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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, 21:30
  #41 (permalink)  
 
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Originally Posted by airdualbleedfault View Post
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???????
Well as much as anyone would hate to admit it, QANTAS are just better at the aviation business than Virgin ever will be. Hate it or love it it’s the truth. We need an AJ at at VA I don’t think Scurrah is the savior either he has already proved his incompetence.
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Old 7th May 2020, 22:16
  #42 (permalink)  
 
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Originally Posted by SHVC View Post
Well as much as anyone would hate to admit it, QANTAS are just better at the aviation business than Virgin ever will be. Hate it or love it it’s the truth. We need an AJ at at VA I don’t think Scurrah is the savior either he has already proved his incompetence.
Qantas has had 100 years to hone their craft. Virgin a lot less time in the saddle. Qantas were always innovators or made the first step, Virgin are followers and ride coattails. Qantas has/was always stacked with analysts - fuel, economy, markets, etc, some very smart, savvy and experienced folk. They had people who knew every inch of the region, knew every Mayor or Council CEO and would engage often. Virgin often has specialists, wannabe’s and kiddies in those roles, and not many of them either. They don’t know the regions, markets, or key people. They were too busy getting wet spots over Federal Government politicians and famous people sitting in 1a. Qantas set up a large freight network with associated infrastructure and contracts. VA bought 777’s with no ULD freight capability. Big big big mistake. Another one to add to the list. You can’t compare VA with QF. It’s like comparing a vagina to a dick.

And before some sook starts accusing me of wanting to see VA collapse, get your emotions in check because that’s not what I want. I’m just stating my opinion on a rumour network. My later years after retiring from flying saw me managing businesses interests that gave me a full comprehension and accurate understanding of how both our national airlines and Governments and how they work. Qantas isn’t perfect and in my opinion they’ve made mistakes over the years. Deferring fleet upgrades for so long that they now have the oldest fleet they’ve ever had, and buying the Dugong are mistakes. AJ will be long gone with his bag of money under his arm when the fleet issues bite hard and they have to spend a motza which will impact profits, but that is a story for the not-so-distant future.







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Old 7th May 2020, 23:17
  #43 (permalink)  
 
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‘Full comprehension and accurate understanding of how both our national airlines and governments and how they work’.
You just outed yourself Mr Geoffrey Thomas.....or Neil Hanford, I can’t pick it.
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Old 7th May 2020, 23:24
  #44 (permalink)  
 
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Originally Posted by ozbiggles View Post
‘Full comprehension and accurate understanding of how both our national airlines and governments and how they work’.
You just outed yourself Mr Geoffrey Thomas.....or Neil Hanford, I can’t pick it.
Neither, you fool, that’s why you can’t pick it. There are some of us that finished flying and then owned businesses that related to the industry mate. Neither of the two fools you mentioned have worked the frontline.
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Old 7th May 2020, 23:36
  #45 (permalink)  
 
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Does anyone know how much of $300mil Regional Aviation Programs REX has been granted.

The Singaporean is firing a shot across his own employees bow using Virgin as an example.
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Old 7th May 2020, 23:39
  #46 (permalink)  
 
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Surprisingly, airlines that did not upgrade their fleets are now in a far better position. Better to have a parked up dinosaur with no lease payments than a parked up 350/787 costing a motza.
Who knew incompetence would pay off. Oh, wait.....
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Old 8th May 2020, 00:40
  #47 (permalink)  
 
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Originally Posted by Blackout View Post
.................... The years do matter!!..............
Sorry, but you're a long way wrong. While the pie chart is a rough break down of operating costs across the worldwide industry it remains a good enough approximation. Sure, wage costs will / would be lower, same as fuel costs as will A/P costs etc. So across the board costs will fall, leaving the % pretty much as they are, as an approximation.
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Old 8th May 2020, 00:50
  #48 (permalink)  
 
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Originally Posted by Icarus2001 View Post
Crew costs, crew. Flight crew and cabin crew.
Do they make up 50% of the VA (previous) workforce?
Is a 50% pay cut realistic? Cabin crew would walk at that salary.

I didn't.

As you can see above Boeing and IATA came up with these figures. So the pilot EBA was not the cause of this, neither was Covid 19, that merely brought forward the move to administration.

In my opinion it was lack of cost control. They turned over around $5.5 billion dollars a year and every time I flew on them the aircraft was full, or close to it and yet they could not make a profit. That says to me that costs were too high. 2-5% either way on a pilot EBA would not be the reason for the last ten years.
you misquoted me. I gave an example of 50% of workforce at 75% of what they were getting at VA, not 50%.

As little as a 1% change here, a 1% change there, can make a huge difference, when margins are so small.

Read about Southwest, I think it was in the book NUTS

It said, working backwards, their average annual profit over many years, equated to 1 passenger per flight. In rough terms, that implied 1 less passenger per flight on average, no profit. 1 more passenger per flight, huge profit.

Obviously, if certain flights full, cannot get another passenger on board.

It just highlighted, how little things can make a huge difference.
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Old 8th May 2020, 00:51
  #49 (permalink)  
 
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Oh Para
It seems you don’t have a comprehensive understanding of sarcasm....
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Old 8th May 2020, 01:49
  #50 (permalink)  
 
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Originally Posted by Paragraph377 View Post
Qantas has had 100 years to hone their craft. Virgin a lot less time in the saddle. Qantas were always innovators or made the first step, Virgin are followers and ride coattails. Qantas has/was always stacked with analysts - fuel, economy, markets, etc, some very smart, savvy and experienced folk. They had people who knew every inch of the region, knew every Mayor or Council CEO and would engage often. Virgin often has specialists, wannabe’s and kiddies in those roles, and not many of them either. They don’t know the regions, markets, or key people. They were too busy getting wet spots over Federal Government politicians and famous people sitting in 1a. Qantas set up a large freight network with associated infrastructure and contracts. VA bought 777’s with no ULD freight capability. Big big big mistake. Another one to add to the list. You can’t compare VA with QF. It’s like comparing a vagina to a dick.

And before some sook starts accusing me of wanting to see VA collapse, get your emotions in check because that’s not what I want. I’m just stating my opinion on a rumour network. My later years after retiring from flying saw me managing businesses interests that gave me a full comprehension and accurate understanding of how both our national airlines and Governments and how they work. Qantas isn’t perfect and in my opinion they’ve made mistakes over the years. Deferring fleet upgrades for so long that they now have the oldest fleet they’ve ever had, and buying the Dugong are mistakes. AJ will be long gone with his bag of money under his arm when the fleet issues bite hard and they have to spend a motza which will impact profits, but that is a story for the not-so-distant future.
When you make statements that are patently wrong, it brings your other statements into question.

Qantas has had 100 years to hone their craft: Irrelevant, I don't think there is a company around that operates in the same manner as it did 100 yrs ago, especially with the style of management of the last 30 yrs and considering pre and post privatisation and considering the pre 90's QF was likely a national asset that operated with the national interests in mind. Since then, I'd go as far to say it changes with each change of management and what their focus is.

Qantas were always innovators or made the first step,: I don't agree with this either, a long way off the mark. Ansett was way in front of QF: introduced First Class, got rid of the middle seat in Biz Class, intro'd lounges at the airports and prior to its demise started self check-in.

Imo QF has been somewhat historically lucky. The following is my view of history: Ansett pre dispute was a cash cow that made lots of dough for the two owners (Newscorp and TNT; Murdoch & Ables). It was what funded Murdoch's international expansion, without which he would not be where he is today, it also funded Ables's aborted attempt to expand TNT into an international company with it's European foray that resulted in TNT turning Dutch. The dispute cost both Ansett and Australian Airlines (TAA) dearly, then followed dereg which killed the cash cow. Neither owner were interested in funding AN as it was loaded with debt and I doubt they could see the return justifying any reinvestment, so it wallowed from '88 up to its end in '01. Prior to QF being gifted TN for 400m with around 400m in debt owed to the fed gov being forgiven, AN & TN fought over the interstate market for a few % points either side of 50% as there were Ms of $ in it. When QF acquired TN we were told that it would take QF two yrs to bed TN in, then they would "kick our heads in" (that is what I recalled as the language used). In the lead up to QF's privatisation AN started losing fed gov contracts it'd managed to hold yr after yr. Approaching 911 AN was down to 45% of the interstate market and we were obviously in the sh!t, we were told if we didn't gain that back we were in real trouble. 911 happens and just like today with VA and CV19, it went south. Prior to AN's demise, AN held a stranglehold on the intrastate travel, how that was gifted to QF who also only faced a low cost operator in VB on the interstate market, it went on to take 60 to 65% of that and holds that to this day.

QF's position imo isn't because of great management, but imo luck. As Eddington said when he came, AN was a great company, but a poor business. The arguments that AN's pay scales far exceeded QF is nothing but bs. Michael West pointed out that when AN went into Admin there were related party transactions that we not investigated taking a substantial amount of cash out prior to admin. So QF now had a the interstate and intrastate markets sown up and the high yield biz market to itself.

I recall being told that economy was the scone and biz travel the cream and that you needed both to do well. VB was a low cost op and QF countered that with Jetstar, so along comes Borgetti to rectify that, but with a company not well financially which, again imo, was a mirror image of AN. Poorly managed with loads of debt and a behemoth overlooking it.

Nothing will change with the present situation, no one in their right sense would see the returns gained that would justify the investment needed to take QF on, it has a massive moat around its market. Risk/ reward!

Any revamp will be to tart it up and on sell it down the track and as with nearly every IPO future failing of the newly listed company.

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Old 8th May 2020, 02:13
  #51 (permalink)  
 
Join Date: Nov 2017
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Originally Posted by BNEA320 View Post
you misquoted me. I gave an example of 50% of workforce at 75% of what they were getting at VA, not 50%.

As little as a 1% change here, a 1% change there, can make a huge difference, when margins are so small.

Read about Southwest, I think it was in the book NUTS

It said, working backwards, their average annual profit over many years, equated to 1 passenger per flight. In rough terms, that implied 1 less passenger per flight on average, no profit. 1 more passenger per flight, huge profit.

Obviously, if certain flights full, cannot get another passenger on board.

It just highlighted, how little things can make a huge difference.
BNEA320,

You're comparing apples and oranges while also making comparisons that aren't correct. Yes small changes in % can make a big difference but only if everything else remains the same (in your pie chart). Consider the grocery industry, huge turnover and wafer thin margins, anything goes wrong and the shtf. The grocery industry back 20-30 yrs ago was a crap business till the ACCC allowed the consolidation to what we have now; Coles & Wollies, forget IGA, of little consequence. They control everything now all the way up the chain. The same can be said when it comes to fuel retailing (tho a little different), back in the 90s Caltex was a dog, again industry consolidation and margins are nice and fat.

Comparing SWA to the position of VA is utterly ridiculous. SWA has had long term stable and excellent management, while also always having been in a strong financial position (very few loses reported), whereas VA is debt loaded and while Admin will resolve some of that not enough to challenge QF in any real way. I doubt VA will do nothing but fluff around the margins, enough maybe to crimp QF returns, but not challenge it or provide any real competition.

VA will be faux turnaround and then offloaded to unsophisticated investors via an IPO with the investment house making money on the IPO, the sellers a nice tidy return with the new shareholders likely to be holding a dog of an investment.

Last edited by exfocx; 8th May 2020 at 04:31. Reason: ICCC to ACCC
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Old 8th May 2020, 03:40
  #52 (permalink)  
 
Join Date: Oct 2013
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exfocx;

“The arguments that AN's pay scales far exceeded QF is nothing but bs”.

Maybe with the Pilots, but not in Cargo!!! Remember those boys wandering around in their white overalls back in the late 90’s, they were making $100k per year. Huge dollars for back then! Plus they still had 1 week per shift cycle where they started at midnight and finished at 0800 with 100% shift penalty. Most would ‘do the nick’ on at least one of those nights. They would sign on at midnight and then drive back home and sleep soundly for the night. Coordinated sickies in which mates would then cover on overtime, and so the list goes on! “It’s good to be the king”. Rampies on the domestic aircraft were earning around $75 to $80k in the late 90’s. And demarcation. If you were a pushback driver all you did was push back aircraft. Maybe 20 mins work 3 or 4 pushes in an 8 hour shift. The good old days. But not as good as flying widebody jets for ANZ between the 60’s and 90’s.


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Old 8th May 2020, 03:57
  #53 (permalink)  
 
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George you said this
"No such thing as overtime on the QF SH award. There is a minimum guarantee then additional hours paid at a flat rate"

I think that would be the very definition of OT wouldn't it , you get paid X for doing 53.5 hours a month , then the hourly rate for anything above

Did read the Virgin EBA , yes it is 69 hours, not 60 as someone told me

Still very much under the odds for this day & age , at work for 10.5 months , for a pretty cruisy 730 hours pa

Notice the base for LHS is $240K , and RHS $155K , gross from 30 to 60% over that , didn't have time to read the 120 page contract

Do you think the wages levels might have been part of the problem here as to why Virgin lost money year in / year out ?

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Old 8th May 2020, 04:30
  #54 (permalink)  
 
Join Date: Nov 2017
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Originally Posted by Paragraph377 View Post
exfocx;

“The arguments that AN's pay scales far exceeded QF is nothing but bs”.

Maybe with the Pilots, but not in Cargo!!! Remember those boys wandering around in their white overalls back in the late 90’s, they were making $100k per year. Huge dollars for back then! Plus they still had 1 week per shift cycle where they started at midnight and finished at 0800 with 100% shift penalty. Most would ‘do the nick’ on at least one of those nights. They would sign on at midnight and then drive back home and sleep soundly for the night. Coordinated sickies in which mates would then cover on overtime, and so the list goes on! “It’s good to be the king”. Rampies on the domestic aircraft were earning around $75 to $80k in the late 90’s. And demarcation. If you were a pushback driver all you did was push back aircraft. Maybe 20 mins work 3 or 4 pushes in an 8 hour shift. The good old days. But not as good as flying widebody jets for ANZ between the 60’s and 90’s.
Totally irrelevant, what does the above have to do with the question of pay disparity or what other employees did? So what % of revenue did cargo make up back then and what impact would that have had on each company? Hardly enough to even call it "on the margins" and I'd also say AN carried the bulk on late night ops cargo.

Like for like between AN & QF, same same! Whatever industrial rorts available to one were available to the other, it was the same industrial system. If wages were responsible for sinking one, why not the other? It's a bs story.
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Old 8th May 2020, 04:34
  #55 (permalink)  
 
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Originally Posted by exfocx View Post
Totally irrelevant, what does the above have to do with the question of pay disparity or what other employees did? So what % of revenue did cargo make up back then and what impact would that have had on each company? Hardly enough to even call it "on the margins" and I'd also say AN carried the bulk on late night ops cargo.

Like for like between AN & QF, same same! Whatever industrial rorts available to one were available to the other, it was the same industrial system. If wages were responsible for sinking one, why not the other? It's a bs story.
Hey, you were the one that started comparing QF with AN, who departed this world 20 years ago. Most of your post was totally irrelevant but I didn’t you shoot you down over it. Each to their own thoughts and ideologies.
Peace out man.



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Old 8th May 2020, 07:44
  #56 (permalink)  
 
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Originally Posted by Telfer86 View Post
George you said this
"No such thing as overtime on the QF SH award. There is a minimum guarantee then additional hours paid at a flat rate"

I think that would be the very definition of OT wouldn't it , you get paid X for doing 53.5 hours a month , then the hourly rate for anything above

Did read the Virgin EBA , yes it is 69 hours, not 60 as someone told me

Still very much under the odds for this day & age , at work for 10.5 months , for a pretty cruisy 730 hours pa

Notice the base for LHS is $240K , and RHS $155K , gross from 30 to 60% over that , didn't have time to read the 120 page contract

Do you think the wages levels might have been part of the problem here as to why Virgin lost money year in / year out ?

Overtime is usually an increased hourly rate above the standard hourly rate. Ever since 1989 Airlines have resisted any move to overtime , unlike the Longhaul Award which predates the debacle.The SH award gives an illusion of a “salary” but in reality is just the minimum the company is prepared to “guarantee “.They would make it 20 hours a month if they could. Personally I think Fleet pay is the way to go but there are too many vested interests on both sides for it to happen. Probably just academic now anyway.
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Old 8th May 2020, 09:42
  #57 (permalink)  
 
Join Date: Aug 2005
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FYI: The most recent Pilot Award published by Fair Work:
Pilot Award

Would a new operator be looking at this as a starting point? One would hope not…...
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Old 8th May 2020, 10:07
  #58 (permalink)  
 
Join Date: Jul 2007
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Ex AFR: Deloitte holds firm on Virgin amid Rex attack

Hmmmmm-

'Frothy' in here, again...................., aye!!!!

ex the AFR article, 'That' started 'this' Shiite-Fight................, there- 'was' a response/follow-up article of late yesterday, link here:https://www.afr.com/companies/transp...0200507-p54qn4

Given, everybody here- 'has' done 10 seconds on 'Chain-Saw'- 'we' 'yarded' the Sucker for your mutual edification-

Extract here:
' Deloitte holds firm on Virgin amid Rex attack

Lucas Baird Reporter

May 7, 2020 – 5.33pm

Deloitte has claimed it is running an "efficient and thorough" administration process of Virgin Australia in response to a scathing broadside by Regional Express executive chairman Lim Kim Hai.

With the rubber soon to hit the runway on a deal, some of Virgin and Deloitte's anger with Mr Lim likely stems from the possibility he could scare off some potential buyers. Chris Hopkins



A spokesman for the firm said, in response to claims Virgin's new owners would run into same financial strife that felled the carrier last month, it was ensuring a strong future for the carrier and what was best for the aviation industry.

"We are running an efficient and thorough process, which is ultimately designed to refinance and restructure the business to preserve as much value as possible," a Deloitte spokesman said. "All aspects of the cost base of the business will be taken into consideration and we are working consultatively with management and other stakeholders, including unions, throughout this process."

"Our intention is to get the business out of administration as quickly as possible, with new owners, and our timeline reflects that. This is what is best for the business, its people and the aviation industry as a whole."

Virgin declined to comment on Mr Lim's remarks, but The Australian Financial Review understands the airline is unhappy by the REX chairman's misrepresentation of the administration process and the sale tactics.

The attack comes at a sensitive time for the nation's second carrier, with Deloitte lead administrator Vaughan Strawbridge expecting up to 20 potential bidders to deliver indicative non-binding offers by the end of next week.

Mr Lim argued in an interview with the Financial Review's Chanticleer column that the strategy of pursuing a quick sale would leave significant problems in Virgin's business unsolved for new owners.

He also criticised the company's industrial agreements and a perceived inability or reluctance to renegotiate them in administration.

Virgin and Deloitte believe a quick sale will minimise the damage of the administration to the brand, employees and customers.

Renegotiate contracts

The airline is also confident Mr Strawbridge will be able to renegotiate onerous supplier contracts that are partly responsible for Virgin's distressed position.

On the industrial agreements, the Financial Review understands Virgin hopes these conversations remain ongoing in the background of the administration, so new pay deals are ready soon after it sells.

Much of the company's ire stems from a belief Rex was treated more favourably by the Morrison government as both airlines found themselves on the brink during the COVID-19 pandemic.

Virgin went to the federal government eight times for support, initially asking for a $1.4 billion loan that decreased to $200 million after eight proposals over several weeks. All these overtures were rejected.

Meanwhile, Rex warned in late March it would not last another six months under crisis conditions. As other regional carriers warned of similarly precarious positions, Deputy Prime Minister Michael McCormack delivered $198 million to these players to cover regulatory and safety standing costs.

This package included another $100 million fund to "provide direct financial support to smaller regional airlines during this unprecedented downturn in aviation activity should it be needed".

The federal government has maintained through the pandemic any support for businesses must be industry-wide and not tailored to a specific company.

To this end, Mr McCormack said the government had committed more than $1 billion to the aviation sector. This figure takes into account $715 million worth of activity-based fee relief and other subsidies aimed at keeping specific international and domestic air services running.

But Virgin has questioned the practical benefit of this support. The fee relief was extended at a time when it had grounded most of its fleet and the air service subsidies only allowed it to break even on these flights.

Deloitte's Mr Strawbridge, who took control of Virgin on April 22, hopes to wrap up a sale by the end of June.

A flyer was distributed to interested parties last Tuesday. Although Street Talk reported an information memorandum to be issued to bidders in the coming days said Virgin Australia's earnings in the 2022 financial year could reach $1.2 billion.

Industry insiders are sceptical of these estimates. John Thomas, an aviation consultant who was previously in charge of Virgin Australia's domestic and international network and a contender for the top job, said reaching that target would be "extraordinarily tough".

"It will be extraordinarily tough to get to these numbers by the financial year 2022, given the likely shape of the recovery curve that most airlines around the world are planning," he said.
"Further, because of the likely ongoing concerns from some traveller segments such as corporations for business travellers, most airlines don't believe that historical price stimulation will necessarily work here to help accelerate the recovery." '
Have a good weekend all
Rgds
S28- BE

Last edited by Section28- BE; 9th May 2020 at 04:49. Reason: Format...
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Old 8th May 2020, 21:28
  #59 (permalink)  
 
Join Date: Jun 2001
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Originally Posted by C441 View Post
FYI: The most recent Pilot Award published by Fair Work:
Pilot Award

Would a new operator be looking at this as a starting point? One would hope not…...
So, looking at those tables to get an an approximation of an annual salary, would it be reasonable to say add 10 bucks to the hourly rates published to cover allowances and then multiply by 1000?

If the above approximation is remotely in the ball park, all I can say is... yikes!

Or are the award rates set so low as to encourage EBAs?

In any case, this document should be essential reading for anyone contemplating a flying career.
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Old 8th May 2020, 23:02
  #60 (permalink)  
 
Join Date: Dec 2001
Location: Australia
Posts: 195
"It will be extraordinarily tough to get to these numbers by the financial year 2022, given the likely shape of the recovery curve that most airlines around the world are planning," he said.
"Further, because of the likely ongoing concerns from some traveller segments such as corporations for business travellers, most airlines don't believe that historical price stimulation will necessarily work here to help accelerate the recovery."
At last, some analysis by someone who does have a clue as to where this is all headed.

Clearly not towards earnings of $1.2 billion in FY 2022.
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