Virgin Blue/Ansett - Behind the scenes??
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Virgin Blue/Ansett - Behind the scenes??
Heresay is that when Sir Richard Branson was seen so spectacularly ripping up the infamous $250 cheque from Ansett to purchase VB that in reality behind the scenes he was very close to actually accepting the offer.
Apparently one of the senior VB managers had his ear to the ground and heard that Air NZ may be about to cut Ansett lose to ensure Air NZ's survival if the deal fell through.
This manager then persuaded Sir RB at the last moment to decline the generous offer from Air NZ as Virgin Blue could have "had it all" so to speak.
Now comes the difficult part - Virgin Blue secured one or two institutional investors under the condition that down the track the company would be floated and sold publicly.
This was how the investor/s would recoup their funds.
Now with the prospect of Ansett Mk II starting up and VB denied vital terminal access for their much needed expansion, will they be able to float if unable to gain SYD/MEL terminal space which would inhibit their expansion plans?
Apparently without this vital terminal space they are virtually unable to guarantee an underwriter for the potential float.
This brings things down to a simple equation - it's either VB or Ansett Mk II that will survive, pure and simple.
The Ansett Mk II creditors meeting is going to be very interesting with the unions nipping at the Tesna heels and Langcorp still keen to acquire a share of VB but only if able to secure the terminal space which they so desperately need and desire.
I am not taking sides here but the next 12 months will shape the Australian domestic scene for the coming decades.
So who is it going to be and what do you forecast????
Apparently one of the senior VB managers had his ear to the ground and heard that Air NZ may be about to cut Ansett lose to ensure Air NZ's survival if the deal fell through.
This manager then persuaded Sir RB at the last moment to decline the generous offer from Air NZ as Virgin Blue could have "had it all" so to speak.
Now comes the difficult part - Virgin Blue secured one or two institutional investors under the condition that down the track the company would be floated and sold publicly.
This was how the investor/s would recoup their funds.
Now with the prospect of Ansett Mk II starting up and VB denied vital terminal access for their much needed expansion, will they be able to float if unable to gain SYD/MEL terminal space which would inhibit their expansion plans?
Apparently without this vital terminal space they are virtually unable to guarantee an underwriter for the potential float.
This brings things down to a simple equation - it's either VB or Ansett Mk II that will survive, pure and simple.
The Ansett Mk II creditors meeting is going to be very interesting with the unions nipping at the Tesna heels and Langcorp still keen to acquire a share of VB but only if able to secure the terminal space which they so desperately need and desire.
I am not taking sides here but the next 12 months will shape the Australian domestic scene for the coming decades.
So who is it going to be and what do you forecast????
Moderate, Modest & Mild.
[quote]"it's either VB or Ansett Mk II that will survive, pure and simple"<hr></blockquote>
..says who?
They were (up to Sept 14), and still are BOTH running.
The interesting equation will unfold when Australian Airlines, QANTAS' "low cost" (read low-salaried staff) kicks off later this year, around September, I understand.
..says who?
They were (up to Sept 14), and still are BOTH running.
The interesting equation will unfold when Australian Airlines, QANTAS' "low cost" (read low-salaried staff) kicks off later this year, around September, I understand.
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Intersting points 13 and Kap M.
With regard to Australian Airlines I agree they will expand AA into the domestic market substantially over the next few years so what do we then have?
Aviation doing the full circle if VB isn't around.
Back to Australian Airlines and Ansett!!
Kap M.Yes VB is and has been up and running but put up some competition with shiny new birds,video screens in the backs of the seats and competing on a cost basis,coupled with the fact that their payroll tax concessions will run out soon and I think you have 2 struggling carriers.
Hearing about VB going cap-in-hand to the federal govt to provide a hand out for these new sky-marshals when QF/AN agreed makes me wonder what financial state they really must be in if they dont want to pay a relatively modest fee to help ensure the safety of their passengers and expect the govt to foot the bill.
Gotta agree with 1013.
Long term it'll be one or the other with the deepest pockets and willing to fork out more funds.
With regard to Australian Airlines I agree they will expand AA into the domestic market substantially over the next few years so what do we then have?
Aviation doing the full circle if VB isn't around.
Back to Australian Airlines and Ansett!!
Kap M.Yes VB is and has been up and running but put up some competition with shiny new birds,video screens in the backs of the seats and competing on a cost basis,coupled with the fact that their payroll tax concessions will run out soon and I think you have 2 struggling carriers.
Hearing about VB going cap-in-hand to the federal govt to provide a hand out for these new sky-marshals when QF/AN agreed makes me wonder what financial state they really must be in if they dont want to pay a relatively modest fee to help ensure the safety of their passengers and expect the govt to foot the bill.
Gotta agree with 1013.
Long term it'll be one or the other with the deepest pockets and willing to fork out more funds.
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In the very early days of aviation when a number of share floats were launched BEFORE the actual start of an airline some wag suggested that they were designed "to make money out of aviation without actually engaging in it".
We have seen the same kind of thing in recent years also with many proposed airlines never actually materialising.
At least this time we have operating airlines looking to float some time in the future and there are jobs in the industry. Let us hope that they DO in fact make money out of aviation but for shareholders and employees and not dodgy owners/managers by way of asset stripping and unethical accounting.
Judging by the performance of many companies of late there are no business ethics and the regulators suffer from a similar lack. Too often employees and shareholders are plundered by corporate "gunslingers". Meanwhile the government regulators (sherrifs) are too busy feeding at the trough.
[ 15 January 2002: Message edited by: pterodactyl ]</p>
We have seen the same kind of thing in recent years also with many proposed airlines never actually materialising.
At least this time we have operating airlines looking to float some time in the future and there are jobs in the industry. Let us hope that they DO in fact make money out of aviation but for shareholders and employees and not dodgy owners/managers by way of asset stripping and unethical accounting.
Judging by the performance of many companies of late there are no business ethics and the regulators suffer from a similar lack. Too often employees and shareholders are plundered by corporate "gunslingers". Meanwhile the government regulators (sherrifs) are too busy feeding at the trough.
[ 15 January 2002: Message edited by: pterodactyl ]</p>
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Terminals or no terminals VB have a growing and loyal customer base. The only way AN MK2 or anyone else is going to topple them is to take away their client base. That will only happen if the price of a ticket is consistently less that VB's. Nobody in the market now nor likely to be in the near future can beat VB on costs and thus won't last to long if they try to run them out of the market. If people want to pay the extra for TV's and bigger seats they will fly AN of QF. If they want a cheaper airfare they will fly VB. The terminal congestion at SYD and MEL can be alleviated somewhat by staggering the banks of arrivals and departures by ten or so minutes over what currently exists. It will be a looooong time before access to AN terminal space or anyone elses plays a pivotal role in the survival or demise of VB. I do agree that access to those terminals would be very nice and VB would like to have such access, no question about it. But it isn't paramount to the companies survival.
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Sprucegoose, On costs, remember that Virgins aircraft lease costs would be mostly based on pre September 11 values. AnsettIIIs would be post Sept 11. They might be more even than it appears.
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Incorrect on that one highroad. All the NG leases have been renegotiated and resigned or will be in short order. The classics will be retired from the fleet this year with the exception of one. Its lease runs out next year. I don't know the actual figures but there would be very little daylight between AN's fleet cost and VB's.
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Sprucegoose - very valid points about VB and loyalty/customer base etc.
Unfortunately the Australian public are consumers and if an opposition airline can/will match air fares and provide a flasher interior etc the travelling public will go with them if that airline advertises its wares and the travellers can get a seat.
It sounds simple but thats the way they think.
Just asked my wife/son and daughter's boyfriend and thats their attitude - why pay more and if Qantas or Ansett can match the price of VB and throw in some cheap entertainment then a bonus!
The sad fact is that although Id really love to see three airlines running around the Australian skies unfortunately in these lean times when the airline principles (financiers) are expected to keep pumping money to keep the airline going then there's only so much theyre willing to spend.
In the end QF will seek out and destroy either AN or VB through sheer "competitiveness" if you can believe that laughable term.
From what I've heard VB are actually locked into their pre Sept 11 leases.
That came from engineering chaps that assisted with delivery of the newer 737 and the more expensive leases were a point of strong discussion amongst them.
This just goes to show competitiveness in Oz with one carrier dominating close to 80% of the market is a standing joke.
[ 15 January 2002: Message edited by: Capt Kremin ]</p>
Unfortunately the Australian public are consumers and if an opposition airline can/will match air fares and provide a flasher interior etc the travelling public will go with them if that airline advertises its wares and the travellers can get a seat.
It sounds simple but thats the way they think.
Just asked my wife/son and daughter's boyfriend and thats their attitude - why pay more and if Qantas or Ansett can match the price of VB and throw in some cheap entertainment then a bonus!
The sad fact is that although Id really love to see three airlines running around the Australian skies unfortunately in these lean times when the airline principles (financiers) are expected to keep pumping money to keep the airline going then there's only so much theyre willing to spend.
In the end QF will seek out and destroy either AN or VB through sheer "competitiveness" if you can believe that laughable term.
From what I've heard VB are actually locked into their pre Sept 11 leases.
That came from engineering chaps that assisted with delivery of the newer 737 and the more expensive leases were a point of strong discussion amongst them.
This just goes to show competitiveness in Oz with one carrier dominating close to 80% of the market is a standing joke.
[ 15 January 2002: Message edited by: Capt Kremin ]</p>
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If Virgin can stay afloat long enough, the only solution to their long term viability is to be part of a solid opposition to QF.
However unpalatable this is for some , it may mean getting into bed with Ansett in some shape or form.
Whether it is the use of terminal space, reciprocal passenger feeding, tied res systems, partial sale etc.etc., this is the only real way to stop QF in its tracks.
Virgin needs a capital reorganisation to survive in Australia. Unless it gets it soon, the already slim operating margins will disappear. Without a partner and legitimate terminal access, it just can not survive.
Ansett would provide the practical means of keeping DJ going.
However unpalatable this is for some , it may mean getting into bed with Ansett in some shape or form.
Whether it is the use of terminal space, reciprocal passenger feeding, tied res systems, partial sale etc.etc., this is the only real way to stop QF in its tracks.
Virgin needs a capital reorganisation to survive in Australia. Unless it gets it soon, the already slim operating margins will disappear. Without a partner and legitimate terminal access, it just can not survive.
Ansett would provide the practical means of keeping DJ going.
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It is interesting that all start up airlines complain about the the lack of parking spaces at airports.
Well, if I head off to the local Westfield, its hard to get a spot around lunchtime, so I go early or in the afternoon. Maybe they should think a little more about there schedule to maximise the bays that they have available.
Well, if I head off to the local Westfield, its hard to get a spot around lunchtime, so I go early or in the afternoon. Maybe they should think a little more about there schedule to maximise the bays that they have available.
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Well Capt Kremlin the 700 leases were resigned between Cjristmas and new year...thus all the trumped up hype about VB aircraft in NZ over that period. The 800's will be done in Feb and this will save a VERY significant amount of money for VB over the term of leases. I have heard what that figure is but I don't know if I should say. E-mail me and I'll discuss it in private. As for some of our clients going to AN with the same ticket price and a few more perks, well that is probably true but then they are not the loyal customers that fly with us 'cause they want to and there are quite a lot that fit that bill. In the end it is unlikely that anyone on the scene at the moment can provide sustained airfares below VB's and offer any appreciable amount of perks on top for a sustained period of time. Its not just the pilot/FA/pit crew wages we are talking about here. VB's overall cost structure and infrastructure is signigficantly below the other players. I tend to disagree that any major capitalisation is needed to survive. I do agree that it is needed to grow beyond the projected 25 - 27 aircraft projection by years end. Don't forget the marketability of the Virgin name. Come time to float it will carry with it some momentum in the market place.
Personally I think all three could survive but whether they do or not really can't be determined at this stage. Consolodation is a normal process in a competetive environment and may very well occur here. As VMCA says lets hope we all survive and provide jobs for the up and coming pilots in Oz.
rescue 1 my point exactly. By reorganising the arrivals/departures at BNE/SYD/MEL, and we are only talking about a fifteen minute spread here in most cases, the existing congestion will ease greatly. Trust me they're on to it.
Personally I think all three could survive but whether they do or not really can't be determined at this stage. Consolodation is a normal process in a competetive environment and may very well occur here. As VMCA says lets hope we all survive and provide jobs for the up and coming pilots in Oz.
rescue 1 my point exactly. By reorganising the arrivals/departures at BNE/SYD/MEL, and we are only talking about a fifteen minute spread here in most cases, the existing congestion will ease greatly. Trust me they're on to it.
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I have to say that my employer buys the cheapest tickets on the internet and quite often we end up flying Qantas or Ansett, occasionaly Virgin. Last Saturday week, I priced tickets for my wife to fly MEL-SYD-MEL the following Wednesday. VB $254, QF $468 and AN $154. She flew AN.
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Here is how it will be in a years time
1/QF AND VB
2/QF AND AN
3/QF AND (AN + VB)
Facts are QF are not going to relinquish there 80% market share,despite outdated work practices and huge cost base they rule and will continue to play AN and DJ like puppets to maintain 80%(80% will also keep the ACCC off their backs).
Facts are that AN and DJ will squabble for the 20% remainder while both claim to have aggressive expansion plans.
Work it out,both minor leaguers will increase there cost base significantly to a finite number (20%)while Golieth amusingly watches on occasionlly throwing in a wobbly for them
Someone will leave the battle field a loser,but who???.I expect we will have a clearer picture in a year or so.
I believe the only way to give QF some sleepless nights is for AN and DJ to combine.Easy said than done considering the different cultures,aircraft types....ect,but the only way we can ALL enjoy a secure future.
Incidently I see AN buses full almost every sector,expect it will have a lot to do with 2 for 1 deals,$66 syd-mel fares.See it is easy to fill those planes after all,why didn't they think of this before!!!.
hmmmmm......now what about those yields?
<img src="wink.gif" border="0">
1/QF AND VB
2/QF AND AN
3/QF AND (AN + VB)
Facts are QF are not going to relinquish there 80% market share,despite outdated work practices and huge cost base they rule and will continue to play AN and DJ like puppets to maintain 80%(80% will also keep the ACCC off their backs).
Facts are that AN and DJ will squabble for the 20% remainder while both claim to have aggressive expansion plans.
Work it out,both minor leaguers will increase there cost base significantly to a finite number (20%)while Golieth amusingly watches on occasionlly throwing in a wobbly for them
Someone will leave the battle field a loser,but who???.I expect we will have a clearer picture in a year or so.
I believe the only way to give QF some sleepless nights is for AN and DJ to combine.Easy said than done considering the different cultures,aircraft types....ect,but the only way we can ALL enjoy a secure future.
Incidently I see AN buses full almost every sector,expect it will have a lot to do with 2 for 1 deals,$66 syd-mel fares.See it is easy to fill those planes after all,why didn't they think of this before!!!.
hmmmmm......now what about those yields?
<img src="wink.gif" border="0">
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There are plenty of times at the moment when AN will have cheaper fares that VB as EPIRB has pointed out. I doubt anything like yeild management exists. They simply need some cash flow and profits are not in the equation until the new owners take over. After that the proportion of cheap seats with AN will look more like VB.
Thumbs up, I agree that a merger between VB and AN is a possible solution to the survival of the two carriers. However VB have plans beyond the shores of OZ and won't be relying entirely on purely domestic traffic throughout its expansion. Should there be an alliance formed with another inbound operator then that too will help VB remain independant. None of these options can be flatly dismissed. I still say all three could exist together. Whether QF can hang on to it 80% forever depends very much on the future fortunes of both VB and AN.
Thumbs up, I agree that a merger between VB and AN is a possible solution to the survival of the two carriers. However VB have plans beyond the shores of OZ and won't be relying entirely on purely domestic traffic throughout its expansion. Should there be an alliance formed with another inbound operator then that too will help VB remain independant. None of these options can be flatly dismissed. I still say all three could exist together. Whether QF can hang on to it 80% forever depends very much on the future fortunes of both VB and AN.
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loyal Customers in aviation is a joke. Tell me that if you are to book a ticket that you don't call all three airlines, get a quote for the days that you want to fly and then book.
The difference is that Qantas provides '1 million' cheap fares, whilst Virgin and Ansett have a limited amount that are available tyo offer. thereby qantas is limiting the growrth of their oppposition airlines.
By the By, with the new 738 that are arriving, then qantas is becoming closer to the cost base of Virgin. The prospect of Australian Airlines operating domestically is unfounded speculation. The example of Virgin buying the European Airline(can't remember the name), selling it a few years later after a significant loss. It isn't feasible to try changing a full service airline into a low cost/value airline.
The difference is that Qantas provides '1 million' cheap fares, whilst Virgin and Ansett have a limited amount that are available tyo offer. thereby qantas is limiting the growrth of their oppposition airlines.
By the By, with the new 738 that are arriving, then qantas is becoming closer to the cost base of Virgin. The prospect of Australian Airlines operating domestically is unfounded speculation. The example of Virgin buying the European Airline(can't remember the name), selling it a few years later after a significant loss. It isn't feasible to try changing a full service airline into a low cost/value airline.