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Virgin headed for another disaster, says REX chairman

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Virgin headed for another disaster, says REX chairman

Old 7th May 2020, 08:59
  #21 (permalink)  
 
Join Date: Nov 2017
Location: australia
Posts: 76
Originally Posted by BNEA320 View Post
& how do you arrive at that idea ?

50% of the workforce at 75% of VA pay would make a huge difference(that's 37.5% of current staff costs), especially now fuel is so cheap, especially if any fuel hedging at low prices can be achieved.

With the new worldwide glut of aircraft, any sort of decent negotiator would be able to get a massive discount on aircraft leasing costs.

Airport handling would also be negotiated downwards.
Okay, I'll bite! You're playing with percentages to make your idea look better than it is. First off, lets forget the headcount cut and look at your savings on the wages bill. It stands at 15% (according to the pie chart) and you get a 25% cut. 25% of your 15% is 3.75%, so your wages bill drops from 15% to 11.25% of Total Op Costs. WOW! Now lets cut staff numbers. You now have 50% less staff, are you seriously suggesting that VA was overstaffed by that much? No, I didn't think so, so your revenue has gone down substantially as well as your other costs, so therefore your claim to have reduced your wages component as a % of T.O.C only stands if their is no change to the rest of the pie chart. Are you seriously contending that VA will continue to do what it was doing prior with 50% less employees?

Now fuel, yeah really cheap, but there's a reason for that. "The earnings forecast, which was revealed byStreet Talk on Monday night, said Virgin expected to record about $5 billion revenue in 2022, back to 2015 levels and about 15 per cent less than last year." Now if they're back to this revenue level I'd say fuel won't be sooo cheap, I know if fell out of bed earlier this year with the Saudi/ Russia dispute, but it literally fell down the elevator shaft when Cov19 appeared, so my guess is it would recover somewhat as well.

Fuel Hedging: must admit I know very little about it. The little I think I understand is that hedging isn't a game of locking in low costs otherwise CX wouldn't have hedged at massive prices some yrs ago, I understand it's to lock in your costs at a point you're happy with, if your competitors don't and prices fall they'll increase their profits or lower fares and take market share off you, if they increase well it's the opposite. I know now is not the time to compare short and long term bond rates, but usually the longer the period the higher the prices. I'd be surprised that you could hedge fuel at todays prices out a few yrs. I'd have though Shell, BP etc have a good idea where demand will go and price accordingly, and if that's low it'll be because demand is low therefore traffic will be low!

I also wouldn't expect lessors to just hand over their a/c for nothing either, not saying they're won't agree to a reduction, but I bet nothing like what you appear to have in mind. Perth Airport also isn't just going to cut their charges as well, I wonder what QF would say on that. Nah, nothing I guess as they're more than happy with Perth Airport right now; they're having a love-fest. Compare a/c leases with commercial property, it's valued by a large part on the rent and when an owner takes a rent cut they're telling the market that the property they own is now worth less. You'll see commercial property empty for months before they cut the rent.

In the meantime the new VA is competing against a QF that has just lost most of it's international market for a good 18 mths. They've had their foot on VA's throat for a long time and I doubt they're going to remove it anytime soon.

I wish the employees all the best, but I think the new VA will be pushing the proverbial up hill.

Btw, "Originally Posted by Icarus2001 View Post
Well it certainly was not crew wages that drove them into administration". Icarus only claimed that crew wages didn't crash the company and nothing you've mentioned proves otherwise.
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Old 7th May 2020, 09:10
  #22 (permalink)  
 
Join Date: Jun 2010
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Originally Posted by chookcooker View Post
essentially the same at VA
salary based on 69 hours/rp (NOT 60 as dopey said, was corrected on and STILL wouldn’t concede)
and then the hourly rate on top of that. It’s no like it’s Double time or anything
And yet QF made billions and Virgin lost billions. Hows that work?
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Old 7th May 2020, 09:35
  #23 (permalink)  
 
Join Date: Sep 2005
Location: NT
Posts: 95
Originally Posted by normanton View Post
And yet QF made billions and Virgin lost billions. Hows that work?
and there in lies the truth that the root of the problem wasnít pilot conditions or wages (despite Dopeyís musing)
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Old 7th May 2020, 09:39
  #24 (permalink)  
 
Join Date: Feb 2001
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Originally Posted by normanton View Post
And yet QF made billions and Virgin lost billions. Hows that work?

'The Pat On Back Club' (Taken from 2017 Report) :Operating and financial review (continued)

Significant risks and uncertainties

The Group is exposed to a range of risks associated with operating in the domestic and international aviation industry. These include:
  • Fuel price and foreign exchange trends, which can significantly affect costs, including fuel, aircraft and funding costs;
  • Increases in airport, transit and landing fees, and the costs of ensuring air traffic security;
  • Competition from other airlines and from alternative means of transportation;
  • Government policy changes or decisions which could have an adverse impact on its business, operations and financial performance;
  • Industrial action by unionised employees, which can adversely impact operations, financial performance and staff engagement;
  • Stability of critical systems, including technology and communication services, which can disrupt operations;
  • Global economic and geopolitical conditions, as well as pandemics, terrorism, severe weather conditions, natural disasters or other Acts of

    God, which can materially adversely affect operations and demand for air travel;
  • Losses associated with major safety or security incidents;
  • Ability to obtain sufficient funds on acceptable terms, or at all, to provide adequate liquidity and to finance necessary operating and capital

    expenditures;
  • Liquidity risk, inability to meet financial obligations, including aircraft purchase commitments, as they fall due; and
  • Credit risk, failure of counterparties and dependency on third party service and facility providers.

    The Groupís exposure to these risks has the potential to affect financial performance, operations, liquidity, and/or result in impairment of the Groupís cash-generating units (CGUs) and derecognition of defered tax assets. Impairment testing is performed on an annual basis, or more frequently if required, to determine if the impact of key risks has generated impairment losses during the financial year and considers the potential impacts, through sensitivity testing, for future financial years. Refer to note D4 to the consolidated financial statements for further information on impairment testing.

    The Group aims to ensure that all activities are undertaken within the Board of Directors (the Board) approved risk appetite and management guidelines and with sufficient independent oversight to protect the safe operations, profitability, financial position and reputation of the Group.

    The identification and proactive management of risk reduces uncertainty associated with the execution of the Groupís business strategies and allows the Group to maximise opportunities as they arise. All personnel are accountable for identifying, assessing and managing risks in a proactive manner. The Group has established the Audit and Risk Management Committee which is responsible for the internal controls, policies and procedures that the Group uses to identify and manage business risks.

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Old 7th May 2020, 09:44
  #25 (permalink)  
 
Join Date: Feb 2001
Posts: 61
https://www.asx.com.au/asxpdf/202005...5gh4nls9zq.pdf

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Old 7th May 2020, 10:06
  #26 (permalink)  
 
Join Date: Dec 2001
Location: Brisvegas
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That graph is a 'generic', outdated to 2015.
It is meaningless currently. Airlines have a dynamic environment and it is certainly no reflection on VA expenditures.
It shows percentage of operating expenses in each cost centre. How can the year matter? Designed by Boeing & IATA who know a little about operating aircraft in an airline environment. Even if these figures are out by a few percent either way they are highly indicative of what EXFOCX said above...a 50% reduction in crew wages would not have saved VA from administration.
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Old 7th May 2020, 10:33
  #27 (permalink)  
 
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Originally Posted by Icarus2001 View Post
Well it certainly was not crew wages that drove them into administration.

Meaningless pie chart given it is a global average and does not reflect any one actual airline.
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Old 7th May 2020, 10:33
  #28 (permalink)  
 
Join Date: Jul 2007
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What Mr 'exfocx & Icarus' said/are saying, the 'said' problem IS way bigger 'than' that- to deliver 'this end result' right here/right now..................., for Mine/& for what that is not worth.

THE CREWING/Staff cost did, Not Deliver 'this' Result- yup, 'there' may have been a journey of 'we' are worth 'this', but none of that was in anybodies Best Interests (at 'that' time, given this point in time, as it were) and 'was' ultimately delivered by THE Head-Shed..............

Not, the first time 'that'/this' gig has gone around- if you get 'what' I mean......

Rgds all
S28- BE
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Old 7th May 2020, 10:48
  #29 (permalink)  
 
Join Date: Dec 2000
Location: Australia
Posts: 689
I’m STRUggling to under/stand a lot of your....posts ‘theses’ days S/@[email protected]%EB
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Old 7th May 2020, 10:57
  #30 (permalink)  
 
Join Date: Nov 2001
Location: Australia/India
Posts: 3,073
DITTo....ozbiggles. i 'have' / 'had' no idea what s28--bE post mean- if you don't.....get what i mean. not may have been-yup THE Head-Case...
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Old 7th May 2020, 11:00
  #31 (permalink)  
 
Join Date: Sep 2011
Location: Unfortunately not the Orient
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Smile

Thanks biggles and lead. That made me laugh. I have never been able to understand him.
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Old 7th May 2020, 11:02
  #32 (permalink)  
 
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Thumbs up

Good
Rgds
S28
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Old 7th May 2020, 11:29
  #33 (permalink)  
 
Join Date: Feb 2020
Location: Houston
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I’m STRUggling to under/stand a lot of your....posts ‘theses’ days S/@
Was gunna say that but would be accused of slander and being vicious.
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Old 7th May 2020, 11:42
  #34 (permalink)  
 
Join Date: Oct 2013
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Originally Posted by Section28- BE View Post
Good
Rgds
S28
I quite like your posts and I understand around 8/10 of them so thatís pretty good. You have style and character and youíre not short on the brain cells either. Keep up the good work my cryptic friend!
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Old 7th May 2020, 12:38
  #35 (permalink)  
 
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Originally Posted by Paragraph377 View Post
I quite like your posts and I understand around 8/10 of them so thatís pretty good. You have style and character and youíre not short on the brain cells either. Keep up the good work my cryptic friend!
He is a QAnon Engineer!

We 'all' in this 'together'
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Old 7th May 2020, 12:52
  #36 (permalink)  
 
Join Date: Feb 2001
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Originally Posted by Icarus2001 View Post
It shows percentage of operating expenses in each cost centre. How can the year matter? Designed by Boeing & IATA who know a little about operating aircraft in an airline environment. Even if these figures are out by a few percent either way they are highly indicative of what EXFOCX said above...a 50% reduction in crew wages would not have saved VA from administration.

Why be uptight Icarus? Are you falling victim? The years do matter!! Yes, you are right. Relying on Wage reductions to make a business survive is a load of shit. Especially when you go out of your way to save Millions, but only see it go to management Bonuses!!
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Old 7th May 2020, 12:56
  #37 (permalink)  
 
Join Date: Oct 2005
Location: Fliegensville, Gold Coast Australia
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But try doing 70-80 hours a month for 12 months....
Yes.....my Brother in law was doing that every week until stood down, what support do you expect from him or countless others like him??

Ever noticed this country is so wildly expensive to live in now companies depend upon workers working many many unpaid hours?...slaves really....any unpaid work is an admission of a business that is failing under fair terms...they fail because the money they rely upon comes from people not paid enough to be customers of their business and so by underpaying them, and over working them, there is no discretionary spend?

Greed...its called greed...
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Old 7th May 2020, 13:05
  #38 (permalink)  
 
Join Date: Oct 2013
Location: New Zealand
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Fuel costs are always the most expensive cost component of an airline, followed by labor.
Purchasing fuel at the right price can make or break an airline, particularly during a time of crisis. It really does not matter what the price of a barrel is today because the fuel you are burning was locked in at a set price perhaps last month, 3 months ago or 6 months ago. There are various hedging techniques and the whole process can be quite complex as many factors are considered as to what price you should pay. The outcome is a serious one. For example, an airline might lock in 80% of their fuel at a set purchase price for 3 months. The other 20% is set at todayís rate. So if fuel today is $60 per barrel but you hedged 80% of it at $22 per barrel 3 months ago, even though it has steadily climbed to $60 per barrel, youíve still done well because only 20% of your fuel is at the higher price. But if it is the reverse situation, you have just blown many many millions of dollars by making a poor decision. Qantas has generally done well with its hedging over the years. It hasnít always got it right, but more often than not it has had skilled analysts who have called the right shots. Not so with Virgin. On numerous occasions they have screwed up the hedge price and it has cost them tens of millions of dollars. The idiot Manny Gill buggered it up twice and it almost sent the then Virgin Blue to the wall. However, being one of ĎBrettís Boysí he lived to get paid for another day and was in fact promoted.





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Old 7th May 2020, 13:36
  #39 (permalink)  
 
Join Date: Feb 2019
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Yet another thread about Virgin's downfall and problems. It couldnt have been added to one of the other existing threads??

I honestly believe some of you have serious mental problems. Cannot help yourself and cannot hide the enthusiasm of watching Virgin fail, with 10,000+ people losing their livelihood, houses and possibly life. Enjoy yours why you can........
Then turn off your computer. Don't read it. It's that simple. Clearly people feel like discussing it.
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Old 7th May 2020, 13:58
  #40 (permalink)  
 
Join Date: Apr 2010
Location: home
Posts: 348
Despite the plethora of flogs (Inc Mr Lim) here that should be running merchant banks instead of flying aeroplanes, nobody has explained in layman's terms how Kwantarse can pay virtually all of their staff significantly more than Virgin and still turn a large profit, if indeed as the experts say the EBAs need to be slashed at VA???????
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