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Virgin Atlantic

Old 26th Apr 2020, 18:50
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If they weren't so hard-pressed themselves I reckon one of the Gulf carriers could have been tempted to take a punt on Virgin, at a knock-down price of course.
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Old 26th Apr 2020, 19:12
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Which would be very nice for the employees......unfortunately EU airline ownership rules still apply.
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Old 26th Apr 2020, 19:15
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fruitbat wrote:

Eye opening figures when you think about it..
There are many reasons why there is a large discrepancy between the 2 Airlines - size is your starter for ten. Some are of Virgin's making others not. Virgin's main mistake was the purchase of 19 A340-600s (4 engines 4 long haul) with out a doubt the 777 was a far better option. As a long haul only Airline we don't have the luxury of a short haul operation to feeds us - we can discuss the failing of Little Red at a later date, suffice to say operating only a handful of destinations (minus GLA) was always going to be difficult. We didn't get gifted a brand new terminal (I don't mean free by gifting - it's the ability to have your own brand new terminal) As has been said before, the ducks were now in a row with brand new fleet of A330s Neo's from next year, A350s and B789s, 2 engine fuel efficient aircraft, a better route structure and a feeded in the USA with Delta. We would never make Billions but we would employ 10,000 people, give a great service and put £350/400 million per year in the treasuries coffers.

Really, what's wrong with that?
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Old 26th Apr 2020, 19:38
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Originally Posted by virgin mary
News Flash
This is all helping to minimise our daily cash burn and make our cash reserves go a little further.
According to Companies House accounts VA have no cash reserves, they're in negative retained profit.
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Old 27th Apr 2020, 00:11
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Originally Posted by xray one
and put £350/400 million per year in the treasuries coffers.
However can VA anticipate this level of profit, to put that much corporation tax into the UK government Treasury, given that

Originally Posted by fruitbat
“Virgin accumulated £211m of losses last decade for a negative 0.1% operating margin. British Airways made £11 billion at a 10% margin”
Those losses despite being centred at what is probably the best O&D hub in the world for business travel demand.

As I understand it, Virgin Atlantic may do fine financially each year, but under the "Starbucks Method" of accounting, whatever level of profit they anticipate in any year is then sucked out beyond the reach of Her Majesty's Government by Virgin Group Holdings Ltd, based beyond the taxman's reach in an obscure accountant's office in the British Virgin Islands (not one of VA's Caribbean destinations; largest aircraft serving there is an ATR), which invoices for the "Use of Brand", which appears in Virgin Atlantic's accounts as a "marketing expense".
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Old 27th Apr 2020, 00:24
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WHBM the £350-400 million that X-ray one refers to is not corporation tax but PAYE and NIC from the employees
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Old 27th Apr 2020, 01:41
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Originally Posted by BleedingOn
WHBM the £350-400 million that X-ray one refers to is not corporation tax but PAYE and NIC from the employees
The problem with "creative accounting" such as "expense to Virgin Islands", to dilute company profits and pay less Company tax, creates a problem when you ask for a loan.
Someone lending them money would want to do due diligence, and see if they will be viable to pay "our" money back again.

I am guessing who ever checked the company and asked them to make a new application for government funds, can't have been happy with what they saw.

I can set up a company, and turn around large amounts of money, and I can also spend on all kind of relevant business expenses, which benefits me so I pay less tax. However if I go to the bank, and show no profits, they will not give me a loan, just because I tell them I can pay all my staff, but over a decade I have made negative profit, they not going to be very convinced that I will be able to pay them back the loan I am applying for.


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Old 27th Apr 2020, 08:49
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Originally Posted by WHBM
As I understand it, Virgin Atlantic may do fine financially each year, but under the "Starbucks Method" of accounting, whatever level of profit they anticipate in any year is then sucked out beyond the reach of Her Majesty's Government by Virgin Group Holdings Ltd, based beyond the taxman's reach in an obscure accountant's office in the British Virgin Islands (not one of VA's Caribbean destinations; largest aircraft serving there is an ATR), which invoices for the "Use of Brand", which appears in Virgin Atlantic's accounts as a "marketing expense".


Interestingly, the initial stage of licensing seems to be run through a UK company – VAL TM Limited – and in the five financial years 2014–18 it received £61m in royalty payments from Virgin Atlantic

£ (,000)
2014 10,745
2015 12,183
2016 12,329
2017 12,637
2018 13,157


Even from a quick wander around companies house (and there are other data sources), it's possible to tease quite a bit of the corporate structure and cashflows apart if someone has time, will of course loose sight when the cash is transferred to BVI companies and family trusts though
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Old 27th Apr 2020, 09:20
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In a previous incarnation, I used to work for a Bank, lending millions to companies.

In putting together a proposal to my directors, they would want to know.

1. Is the lending properly secured.
2. If/when the company goes bust how quickly can we turn the secured assets into cash.
3. For taking the “risk”, how much can we charge in interest and fees.

we were often dealing with loss making entities who had a business turnaround plan, which is why they needed the funds in the first place. I would guess with Virgin, the problem may be no 2, Necker and second hand airframes may be slow moving sellers.

Virgin has been my long haul carrier of choice for many years, and really hope they can get through this one way or another.
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Old 27th Apr 2020, 12:06
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There are other money diverters as well. Even Delta has apparently got a claim on a large sum, USD 200m, relating to their JV, described by the Delta CEO here :

https://www.forbes.com/sites/willhor.../#3202f14630d2

now it's not particularly apparent what this is for, but if it's "related to their JV" it doesn't sound like payment for any goods received, which in any event would never be allowed to get up to that level anyway. The statement there that it's an amount "the airlines agreed earlier this year" is a bit opaque about it. JVs do not normally require one party to pay the other large sums. Is this just some further part of a tax management money-go-round ?
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Old 27th Apr 2020, 14:43
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Mr Branson is very careful not to make too much of a taxable profit but is very keen on collecting his dividend from his brand licensing company based in a tax haven.

When it comes to taxpayer funded loans the back of the queue is clearly visible.

Virgin Group Holdings payments appears in Virgin Atlantic's accounts as a "marketing expense". Virgin Enterprises collects royalties from global Virgin brands. In 2018, it reported revenues of £75 million, £51 million pre-tax profit and paid £9 million corporation tax. It paid an £85 million dividend to its sole shareholder: Virgin Group Holdings.







WWW
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Old 27th Apr 2020, 15:51
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WWW : Could you calibrate what your chart is showing please (I am guessing it is showing PreTax margin as a % of revenue).

Any commercial bank you showed that to would run a mile from the red company.

A question we may ask is why the difference, given BA's long-established pension liabilities, its substantial short haul and domestic operations which everyone tells us are always unprofitable (though those too are subject to creative accounting), significant in-house UK-based overhaul facilities, and all the posts on here about overpaid Nigels, bloated Waterside bureaucracy, etc.
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Old 27th Apr 2020, 16:41
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Originally Posted by WHBM
WWW : Could you calibrate what your chart is showing please (I am guessing it is showing PreTax margin as a % of revenue).

Any commercial bank you showed that to would run a mile from the red company.

A question we may ask is why the difference, given BA's long-established pension liabilities, its substantial short haul and domestic operations which everyone tells us are always unprofitable (though those too are subject to creative accounting), significant in-house UK-based overhaul facilities, and all the posts on here about overpaid Nigels, bloated Waterside bureaucracy, etc.
Three words; economies of scale. I think you’ll find VS pilots are better paid than their BA counterparts in any case, we’re also more productive too (controversial topic).
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Old 27th Apr 2020, 17:04
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Originally Posted by WHBM
A question we may ask is why the difference, given BA's long-established pension liabilities,
I seem to remember BA had a massive pension black hole debt....what happened to it?

Do they still have it, were they bailed out, did they find reinvestment, was it written off, or were the Company allowed to work off the debt? Whichever it was, it’s a bluddy good job there wasn’t a Corona virus outbreak back then, otherwise the Government might have had to bail THEM out, heaven forbid!!!
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Old 27th Apr 2020, 19:03
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Originally Posted by RexBanner
Three words; economies of scale. I think you’ll find VS pilots are better paid than their BA counterparts in any case, we’re also more productive too (controversial topic).
Hi Rex,

Could you explain to a military man how you calculate the productivity of a civvy pilot? Apologies for the thread drift
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Old 27th Apr 2020, 19:28
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Well without knowing the ins and outs of Virgin’s scheduling agreement I do know that they are limited to 700 hours a year, whereas we at BA are up to 900 and in very many cases on Long Haul we hit it. However these are (relatively speaking of course) marginal gains for Flight Ops and do not begin to explain the large disparity between the operating margin at BA and VS, there’s other factors at play there.
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Old 27th Apr 2020, 19:34
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750 In Virgin and in recent years I've flown over or close to it.

Last edited by A320baby; 27th Apr 2020 at 19:49.
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Old 27th Apr 2020, 19:47
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Kintyred. Legal limits on duty and flying hours are stipulated by EU regs, 900hrs a year and 100hrs a month (there are other limits). Local agreements may limit these to lower values. So if you are paid a salary for flying 900 hrs a year but only rostered for 500 hrs, the company is not getting full value from its contract with you. I flew with a holiday charter, where high monthly hours were achieved over the summer but winter work was pretty sparse so no more than 600 hrs was usual for us. With someone like BA/Virgin, who have more constant work across the year, 900/700 is achievable and therefore their pilots Achieve high productivity.
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Old 27th Apr 2020, 20:19
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I seem to remember BA had a massive pension black hole debt....what happened to it?

Do they still have it, were they bailed out, did they find reinvestment, was it written off, or were the Company allowed to work off the debt?
Over the past years BA have been paying large sums into the scheme to pay off the deficit. They continue to do so. The last iteration of the defined benefit scheme was finally closed to existing members a couple of years ago having been unavailable to new joiners for some time before that.
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Old 28th Apr 2020, 05:54
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All depends on the fleet , at BA on the 787 I was worked VERY hard almost to the point of questioning what I was doing in aviation, As I thought it would have been much better than the 320 .
I still have mates at BA now and they don’t understand that the lifestyle on LH will be worse than the 4 year seniority they have on SH . Certainly get the productivity out of you unless your ultra senior PP24 But those days are well and truly over
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