Godfrey: No Deal with Tesna
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Godfrey: No Deal with Tesna
Virgin Blue site. .<a href="http://www.virginblue.com.au/" target="_blank">http://www.virginblue.com.au/</a>
22nd February 2002
VIRGIN BLUE AND TESNA AGREE TO GO THEIR OWN WAY
. .STATEMENT BY VIRGIN BLUE CHIEF EXECUTIVE OFFICER BRETT GODFREY
"In recent weeks, Virgin Blue and Tesna have held discussions focusing on a variety of options including the merger of the two airlines.
Virgin Blue has determined that both its financial interests as well as the future needs of its staff and customers is best served by remaining independent.
At the same time, we believe Tesna has valid reasons to pursue its own goals.
Our decision should not be interpreted in any way as a statement about Tesna or its business plan. The talks that took place were both professional and amicable. Our airline was built and was profitable in a three, and even a four, airline environment. We have always welcomed healthy competition and we wish them well in their endeavour.
Virgin Blue will stick to the strategy that it has maintained since day one - offering top quality low fare service to millions of people across the country.
In the history of global commercial aviation, Virgin Blue is one of only a few start-up carriers to return a consistent and growing profit in only its first 18 months.
In addition, if one looks around the world today, the airlines that are clearing succeeding are those that have stuck to the consumer friendly Southwest low fare model.
While Virgin Blue is presently the second largest airline in the country, we believe our people make us Australia's number one airline when it comes to service.
With the most modern fleet in Australia and the tremendous enthusiasm of the over 1500 Virgin Blue staff, we believe there is nothing that can stop us from providing our low fare, high quality service to more and more of Australia."
[ 22 February 2002: Message edited by: Wirraway ]</p>
22nd February 2002
VIRGIN BLUE AND TESNA AGREE TO GO THEIR OWN WAY
. .STATEMENT BY VIRGIN BLUE CHIEF EXECUTIVE OFFICER BRETT GODFREY
"In recent weeks, Virgin Blue and Tesna have held discussions focusing on a variety of options including the merger of the two airlines.
Virgin Blue has determined that both its financial interests as well as the future needs of its staff and customers is best served by remaining independent.
At the same time, we believe Tesna has valid reasons to pursue its own goals.
Our decision should not be interpreted in any way as a statement about Tesna or its business plan. The talks that took place were both professional and amicable. Our airline was built and was profitable in a three, and even a four, airline environment. We have always welcomed healthy competition and we wish them well in their endeavour.
Virgin Blue will stick to the strategy that it has maintained since day one - offering top quality low fare service to millions of people across the country.
In the history of global commercial aviation, Virgin Blue is one of only a few start-up carriers to return a consistent and growing profit in only its first 18 months.
In addition, if one looks around the world today, the airlines that are clearing succeeding are those that have stuck to the consumer friendly Southwest low fare model.
While Virgin Blue is presently the second largest airline in the country, we believe our people make us Australia's number one airline when it comes to service.
With the most modern fleet in Australia and the tremendous enthusiasm of the over 1500 Virgin Blue staff, we believe there is nothing that can stop us from providing our low fare, high quality service to more and more of Australia."
[ 22 February 2002: Message edited by: Wirraway ]</p>
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Sat "Weekend Australian"
Scene set for battle of the skies. .By Steve Creedy and David Nason . .February 23, 2002
VIRGIN Blue and the Lindsay Fox-Solomon Lew Tesna consortium last night ended merger talks, setting the stage for a three-way battle for Australia's skies.
The two disagreed on market strategy; Tesna insisted on a full-service airline and Virgin stuck with its budget model.
Virgin said it had determined that its financial interests, and the future needs of its staff and customers, were best served by remaining independent.
"At the same time, we believe Tesna has valid reasons to pursue its own goals," the airline said.
"Our decision should not be interpreted . . . as a statement about Tesna or its business plan. The talks that took place were both professional and amicable," the airline said.
Tesna spokesman Michael McLeod said the failure of the negotiations would have no impact of the Fox-Lew plans to resurrect Ansett.
"The agreement to engage in discussions with Virgin Blue was always based on the clear understanding that Tesna would remain committed to the completion of a sale agreement with the administrators of Ansett," Mr McLeod said.
"We now advise no agreements of any kind have been reached and the discussions have been terminated.
"Virgin Blue and Ansett will participate in a three-airline market, and compete for customers and market share consistent with their respective business plans."
Mr McLeod said he was not disappointed the talks had collapsed.
"At the end of the day, Virgin's view of the market, and what you have to do to get significant market share, is different to ours," he said.
He said the central issue for the Australian aviation market – for both operators and consumers – was the overwhelming market dominance of Qantas.
"Tesna holds the unambiguous view that the Australian market is fundamentally different to the US and European markets in terms of both the scale and relative costs," he said.
"Therefore, the opportunities for value-based airlines to be anything other than niche players is limited."
A statement from Virgin said it had always welcomed healthy competition and could be profitable in a three- or four-airline environment.
It noted it was one of only a handful of start-up airlines to return a growing profit in the first 18 months.
It would stick to the strategy it had maintained since day one, offering quality, low-fare service.
"In addition, if one looks around the world today, the airlines that are clearly succeeding are those that have stuck to the consumer-friendly, low-cost, South-West model," it said.
Tesna is expected to go to the Federal Court on Monday and reveal its plans for completing the sale.
It said last night it remained committed to the completion of the sale.
Scene set for battle of the skies. .By Steve Creedy and David Nason . .February 23, 2002
VIRGIN Blue and the Lindsay Fox-Solomon Lew Tesna consortium last night ended merger talks, setting the stage for a three-way battle for Australia's skies.
The two disagreed on market strategy; Tesna insisted on a full-service airline and Virgin stuck with its budget model.
Virgin said it had determined that its financial interests, and the future needs of its staff and customers, were best served by remaining independent.
"At the same time, we believe Tesna has valid reasons to pursue its own goals," the airline said.
"Our decision should not be interpreted . . . as a statement about Tesna or its business plan. The talks that took place were both professional and amicable," the airline said.
Tesna spokesman Michael McLeod said the failure of the negotiations would have no impact of the Fox-Lew plans to resurrect Ansett.
"The agreement to engage in discussions with Virgin Blue was always based on the clear understanding that Tesna would remain committed to the completion of a sale agreement with the administrators of Ansett," Mr McLeod said.
"We now advise no agreements of any kind have been reached and the discussions have been terminated.
"Virgin Blue and Ansett will participate in a three-airline market, and compete for customers and market share consistent with their respective business plans."
Mr McLeod said he was not disappointed the talks had collapsed.
"At the end of the day, Virgin's view of the market, and what you have to do to get significant market share, is different to ours," he said.
He said the central issue for the Australian aviation market – for both operators and consumers – was the overwhelming market dominance of Qantas.
"Tesna holds the unambiguous view that the Australian market is fundamentally different to the US and European markets in terms of both the scale and relative costs," he said.
"Therefore, the opportunities for value-based airlines to be anything other than niche players is limited."
A statement from Virgin said it had always welcomed healthy competition and could be profitable in a three- or four-airline environment.
It noted it was one of only a handful of start-up airlines to return a growing profit in the first 18 months.
It would stick to the strategy it had maintained since day one, offering quality, low-fare service.
"In addition, if one looks around the world today, the airlines that are clearly succeeding are those that have stuck to the consumer-friendly, low-cost, South-West model," it said.
Tesna is expected to go to the Federal Court on Monday and reveal its plans for completing the sale.
It said last night it remained committed to the completion of the sale.
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So the time has finally arrived - FLEW must put their money where there mouths have been for the past four months.
No Singapore Airlines, no government handouts and no Virgin crutch to kick start them.
Interesting times indeed!
No Singapore Airlines, no government handouts and no Virgin crutch to kick start them.
Interesting times indeed!
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If Godfrey's report is the complete story, it is a real disappointment because there will only be two major operators in the longer term.
One will be QF/Australian Airlines, the other AN or DJ.
How will DJ survive a long term fare war which now seems inevitable ? Together, AN / DJ would have really troubled QF.
Dixon must be laughing all the way to the bank now, with little competition to the huge market share they now enjoy.
Surviving on cash flow alone will severely limit the future size of Virgin's operation. Loss of capacity to AN will immediately be reflected in reduced yields to DJ. With their operating margins unknown to the market, I wonder how just long they can continue after AN resumes in full.
Where does SQ stand in all this - prepared to back Ansett or through Dick Branson to Virgin Blue? Or have they had enough in Australia at the present.
Once the public gets a whiff of doubt about the viability of any carrier, passengers will desert in droves, given the recent aviation history in Australia.
AN will go the distance if FLEW put up the cash reserves they say are available. They also have the terminals, the infrastructure, and very importantly, a very advantageous cost base.
The next six months will see a very different Ausralian aviation landscape.
One will be QF/Australian Airlines, the other AN or DJ.
How will DJ survive a long term fare war which now seems inevitable ? Together, AN / DJ would have really troubled QF.
Dixon must be laughing all the way to the bank now, with little competition to the huge market share they now enjoy.
Surviving on cash flow alone will severely limit the future size of Virgin's operation. Loss of capacity to AN will immediately be reflected in reduced yields to DJ. With their operating margins unknown to the market, I wonder how just long they can continue after AN resumes in full.
Where does SQ stand in all this - prepared to back Ansett or through Dick Branson to Virgin Blue? Or have they had enough in Australia at the present.
Once the public gets a whiff of doubt about the viability of any carrier, passengers will desert in droves, given the recent aviation history in Australia.
AN will go the distance if FLEW put up the cash reserves they say are available. They also have the terminals, the infrastructure, and very importantly, a very advantageous cost base.
The next six months will see a very different Ausralian aviation landscape.
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My thoughts are that by the end of the year it will be QF with either Virgin or Ansett flying, my money is on Virgin. . .Makes me wander about those pilots who were offered a job by QF and then turned it down to go back to Ansett. <img src="rolleyes.gif" border="0">
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Consider this strobes-on, rumour has it that one of the major investors has indicated they may pull out if AN didn't strike a deal with VB. Secondly, VB's seat mile/kilometer cost is 8 cents whereas AN's is more like 12 cents..apparently. AN may have cash reserves but they will continue to be bled away if they drop their revenue per seat mile sufficiently low enough to force VB into a loss making position. VB can operate all day long at a yield of 8 cents per seat mile/kilometer and not lose money. This argument that FLEW have all this wonderful infrastructure to support their airline is rather flawed. They also have to pay for it all and do so while trying to run VB out of town. There may be a market out there for FLEW to compete in but it isn't at the low cost end of town. They would be far better trying to get their market share from QF and not VB. They will not survive a price war with VB. I suspect FLEW know that and thats why THEY approached Branson to discuss a deal.
[ 23 February 2002: Message edited by: sprucegoose ]</p>
[ 23 February 2002: Message edited by: sprucegoose ]</p>
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Strobes....my main reasons are:. .1. Both QF and Virgin have built up a pretty solid customer base. Ansett has to start all over again and will not be offering anything particularly new.. .2. There will be a lot of people out there who will shy away from Ansett with its reputation of being "on again off again".. .3. Loyalty I believe will have gone out the window after the way they treated passengers when they went bust. Look at the fuss that frequent fliers made. Qantas carried about 60,000 Ansett Pax for free and another 50,000 at very reduced fares, not many of them will be keen to go back to Ansett.. .I may be wrong, but those are my reasons.
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Saturday morning, Flt 12, MEL-SYD, 115 pax, Flt 27, SYD-MEL, 136 pax. No advertisement, no inflight service, no frills. Just ontime reliable service with customers walking out of the terminal with their bags ten minutes after the scheduled arrival time. Ansett will be back in the air going full throttle. Would say that Messers Branson/Godfrey have made a bad move.
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Thumbs - you don't have to be a genius to see how an alliance of DJ & AN could have put up some resistance to the massive Qantas "machine".
AN (if it ever gets up) will be on it's lonesome now and trying to compete with no "war chest", very little market share and a distinct lack of consumer confidence.
I have only been an observer of the airline industry for about 30 odd years and I don't believe Ansett's position represents longevity.
DJ on the other hand has a solid consumer base, positive market share and are making money. A little "scratch my back and I'll scratch yours" would have been very healthy between AN & DJ and for the travelling public of Australia as well.
Looks as though DJ is of the opinion (as is everyone else except the administrators) that AN would not be a good investment and has decided to stay with the status quo.
AN (if it ever gets up) will be on it's lonesome now and trying to compete with no "war chest", very little market share and a distinct lack of consumer confidence.
I have only been an observer of the airline industry for about 30 odd years and I don't believe Ansett's position represents longevity.
DJ on the other hand has a solid consumer base, positive market share and are making money. A little "scratch my back and I'll scratch yours" would have been very healthy between AN & DJ and for the travelling public of Australia as well.
Looks as though DJ is of the opinion (as is everyone else except the administrators) that AN would not be a good investment and has decided to stay with the status quo.
Nunc est bibendum
Okie, QF411 SYD-MEL, a few minutes late, ten empty seats (out of 230), all got served brekky (I think!).
The numbers of backsides on seats mean ZILCH!
The numbers of backsides on seats mean ZILCH!
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SOPWITH.. . Your points 1 and 3 are somewhat contradictory.QF and DJ at the moment do enjoy a good customer base because AN at the moment don't.Apart from being engrossed in collecting loyalty points people will pay for the cheapest service in line with the service they want.AN will be no where near the Airline they used to be and FLEW could have pulled out at any time but they have remained commited.. .Point two does have a lot of merit.There will be a lot of our ex loyal customers who we may never see again but on the other side there is a total commitment to the new start up from a lot of our ex customers including Star Allience.
SPRUCY.. .You are indeed a man in the know.Previous posts about Virgin rumours incurred the wrath of Woomera.The man in the wooley sweater himself told us that Goldman Sacks (or whatever your bankers are called)contacted him in December about Virgin,and if one of the major investers was to pull out unless a deal with Virgin was struck,well why wouldn't he pull out anyway and buy Virgin himself if it was such a good investment?.I may be incorrect about seat/km costs but I would expect that Impulse had costs on par or lower than Virgins's and look what happened to them!!.. .Ansett with Tesna are not taking this lightly ,all will be revealed soon.QF and DJ will not be dealing with a light weight.Tesna's stategy is to win back market share by reclaiming customers from BOTH Airlines.. .Sprucy, we both know that it would be an odds on bet that only one of us will be flying in a years time,if I had my way I would have liked us to merge, amalgamate, or something.It seems that that won't be the case and soon the fight to the death will begin. Good Luck to both.
SPRUCY.. .You are indeed a man in the know.Previous posts about Virgin rumours incurred the wrath of Woomera.The man in the wooley sweater himself told us that Goldman Sacks (or whatever your bankers are called)contacted him in December about Virgin,and if one of the major investers was to pull out unless a deal with Virgin was struck,well why wouldn't he pull out anyway and buy Virgin himself if it was such a good investment?.I may be incorrect about seat/km costs but I would expect that Impulse had costs on par or lower than Virgins's and look what happened to them!!.. .Ansett with Tesna are not taking this lightly ,all will be revealed soon.QF and DJ will not be dealing with a light weight.Tesna's stategy is to win back market share by reclaiming customers from BOTH Airlines.. .Sprucy, we both know that it would be an odds on bet that only one of us will be flying in a years time,if I had my way I would have liked us to merge, amalgamate, or something.It seems that that won't be the case and soon the fight to the death will begin. Good Luck to both.
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Don't get too cocky Keg, it's common knowledge that QF have huge problems with on-time performance in Sydney at the moment. You can look down the QF end at any time of the day and see a grid lock of aircraft waiting on the taxi-ways. A mate went to Sydney the other day at .8 with an 80kt tailwind only to be passed ( with much help from ATC) by a QF 767 that had departed off 27 the same time AN went off 34 with a speed waiver, he must have been doing at least .83/84,any way to get to the point, my mate landed, parked, got off and walked to the crewroom and was amused to see the very same QF 767 still waiting on the taxi-way, some 12 minutes later. This is an everyday event and the business men hate it. A lot of the corporate guys are longing for the new Ansett.. .Don't get too cocky mate, QF have had it handed to them on a platter recently, not unlike your Airline career when you were in High School. Weren't your marks good enough to be a Doctor? you must be such a disapointment to Daddy!!
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Did you notice the God Brettfry's statement was very unlike the typical "stuff the rest of you, we are ok jack" Virgin type press release.
"At the same time, we believe Tesna has valid reasons to pursue its own goals".
A merger was never going to happen. BUT, take a look at the Impulse/QF operation and you will get the idea (DJ and AN can operate as commercial partners without merging the operations - this would be pointless anyway)
Sounds to me like the DJ statement is leaving the door open for a future friendship.
[ 23 February 2002: Message edited by: oicur12 ]</p>
"At the same time, we believe Tesna has valid reasons to pursue its own goals".
A merger was never going to happen. BUT, take a look at the Impulse/QF operation and you will get the idea (DJ and AN can operate as commercial partners without merging the operations - this would be pointless anyway)
Sounds to me like the DJ statement is leaving the door open for a future friendship.
[ 23 February 2002: Message edited by: oicur12 ]</p>
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Sorry Thumbs........can't see where 1 & 3 are contradictory. I don't believe that "Star" will provide that much traffic, after all the International Airlines loads are down.. .Ansett have created a lot of hurdles for themselves and in my mind they have an almost impossible task ahead.
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BB has a point regarding on-time departures,. .presuming AN launches ok, the 1st thing their. .advertising will claim is 99% on-time or. .earlier for the past couple of months, I regulaly. .check MEL and it is a fact, take today as an. .example to see for. .yourself.. .<a href="http://www.melair.com.au/index.asp" target="_blank">web page</a>
. .Wirraway
[ 23 February 2002: Message edited by: Wirraway ]</p>
. .Wirraway
[ 23 February 2002: Message edited by: Wirraway ]</p>