Disclaimer:

I am now a substantially minor shareholder of VB... therefore... everything I post or say in this thread from now on is motivated by a selfish greedy desire to not-so-subliminally coerce as many of you as I can to buy rediculously huge parcels of shares in VB at unfairly high prices so as to abnormally drive the price of VB up to insanely high levels whereupon you can expect me to sell the whole lot without any warning and retire to a beach in the Bahamas... :E

End of disclaimer.

Irrespective of any "war chest" that Virgin Blue may have, there must now be serious concerns at just how VA is going to survive with the current global financial turmoil striking new uncharted lows.

This must impact on the overall Virgin Australian operation and with dwindling share prices and asset values, gold and cash are kings right now - and if Virgin's cash runs out, will there be anyone left to pick up the pieces?:confused:

I am certainly not anti Virgin and accept neither QF or TT is immune from any of this. The strongest will survive. But it is pretty scary stuff right now.

Yes I agree Led that now may not be the most opportune time to lanch a new route with a new aircraft to an economy which is rooted.

Today will be an interesting day on the ASX sharemarket judging by the turmoil on the DOW, and especially for VBA. Im picking their shareprice may even drop below 30c when the markets open.

SkySurfin - how true.

I have copped flack numerous times whenever I write a seemingly balanced posting on this forum and criticise either Brett Godfrey or Virgin Blue.

As I have said before and I'll say again, Brett Godfrey has handled himself poorly in the running of this airline and the share price reflects that.

VB has gone from being a "Low cost carrier" (keeping the air fair[?]) to being a "New world carrier" (whatever the $%ck that is!), purchased a new aircraft fleet to spread into the regional market and now at the worst possible time he is setting up an expensive venture to operate into a rapidly declining and collapsing market in the USA while their share price has been reduced to almost junk-bond status!

As has been mentioned before certain very well respected airline analysts have said that the only way VB can survive is to firstly cancel their V Australia plans to the USA (which will incur heavy losses), cut out loss making routes and reduce their fleet by about 30% by concentrating on major trunk routes where the returns and profit are.

I copped alot of flack for that one when the share price was about 40% higher!

Godfrey has whinged and whined incessantly and blamed everyone for his company's problems.
If it's not CASA, its Qantas, its Geoff Dixon, its Sydney Airports, its Macquarie Bank, its the Government, its Analysts, its Jetstar, its ........... you get the picture.

About 3 years ago when the share price dipped to $1.75 after the announcement of bad results I copped a fair bit of abuse also.
Now the share price is set to drop to about 30 cents.

I would be very very very concerned if I were working for Virgin Blue.

Godfrey's ability or lack thereof will be further tested in the next few months.

Undisputed Timee absolutely undisputed. Till there is a change in direction which will only come with management/Board change the present course will remain.............VB does seem headed towards a very rocky coastline!

Don't forget as at 30 JUN 08 VB held cash reserves of $604,000,000. The net assets of VB were on 30 JUN 08 $925,300,000 valuing the company at $0.88.

At the same time QAN held cash reserves of $2,599,000,000. The equity minus debt of QAN $1,331,000,000 values the company at $0.70. QAN currently trading at 4 x that.

This is my interpretation of the figures and please point out my mistakes if I have made any.

QAN in the last twelve months increased net debt by $429,000,000 and reduced its net operating cash flow by $296,000,000 some $725,000,000. Yet none of you are questioning this because your brokers and the majority of readers here all have large interests in the QAN group and cannot afford for this company to take a dive. I would ask the question has QAN paid dividends from borrowings. Something that has been going on on Wall St with disastrous results.

The other question should be asked about QAN's share price and when is it going to take a beating?

TIMMEEEE,

Finaly someone who can see the wood from the tress, the S%^T from the clay. If some serious management changes are not made, which won't happen because Camp Davidian is so arrogant and pig headed, this airline will be broke in 18 months. They do not have the cash reserves to survive a protracted down turn in the global markets and a sustained high oil price. And now they are starting an International airline to the heart of the melt down. Great timing boys. I reckon Tiger will benefit from the the collaspe of VB, like Vb did with the collaspe of AN. VB boys and gals, get your CV and Log book up to date, there's going to be a melt down.

Agree with greenslopes TIMMEEEE.

I recall some time ago questioning the wisdom of DJ going down the path of fleet diversification. The collapse of Ansett aside, the low cost model and single type fleet has led to a fundamental change in domestic air travel in this country. Whether or not this change was one for the better sometimes depends on who you speak to. The fact is however, more Australians than ever before are flying, and airfares are approx 50% of what they were 10 years ago. That's gotta' be a good thing.

From an initial capitalisation of $50 mil (correct me if I'm wrong) DJ grew to become a market leader in the market they were designed for. I hope the doomsayers are wrong, but the factors appear to be adding up. And as far as VA is concerned, I think they may now have more problems than just attracting quality staff and crew!

I was quite suprised by the "Changes" they made to their airline back in June. They only cut a few services, then just put those extra planes on other routes (ie- To Pacific Blue), and just adding a $8 surcharge???
Godfrey vowed:
:hmm:
:eek:

Well, if this stubborn managment wont accept whats going to happen, Its time to go Virgin.

Dirty, TIMMEEEEE,

DJ's management/Board actions and inaction can perhaps be described by what is loosely termed the 'Arrogance of Ignorance'.

It seems they actually believe their own rhetoric and therefore will prove the rest of the world wrong! Psychologists have a wonderful term for this type of mental disorder 'Narcissism' ('an exceptional interest in or admiration for oneself'). The name comes from Greek mythology where Narcissus was so rapt in his own beauty that he fell into a pool (while admiring the reflection of his image) and drowned.

With the Global financial sector meltdown, all businesses worldwide are operating in changed and uncertain circumstances. The only SAFE way to proceed is conservatively and with minimal risk and these notions seem to be alien to the DJ managerial psyche.

People have short memories. The original (conservative) DJ LCC 'no frills' model ONLY SUCCEEDED on the back of the Ansett collapse. Had this not occurred DJ could easly have failed 7 years ago.

Godfrey and Co obviously learned nothing from that experience as they have assembled a 'house of cards' the with level of exposure built into their current business plan which seems to naively assume the airline business environment is stable!!

'Narcissism' ('an exceptional interest in or admiration for oneself').
You hit the nail on the head Oracle!

I like to call HQ "Camp Davidian" myself, it suits the David Coresh style of management well, if I cannot win, I will burn the place down. And everyone follows the leader blindly.

"Cesar, Rome is falling"

"Get the wine out, lets throw an 8th year Empire Party"

"But Cesar, we cannot pay the troops"

"Well, feed them some cake"

given fuel prices have come down - and usually in a downturn companies choose to put staff ont he cheapest airline of the day, surely that would benefit DJ on it's business routes?

ANstar -

I don't think fuel is the issue right now.It's gone way beyond that. The problem with Virgin Blue is brand identification, the E-jet introduction, sustaining the VA start up while trying to make money on international routes to a sinking economy in the grips of a recession.

The apparent largesse at Virgin headquarters smacks of a company whose management has lost the plot completely.

VA will probably gulp any cash reserves the group has as a sinking fund. As has been said elsewhere - in a state of declining asset and share prices, the situation that Virgin now finds itself in is very troubling.

My views only - hope I'm proved to be wrong.

wirgin, i'm unsure of how you came to the figure of .70c value of QF shares when the actual asset value of each share was stated at $2.95 in the prelim annual report (as was VB at 88c). QF is trading only slightly above that figure and is more bouyant as their fundamentals are better for the long run (corporate size/route viability/competition/fuel hedging policies etc...). QF has also talked up their readiness to conserve and cut back if needed, giving a sense of control during the turmoil.

Also the liabilities being quoted are only this years debts, the non-current (long term) liabilities must be taken into account as VB has almost $1.4 billion worth of interest bearing liabilities long term to be addressed, this alone is a very worrying factor if cashflow difficulties are encountered.

The $600 million cashflow 'reserve' was created with borrowings of $700 million not all revenue cash.

I totally agree with this. Brett Godfrey said at the time the startup of V Oz was announced, that a single SYD-LAX B773ER sector risked the same amount of money as 53 B737 domestic sectors. To risk such large sums of money at a time when the international market is shrinking is very worrying for DJ shareholders. It may be smarter to delay the startup of V Oz for a couple of years when the market should be in a growth cycle, however, that would involve writing off some of the money already invested in setting it up - something that the Board would be reluctant to do.

All,

Perhaps the lack of definitive action from the DJ Board and Management with respect to the global situation has a simple explanation.

Could it be that like the media reports of householders on limited incomes around Australia's 'mortgage belt' who are now so overcomitted they can't service their debts, that DJ similarly is so locked into the penalty cancellation costs of it's business plan for E-Jets/VA and the sustaining fleet, that any significant wind back could be the trigger for a cataclysmic business meltdown?

Food for thought!!

I had a conversation with a QF middle management type a while back and he old me that QF would not want VB to go under. He said that they are comfortable with VB as the other side of the duopoly and VB's demise would most likely bring leaner/tougher competition.
As I don't know the first thing about airline management/policy etc, I would like to know what you folk think of that statement.
Cheers.

Going boeng said:

"It may be smarter to delay the startup of V Oz for a couple of years when the market should be in a growth cycle,"

Agree 100%. On a much smaller scale, and due to somewhat different circumstances, REX were similarily warned about it's foray into QLD. Blind freddy could see that the chronic shortage of pilots would mean a robbing of the established and money making routes if it were to have any chance at all. Shortly after it began, they were forced to pull the plug, and only after more serious damage than if they had not gone there in the first place!

At a social function some time later, the REX Strategic planner was heard to say, We had to go into QLD because it had gone so far that to cancel before it begun would have been unthinkable!

Lets hope for all the good people at DJ, and those looking at VA, that this sort of mindset is limited to only one group of airline managers?

Well broader market sentiments withstanding it was indeed a big day out for VBA today:

Closed at 0.315 cents

On a volume of 13,025,439

With a High of 0.38c and a Low of 0.315c

Or down 6.5 cents for the day.

They were down 2.5-3c most of the day and softened during the afternoon to close on their low for the day.