RB's spin is really starting to bite him on the backside....

From Gerson Lehrman Group Website Financial Comment :

''So what’s gone wrong in just a few weeks after so brazenly boasting how efficient it was in contrast to rival British Airways?

The simple answer is that Virgin is waking up to the realities of the marketplace and without any major airline alliance that wants this subsidised carrier amongst their ranks, the battle which Branson’s baby faces is more than just an uphill one.”

“Throw in the worse-than-expected forward bookings at Virgin (down 30% on last year compared to BA 17% apparently) and quickly you see that its reliance on premium customers is far greater than that of British Airways, particularly with its smaller network that has less room to offset big declines in demand for that class of travel.''

''Little wonder then that BMI and Lufthansa are equally keeping themselves at arms length from Virgins ailing overtures. While all of this goes on, the Virgin PR machine will do little to console the staff it has to cull for its mismanaged operations.''

Unhappy times and very fair comments Bart - Good Luck to all.

Not good PR
 

Yes, the executives may have been due their bonuses and rises but it really doesn't look good at all does it? In the long run it would surely pay then to forgo these payments and avoid such headlines as this:
As Virgin sheds jobs, chiefs enjoy 40% pay rises - Times Online
That is what leadership is all about.

Fly747,

Virgin rebutted that story today. Do you mean there could be truth in it?

Heaven forfend....

BART
One of the best posts I have read on here :ok:Respect:ok:

Analysis

So what’s gone wrong in just a few weeks after so brazenly boasting how efficient it was in contrast to rival British Airways?

The simple answer is that Virgin is waking up to the realities of the marketplace and without any major airline alliance that wants this subsidised carrier amongst their ranks, the battle which Branson’s baby faces is more than just an uphill one.

For over six months, rival British Airways has seen plummeting premium passenger figures, particularly in Asia where Virgin is slashing flights to Hong Kong by 50%. While Virgin has moved to take out system capacity for its winter schedule, however, by not doing so for this summer means it still has airplanes to fly relying on low yield fares as oil prices continue to climb. Compounding Virgin’s cost base woes is the highly inefficient A340-300/-600 fleet, which guzzle as much fuel as oil prices rise – no wonder that Qatar Airways’ CEO Akbar Al-Baker said he wanted to “throw them away”. Virgin’s recent A330 order is evidence of that move, albeit several years too late.

Throw in the worse-than-expected forward bookings at Virgin and quickly you see that its reliance on premium customers is far greater than that of British Airways, particularly with its smaller network that has less room to offset big declines in demand for that class of travel. It already got rid of the manicure services to cut costs – a gimmick 10 years ago Virgin would have never considered abandoning.

British Airways by no means is not fairing any better, however its forward bookings have remained fairly stable and premium demand on its key North Atlantic routes have stabilised. Of course, the ongoing talks at British Airways and unions could undermine its business model but that’s another discussion altogether.

Singapore Airlines’ parent Temasek struggling to even give away the 49% holding it has in Virgin Atlantic - the Singaporean carrier has oft stated desire to fly to North America from a European hub and it may as well consider buying out the other half, keep the brand and operate those routes via proxy.

That of course is the long term outlook. But if people look at how British Airways is coping and start to get “nervy”, then the real clatter of worry is in the veil of PR gambling being removed to display the ineptness with which Virgin Atlantic is run. There’s a reason why the Star, SkyTeam and Oneworld alliances do not entertain this “look at me!” airline – it simply has nothing on offer for them.

Little wonder then that BMI and Lufthansa are equally keeping themselves at arms length from Virgins ailing overtures.

While all of this goes on, the Virgin PR machine will do little to console the staff it has to cull for its mismanaged operations.
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.

The above article seems to suggest the fuel guzzling a340 fleet is a big part of Virgin's woes but I wreckon the real reason for the further jobs cull is the forward bookings. I guess if the world economy picks up quickly that could follow suit.

or the threat of a BA strike...

Even at full steam ahead, strike would be mid Sept at the earliest.

Not sure the threat of a BA strike will offer much help according to the huge VS drop in forward bookings reported (30%+ drop last month on premium apparently) The benefit will be very short lived and will not avert the current serious long term problems of none of the alliances wanting to get VS on board.

My sources (very reliable as you have seen in previous posts) have no doubt that BA will hit the nuclear option with cabin crew this time. All of July talking to ACAS, followed by 90 day notice of imposition of new contracts. By the time a legal ballot is called and actioned, earliest dates will be Sep/Oct - summer season over. They already have ring fenced funds in place to take on the cabin crew union and break them into tiny pieces this time. Watch this space.

VS has huge exposure to the N. Atlantic and little else. They offer a tiny amount of routes elsewhere and are unable to redirect their efforts accordingly. BA have a large Worldwide route structure which, apart from the N. Arlantic, is still apparently holding up pretty well. VS need some new non Atlantic routes, and quickly.

Whilst not directly related to the current redundancies, the press are starting to show serious interest in the previously squeaky clean image:

Daily Mail 7/7/09

Sir Richard Branson's Virgin Megastores accumulated losses of more than £300million before they were sold off two years ago.

Accounts filed at Companies House show that Virgin Holdings, which owns a number of Branson's businesses, swung into the red in the year that ended in March 2008.

Profits of £151.7million turned into losses of £227.3million that year after a one-off operating loss of £324.3million.

That came after the 125 Virgin Megastores were sold to Zavvi, a rival music retailer, which went into administration last year with debts of more than £100million.

A Virgin spokesman said that Virgin Holdings' losses were mainly due to accumulated losses at Megastores over many years, which were written off once the business was sold.

The accounts also reveal that Virgin paid Zavvi £61million to break a licensing agreement for the use of the Virgin brand.

The firm also wrote off another £21million when it sold Virgin Vie, the cosmetics business, to its management. This also led to a payment - of £8.8million - to remove the Virgin brand.

It may be Sept at the earliest for a possible BA strike but the damage is being done on This Morning Simon Calder was warning of possible disruption which cant be doing BA any favours and in turn can only help VS in the short term.

Yes, look what happened when a threatened strike by Monarch was in the press, lots of cancellations by holidaymakers. VS must be really pleased that they have announced that they will take industrial action. Joe Public doesnt know whether its going to be next week or in Sept.

Well, it (the general public) does. Front page of the Telegraph today (well, yesterday) mentioned August at the earliest. Besides, we all know how reliable Simon Calder is when it comes to facts about the airline industry (still looking for that £100k average salary....)

There will be no strike at BA as it will be the end of UNITE as a union (Unemployed do not pay union dues !).

They know that and so does the BA board.

I see Branson has recently announced plans to seek approval from the DoT for anti trust immunity with Delta on routes between the US and Oz ??

Hang on a minute, wasn't it RB that claimed that an AA/BA tie up should be turned down by the DoT as it would be bad for competition and would damage consumers' interests !!!

I pity the VS workforce having to cope with such erratic behaviour.

Royhudd
 

Roy says

How right you are! Having been duped by the virgin spin of "come and join the virgin family" and lived the entire duration of Virgin Express Ireland, I know exactly how dysfunctional that family is!!!!

We were ceremoniously dumped without ANY assistance in arranging interviews with VA who were hiring at the time. All we asked RB for was a feed into an interview and he couldn't give a stuff.

This guys a knob and doesn't belong anywhere near the public.

Pulling the wool over your eyes - hopefully from the fast unravelling cardigan.......

Any guy who makes his seventy year old mother carry his bags clearly has no concept of respect. :=

I wish you all luck guys. IMHO you will need it!

Good to see you're not still bitter about it though.

:rolleyes:

Bitter? Not exactly. I tend to have a long memory with these things though. When you and your partner both lose your livelihood it tends to leave scars. Thats all part of life's education process and should stop us making the same mistake again. Thanx for your sympathy though! :yuk:

Anyone have any news whether our own Danny F has survived the troubles at VS ??

No reason other than we all owe him an awful lot of our thanks for pprune and I understand he gave up a reasonably secure job to get his bum into the RHS of a 747....

Fingers crossed....

Danny was senior enough to never be threatened by the recent troubles.

Do you mind me asking guys how many pilots actually were forced out of Virgin this year during these troubling times?