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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 9th May 2020, 02:41
  #61 (permalink)  
 
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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.
The rates aren't that low when you add up all the allowances and extras. It would be close to if not more than what Jetstar get paid. Also the Award is based on duty hours not flight hours. Good luck finding an airline to agree to that with the length of duties and extensions available these days.
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Old 9th May 2020, 02:55
  #62 (permalink)  
 
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It's about wages and conditions and using Virgin as a platform to run it up the flag pole to see who salutes.

Be wary.
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Old 9th May 2020, 04:29
  #63 (permalink)  
 
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Originally Posted by Arctaurus View Post
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.
I would love to see the assumptions that Deloitte based that projection on but clearing $1.2 billion EBITDA off of $5 billion revenue is extraordinarily difficult to envisage.

Let's start with the likelihood of being able to achieve $5 billion in revenue in FY22. Deloitte say that that is based on FY19 revenue less 15 percent. So their $5 billion appears to be based on Virgin's FY19 revenue of $5.827 billion less 15 percent. The problem with that is 22 percent of the $5.827 billion was derived from international and anyone who thinks that international will have rebounded to 85 percent of FY19 levels by 2022 would be in a distinctly bullish minority. And nearly 10 percent of the FY19 revenue came from Tiger and I don't think that Tiger is coming back.

But leaving that aside, there's the EBITDA margin! 24 percent! The last time that Virgin had a margin like that was back in the halcyon days of 2007. Then along came international and by 2010 their EBITDA margin was down to around 16 percent. Two years later, the last time they made a profit, it was about 9 percent. Last year it was 4 percent. For comparison, Qantas's EBITDA margin for the past four years has bounced around the high teens percent mark. Not 24 percent, not even in their record year of 2016.

If you leave aside margin and just look at the requisite operational cost base required - $3.8 billion - that looks like a couple of bridges too far. Last year Virgin's operating costs came to around $5.1 billion exclusive of aircraft leasing costs. That means you've got to find $1.3 billion in savings - 25 percent - from the rest. That's a job for the big wire brush and it would not be pretty.

So, that Deloitte marketing spiel is somewhat delusional. Needless to say the bidders will have seen through it at a glance.

Last edited by MickG0105; 9th May 2020 at 06:55. Reason: Typo
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Old 9th May 2020, 05:44
  #64 (permalink)  
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That margin will require a large axe drop on the cost base. PS has pulled back what 20% of the workforce since he started? HQ will likely move to Sydney so expect another 10-20% who wonít commit.

That number will still require some large gains on the domestic front. They have peaked at 600m EBITA Dom before. I imagine the number includes Velocity. Tiger and International will never ever contribute anything of relevance so not worth a mention.

What Fuel price is that figure based on?
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Old 9th May 2020, 06:39
  #65 (permalink)  
 
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If you want to see how much they spent on fuel, airport charges, employee expenses, all you have to do is look at their latest annual report. Might save the bickering going on here.

also, in terms of what will be left of Virgin, it appears they have used around $2.3 billion of planes as collateral for interest bearing liabilities. So if those interest bearing liabilities are now basically worthless, that would mean the holders are entitled to take ownership of those planes.
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Old 9th May 2020, 06:49
  #66 (permalink)  
 
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Originally Posted by wheels_down View Post
PS has pulled back what 20% of the workforce since he started?
No, not even close. His lack of traction on that front has been just one of his signature failures.

In August last year he announced 750 jobs were going to be cut as part of a rightsizing. On the basis that he'd been there for five months at that stage most people thought that he'd have the 750 names in his back pocket or at the very least be well advanced in planning. In a 7 November 2019 piece in the SMH it was reported that most of the 750 headcount reduction would be completed by Christmas.

Depending on who you listen to, as of 1 January this year either just 140 of the mooted 750 had gone or none had gone but there were plans to cut 400 jobs by the end of March with another 350 to go by the end of June. So, much talking, little planning, less cutting.

If you turn to the FY20-H1 interim report delivered in late February, subsequent to announcing the 750 'rightsizing' employee costs went up by $42 million (6.3 percent). After you allow for redundancy payments for the 140 that were meant to have been exited, the Schuster bonus and EBA escalators, there's still $10 million in additional employee costs that is unaccounted for. That seems to suggest that they added headcount. There was no hiring freeze in place prior to the COVID-19 crisis biting.

Subsequent to the coronavirus crisis emerging they've apparently made 1,000 people redundant, likely some of the 750 plus the Tiger and NZ-based staff. That seems to gel with the headcount numbers that Deloitte is bandying around (9,020 employees). So, all up pre- and post-crisis they've managed to reduce headcount by about 10 percent with the vast majority of that reduction occurring post-crisis.


Originally Posted by wheels_down View Post
HQ will likely move to Sydney so expect another 10-20% who won’t commit.
I wouldn't be too sure about head office moving but, in any event, just how many people do you think are employed in the Village? My understanding is that there's only about 1,000 people there.


Originally Posted by wheels_down View Post
What Fuel price is that figure based on?
Yeah, good question. Just back of the napkin it has to be something like $US50 a barrel.

Last edited by MickG0105; 9th May 2020 at 06:53. Reason: Formatting
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Old 9th May 2020, 10:07
  #67 (permalink)  
 
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Grrr

For 'what', It is Not worth- it has been 'reported' (allegedly/apparently) -

1/ 'Said', "Note Holders"- not 'that' freekin Happy/Impressed, with NIL Inclusion on the 'Committee of Inspection'.....

2/ 'Apparently'- a veritable onslaught of 'New' (revised)- Confidentiality Agreements, being 'Sprayed' around at this time.............., go figure?????

Shall, keep it Blunt/Descriptive, for this...., per chance 'is' the model being flogged, the one Paul...........
Rgds all
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Old 9th May 2020, 10:51
  #68 (permalink)  
 
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Originally Posted by Section28- BE View Post
For 'what', It is Not worth- it has been 'reported' (allegedly/apparently) -

1/ 'Said', "Note Holders"- not 'that' freekin Happy/Impressed, with NIL Inclusion on the 'Committee of Inspection'.....

2/ 'Apparently'- a veritable onslaught of 'New' (revised)- Confidentiality Agreements, being 'Sprayed' around at this time.............., go figure?????

Shall, keep it Blunt/Descriptive, for this...., per chance 'is' the model being flogged, the one Paul...........
Rgds all
S28- BE
Gas turbine blades of conventional rotorcraft turboshaft engines are optimized to operate at nearly a fixed speed and a fixed incidence angle. If the operating condition of the engine changes, then the flow through the turbine may need to be guided to a more optimum direction.

One way to do this is with variable turbine nozzle geometry. But this standard method has some disadvantages including increased weight and complexity, as well as a limited operating range since the nozzle vanes can only be turned to a certain point before severe flow incidence angles disrupt the rotating blades downstream.
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Old 9th May 2020, 11:01
  #69 (permalink)  
 
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Originally Posted by Section28- BE View Post
For 'what', It is Not worth- it has been 'reported' (allegedly/apparently) -

1/ 'Said', "Note Holders"- not 'that' freekin Happy/Impressed, with NIL Inclusion on the 'Committee of Inspection'.....

2/ 'Apparently'- a veritable onslaught of 'New' (revised)- Confidentiality Agreements, being 'Sprayed' around at this time.............., go figure?????

Shall, keep it Blunt/Descriptive, for this...., per chance 'is' the model being flogged, the one Paul...........
Rgds all
S28- BE
On Point 1/, and rightly so. Unsecured bondholders are owed $2,000 million (roughly one third of total debts) and have zero representation on the Committee of Inspection; employees are owed $450 million and have 11 representatives on the CoI (roughly one third of the committee of 35).

Dot - unions raise no objection to the appointment of Strawbridge et al (Deloitte) as Administrator.

Dot - Strawbridge announces no plans for redundancies or changes to employment during administration.

Dot - Employee representatives (10 unions plus Virgin's Chief Legal and Risk Officer) make up one third of CoI

I'm sure there's some joining to be done there somewhere.

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Old 9th May 2020, 11:07
  #70 (permalink)  
 
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Got-Ya 'Blackout'............., well done.

You, would Know- Sister.
Rgds
S28

Last edited by Section28- BE; 9th May 2020 at 11:11. Reason: Blackout- ident.
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Old 9th May 2020, 11:18
  #71 (permalink)  
 
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Originally Posted by Blackout View Post
Gas turbine blades of conventional rotorcraft turboshaft engines are optimized to operate at nearly a fixed speed and a fixed incidence angle. If the operating condition of the engine changes, then the flow through the turbine may need to be guided to a more optimum direction.

One way to do this is with variable turbine nozzle geometry. But this standard method has some disadvantages including increased weight and complexity, as well as a limited operating range since the nozzle vanes can only be turned to a certain point before severe flow incidence angles disrupt the rotating blades downstream.
That appears to draw directly enough from Murugan, Muthuvel; Ghoshal, Anindya; Bravo, Luis; Xu, Fei; Hsu, Ming-Chen; and Bazilevs, Yuri, "Articulating Axial-Flow Turbomachinery Rotor Blade For Enabling Variable Speed Gas Turbine Engine" (2018). Mechanical Engineering Conference Presentations, Papers, and Proceedings. 195. to require a citation, no?
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Old 9th May 2020, 11:29
  #72 (permalink)  
 
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Orrrrh- 'Cut & Paste'........., could not be so.

Rgds
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Old 9th May 2020, 11:52
  #73 (permalink)  
 
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Thumbs up

Originally Posted by MickG0105 View Post
That appears to draw directly enough from Murugan, Muthuvel; Ghoshal, Anindya; Bravo, Luis; Xu, Fei; Hsu, Ming-Chen; and Bazilevs, Yuri, "Articulating Axial-Flow Turbomachinery Rotor Blade For Enabling Variable Speed Gas Turbine Engine" (2018). Mechanical Engineering Conference Presentations, Papers, and Proceedings. 195. to require a citation, no?
Still -'Serves' its 'Purpose' as a- 'Metaphor' -moving 'FORWARD'.
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Old 9th May 2020, 17:13
  #74 (permalink)  
 
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Originally Posted by Paragraph377 View Post
You canít compare VA with QF. Itís like comparing a vagina to a dick..
I love this thread, this made me LMAO, thanks P377
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Old 9th May 2020, 23:23
  #75 (permalink)  
 
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Originally Posted by Blackout View Post
Still -'Serves' its 'Purpose' as a- 'Metaphor' -moving 'FORWARD'.
Yes, I had a fair idea of what you were getting at, I was just looking out for poor old Murugan et al.
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Old 10th May 2020, 01:22
  #76 (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???????
so my 2 cents .....

QF & VA had way too many staff getting paid too much, BUT QF had larger share of corporate market, who pay top dollar.

You only had to look around at airports, with many well paid staff, standing around doing stuff all between flights.

New QF will have less staff probably being paid less or paid same but with more required (not saying necessarily pilots will work more hours).

New VA, if it gets up (can the administrators stuff it up ? Looks possible) will have a huge haircut in terms of staff & pay & conditions, otherwise a totally new airline will pick up either B737 or A320 aircraft leases for a song & pay nothing like QF/VA have in the past.

A new airline will only have to fly trunk routes more frequently than JQ & have cheaper fares than QF. Govts might have to subsidise non-trunk routes or JQ will fly them at higher fares, which will hurt tourism industry recovery in the regions.

Plenty of experienced ex VA & other airline staff, who would work for a lot less than they were getting, as have mortgages etc.

A new airline might start slowly, hiring only as needed, but in this new world, they could probably start with 6-8 aircraft or less, doing triangle only to offer a schedule better than JQ. Remember JQ will never fly frequently on the golden triangle or will be competing with QF.

What did Virgin Blue start with ? 2 x ex AN B734s wasn't it ? BNE/SYD only ?

Seem to be plenty of venture capitalists around with plenty of cash to fund it. Wouldn't be surprised if some of pay of any new airline was either shares or % of profit.
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Old 10th May 2020, 01:48
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Remember JQ will never fly frequently on the golden triangle
I wouldn't be so sure of that in the future if a new airline such as your describing gets up. Qantas will compete head to head using JQ to match any new airfares.
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Old 10th May 2020, 01:49
  #78 (permalink)  
 
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I remember an Airline that started in this country a few years ago, had only a hand full of planes of one type, the drivers started out on less $$$ than their competitors and they ran a very lean operation, even used spent paper in the printers! They did just the popular main routes tourist destinations mostly. They expanded to 14 airframes still all the one type, finally after a sucsesion of the usual CEO's CP's who thought they knew better the said Airline just started to operate on the black then along came a mother Airline who bought in to the said Airline a bit at a time and wanted to change the fleet type, synergy I think they call it, the new corporate 'in' word. From that day onwards the said Airline went backwards losing money like a kid at a lolly shop due missmanagment and a whole host of internal issues. Enter CV19, the lolly shop kid ran out of money, the mother Airline went bust".........said Airline was Tigers!
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Old 10th May 2020, 02:23
  #79 (permalink)  
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You only had to look around at airports, with many well paid staff, standing around doing stuff all between flights.
So what would you have them do? Stand them down for 20 minutes then recall them?
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Old 10th May 2020, 02:31
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Originally Posted by MickG0105 View Post
So, that Deloitte marketing spiel is somewhat delusional.
youíve seen it have you?
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