Brett Godfrey transcript "Business Sunday"
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Brett Godfrey transcript "Business Sunday"
NineMSN-"Business Sunday"
VIRGIN BLUE'S PROGRESS . . . .10 February 2002 . . . .Michael Pascoe . . . . "There is a couple of high profile individuals there that you know have got some credibility on the line now..." . . . . . .So, will Ansett fly under new ownership, or will it merely fade away as the attempt by the two Marks from administrators Andersons falters on the failure of Lindsay Fox and Solomon Lew to complete the deal?
Who knows, with this tangled and still evolving corporate soap opera … which may still end in tears?
But for Virgin Blue — that upstart everyone said wouldn't last — the prospect of Ansett flying or not flying seems immaterial, as Michael Pascoe found when he spoke to CEO, Brett Godfrey, in Brisbane this week.. . . . . . . . . . . . . .BRETT GODFREY, VIRGIN BLUE CEO AND MICHAEL PASCOE
. .BRETT GODFREY, CEO VIRGIN BLUE: I still think it is a little bit unsettled Michael. I guess particularly with Tesna delaying their start until possibly the end of this month, that leaves a great deal of uncertainty for a lot of people and the employees of Ansett Mk II, ourselves and our positioning and Qantas, I’m sure for that matter as well.
REPORTER: And what about the customers?
GODFREY: Oh, the customers I think are being pretty well served you know. We’ve always said that the market is, there’s planes flying out there today that aren’t full. We’re not in the best of times. I mean September 11th did have some affect here domestically, and I think people are a little bit more hesitant to put their hand in their pocket to buy a ticket these days unless they really have to, so from that point of view I think the customers are actually seeing some value as it is now any way, so fares out there are pretty rock bottom. So I don't think they’ve got too much to complain about right now.
REPORTER: So there is already excess capacity here?
GODFREY: Oh, there is but we’re in a seasonal down turn right now. I mean December/January time is very good for the airlines, February is one of the quieter months, as is say May. But I guess what I'm saying, year over year capacity we're back to where we were before Ansett went away.
REPORTER: And Virgin Blue‘s market share now?
GODFREY: It is hard to tell because we are not getting statistics because everyone is pretty much fallen behind but I’d say we’re around 12% - 13%. I mean we’ve got 16 aeroplanes and I think what is a little over 100 aeroplane market so, so it is about 12 or 13% I think at this stage, and I that's pretty good.
REPORTER: So you are not track in terms of being able to absorb the new planes you’ve got coming in?
GODFREY: Oh, yeh, we grew 350% last year, we’re not going to do that this year. We’re probably somewhere around 30%. We had a good first half profit of 8.2 million on that 350% growth. Our third quarter which is our December quarter looks like we will probably double that just in a quarter alone. You know, we've just finished the numbers there, we waiting for them to be audited so that's very, very encouraging, and we're on track to do even better this year.
REPORTER: So about a 16 million dollar profit in the December quarter you are saying?
GODFREY: There abouts, as I said it is not audited yet but that will be the approximate number I think, at least around doubling of what we did do for the first half.
REPORTER: I won’t try to raise a question about your auditors, but in terms of accounting is that on a conservative basis or …
GODFREY: That’s on Australian accounting standard principles, there’s nothing there. The realities as you know, we had about 10 million dollars worth of start up costs, which you know, a lot of airlines would traditionally advertise those over 4 or 5 years, we took the step to write them off in our first trading period and so from that point of view, we’re carrying nothing but we now talk about a profit of, you know, perhaps 16 million. That’s cash as well, so from that point of view there’s not too much more to be said, It is just a good result.
REPORTER: Tesna missed its first start update, do you think they will get air borne?
GODFREY: Well they say they are going to and so I guess that ‘s all I know. Probably about as much as you guys. Look, it’s pretty tough. I was always sceptical about first start date anyway, particularly given knowing that the airport discussions didn’t start until very close to the creditors meeting. They are complex at best of times those leases but look, they say they are going to get up. You know, there is a couple of high profile individuals there that you know have got some credibility on the line now, so I’m pretty confident they will get up.
REPORTER: Chris Corrigan doesn’t seem to be interested in buying a stake in Virgin Blue any more, is that in some way a vote of confident by him and Ansett MarkII.
GODFREY: Well it is probably only a vote of confidence in that he like us, believes that there is very likelihood they will got up. His deal wasn’t just an airline. It was taking assets and terminals in particular, and rolling it all into one. If that is not available for him to buy it is only half the package, is he still interested in it, maybe not. There reality is that we enjoyed working with the Lang Corporation, they are a smart outfit. I don’t think any doors have been shut on either side but there are not in our forefront of our thoughts at this stage in terms of how we take this business forward.
REPORTER: Is an equity position in Virgin Blue still for sale?
GODFREY: Hhem. And we’re still with 2 potential partners. Those things are taking a little bit longer simply because of the uncertainty and it is not a matter of whether Tesna gets up or whether they don’t, it is just that valuations clearly will be effected by whether they get up or whether they don’t, so I figure at this stage we’re just working through the mechanics with these 2 parties which are airline related parties, to sort of say, well what is the mechanism here that comes into play if they survive or if they don’t survive, you know in terms of the value. So I’m pretty confident we’ll do something in the new term, and if not I still believe that on the value or the profitability we’re going to generate to our March year end, which you now, people just won’t be expecting that and then with the opportunity, that was in a period of 350% growth. It is going to be less this year so that there will be less costs associated with growing pains. The margins are going to improve and the business is going to be even more viable and interesting for a potential float.
REPORTER: Is there pressure on you to sell some equity sooner rather later, given the uncertainty at the moment , does it seem best to hold off?
GODFREY: Well that is exactly right. Which is why once upon time as you recall we were talking about a majority sell down, we’re not looking at a majority sell down at all now. We’re looking at a minority stake and really the value in bringing on airline investors who are particularly savvy and well regarded throughout the industry, is let’s bring in a small slice but bring in a not so much their money but their expertise, their credibility and that helps for a new start up airline such as ourselves when we do go to the market, particularly if we floated some of it overseas in the US for instance. I’m not saying we’d do that but Virgin Blue is Virgin who in the United States, it is very much more well know here but there is a lot of money to be raised in the states for good airlines.
END
VIRGIN BLUE'S PROGRESS . . . .10 February 2002 . . . .Michael Pascoe . . . . "There is a couple of high profile individuals there that you know have got some credibility on the line now..." . . . . . .So, will Ansett fly under new ownership, or will it merely fade away as the attempt by the two Marks from administrators Andersons falters on the failure of Lindsay Fox and Solomon Lew to complete the deal?
Who knows, with this tangled and still evolving corporate soap opera … which may still end in tears?
But for Virgin Blue — that upstart everyone said wouldn't last — the prospect of Ansett flying or not flying seems immaterial, as Michael Pascoe found when he spoke to CEO, Brett Godfrey, in Brisbane this week.. . . . . . . . . . . . . .BRETT GODFREY, VIRGIN BLUE CEO AND MICHAEL PASCOE
. .BRETT GODFREY, CEO VIRGIN BLUE: I still think it is a little bit unsettled Michael. I guess particularly with Tesna delaying their start until possibly the end of this month, that leaves a great deal of uncertainty for a lot of people and the employees of Ansett Mk II, ourselves and our positioning and Qantas, I’m sure for that matter as well.
REPORTER: And what about the customers?
GODFREY: Oh, the customers I think are being pretty well served you know. We’ve always said that the market is, there’s planes flying out there today that aren’t full. We’re not in the best of times. I mean September 11th did have some affect here domestically, and I think people are a little bit more hesitant to put their hand in their pocket to buy a ticket these days unless they really have to, so from that point of view I think the customers are actually seeing some value as it is now any way, so fares out there are pretty rock bottom. So I don't think they’ve got too much to complain about right now.
REPORTER: So there is already excess capacity here?
GODFREY: Oh, there is but we’re in a seasonal down turn right now. I mean December/January time is very good for the airlines, February is one of the quieter months, as is say May. But I guess what I'm saying, year over year capacity we're back to where we were before Ansett went away.
REPORTER: And Virgin Blue‘s market share now?
GODFREY: It is hard to tell because we are not getting statistics because everyone is pretty much fallen behind but I’d say we’re around 12% - 13%. I mean we’ve got 16 aeroplanes and I think what is a little over 100 aeroplane market so, so it is about 12 or 13% I think at this stage, and I that's pretty good.
REPORTER: So you are not track in terms of being able to absorb the new planes you’ve got coming in?
GODFREY: Oh, yeh, we grew 350% last year, we’re not going to do that this year. We’re probably somewhere around 30%. We had a good first half profit of 8.2 million on that 350% growth. Our third quarter which is our December quarter looks like we will probably double that just in a quarter alone. You know, we've just finished the numbers there, we waiting for them to be audited so that's very, very encouraging, and we're on track to do even better this year.
REPORTER: So about a 16 million dollar profit in the December quarter you are saying?
GODFREY: There abouts, as I said it is not audited yet but that will be the approximate number I think, at least around doubling of what we did do for the first half.
REPORTER: I won’t try to raise a question about your auditors, but in terms of accounting is that on a conservative basis or …
GODFREY: That’s on Australian accounting standard principles, there’s nothing there. The realities as you know, we had about 10 million dollars worth of start up costs, which you know, a lot of airlines would traditionally advertise those over 4 or 5 years, we took the step to write them off in our first trading period and so from that point of view, we’re carrying nothing but we now talk about a profit of, you know, perhaps 16 million. That’s cash as well, so from that point of view there’s not too much more to be said, It is just a good result.
REPORTER: Tesna missed its first start update, do you think they will get air borne?
GODFREY: Well they say they are going to and so I guess that ‘s all I know. Probably about as much as you guys. Look, it’s pretty tough. I was always sceptical about first start date anyway, particularly given knowing that the airport discussions didn’t start until very close to the creditors meeting. They are complex at best of times those leases but look, they say they are going to get up. You know, there is a couple of high profile individuals there that you know have got some credibility on the line now, so I’m pretty confident they will get up.
REPORTER: Chris Corrigan doesn’t seem to be interested in buying a stake in Virgin Blue any more, is that in some way a vote of confident by him and Ansett MarkII.
GODFREY: Well it is probably only a vote of confidence in that he like us, believes that there is very likelihood they will got up. His deal wasn’t just an airline. It was taking assets and terminals in particular, and rolling it all into one. If that is not available for him to buy it is only half the package, is he still interested in it, maybe not. There reality is that we enjoyed working with the Lang Corporation, they are a smart outfit. I don’t think any doors have been shut on either side but there are not in our forefront of our thoughts at this stage in terms of how we take this business forward.
REPORTER: Is an equity position in Virgin Blue still for sale?
GODFREY: Hhem. And we’re still with 2 potential partners. Those things are taking a little bit longer simply because of the uncertainty and it is not a matter of whether Tesna gets up or whether they don’t, it is just that valuations clearly will be effected by whether they get up or whether they don’t, so I figure at this stage we’re just working through the mechanics with these 2 parties which are airline related parties, to sort of say, well what is the mechanism here that comes into play if they survive or if they don’t survive, you know in terms of the value. So I’m pretty confident we’ll do something in the new term, and if not I still believe that on the value or the profitability we’re going to generate to our March year end, which you now, people just won’t be expecting that and then with the opportunity, that was in a period of 350% growth. It is going to be less this year so that there will be less costs associated with growing pains. The margins are going to improve and the business is going to be even more viable and interesting for a potential float.
REPORTER: Is there pressure on you to sell some equity sooner rather later, given the uncertainty at the moment , does it seem best to hold off?
GODFREY: Well that is exactly right. Which is why once upon time as you recall we were talking about a majority sell down, we’re not looking at a majority sell down at all now. We’re looking at a minority stake and really the value in bringing on airline investors who are particularly savvy and well regarded throughout the industry, is let’s bring in a small slice but bring in a not so much their money but their expertise, their credibility and that helps for a new start up airline such as ourselves when we do go to the market, particularly if we floated some of it overseas in the US for instance. I’m not saying we’d do that but Virgin Blue is Virgin who in the United States, it is very much more well know here but there is a lot of money to be raised in the states for good airlines.
END
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So, as I've said before, it's quite clear from the final paragraph here that VB will raise cash from a floatation in the US. VB will remain as Australian as a backpacker in a Sydney Bar.
