well.
Your straw man argument suggesting that all is good at VA because they have free cash is a distraction.
AN tried this argument too, as they say, money talks, BS walks.
To suggest their situation is anything short of parlous is at best wishful thinking. This is a business that has chewed nearly $2 Billion dollars of investors money without producing a return. It has brutally punished those poor shareholders who bought into the IPO.
This, in a market where their competitor just posted nearly $1 billion in profit from their domestic business alone! This off the back of consistent year on year profits. On a market share basis, VA’s share of the profits pie should have been at least a $300m PROFIT. Where is it? Clearly the issue is not the market.
To paraphrase Rod Eddington - it might be a great airline, but its a poor business. Problem is, unlike AN, this is not even a great airline.
But hey, you might be right, all of this will rapidly change, the new CEO will discover what clearly eluded previous management, the board and long suffering shareholders and voila....... profit.
Your straw man argument suggesting that all is good at VA because they have free cash is a distraction.
AN tried this argument too, as they say, money talks, BS walks.
To suggest their situation is anything short of parlous is at best wishful thinking. This is a business that has chewed nearly $2 Billion dollars of investors money without producing a return. It has brutally punished those poor shareholders who bought into the IPO.
This, in a market where their competitor just posted nearly $1 billion in profit from their domestic business alone! This off the back of consistent year on year profits. On a market share basis, VA’s share of the profits pie should have been at least a $300m PROFIT. Where is it? Clearly the issue is not the market.
To paraphrase Rod Eddington - it might be a great airline, but its a poor business. Problem is, unlike AN, this is not even a great airline.
But hey, you might be right, all of this will rapidly change, the new CEO will discover what clearly eluded previous management, the board and long suffering shareholders and voila....... profit.
It’d be interesting if someone got on the phone and offered the entire 777 fleet (and pilots during the establishment phase, and then seniority where it took them) to Qantas. They’d be able to cull the 747 operation early and use the VA 777s to get the sunrise operation up and running.
The 777s would also be ideal for Haneda and Joberg.
The 777s would also be ideal for Haneda and Joberg.
It’d be interesting if someone got on the phone and offered the entire 777 fleet (and pilots during the establishment phase, and then seniority where it took them) to Qantas. They’d be able to cull the 747 operation early and use the VA 777s to get the sunrise operation up and running. The 777s would also be ideal for Haneda and Joberg.
It’d be interesting if someone got on the phone and offered the entire 777 fleet (and pilots during the establishment phase, and then seniority where it took them) to Qantas. They’d be able to cull the 747 operation early and use the VA 777s to get the sunrise operation up and running.
The 777s would also be ideal for Haneda and Joberg.
The 777s would also be ideal for Haneda and Joberg.