Virgin Australia Financials 2019/20

[Must...Fly!]

VA & Alliance are close. Surely Alliance would take the F100s & either part them out for own use or squeeze any life left in them before major expensive check due. IIRC called a D check. Maybe Alliance would take over some of the very thin VA routes.

Can an F100 do eg. BNE/HIR or too much over water ?

So close that Qantas owns 20% of QQ...

 

[ozfflyer]

So close that Qantas owns 20% of QQ...

yep & they do a lot of flying for VA. How much are these old tired A320s/F100s worth really not very much. Probably less than $1m each.

 

[Zanzara]

Wonder with VA axing the MEL- HKG route they might actually release some J class award inventory before it finishes-up in Feb. Not that HKG is so much on many preferred routing and itineraries these days.

 

[Isochronous]

Wonder with VA axing the MEL- HKG route they might actually release some J class award inventory before it finishes-up in Feb. Not that HKG is so much on many preferred routing and itineraries these days.

It should be - an exciting and affordable destination that has become more pleasant for international tourists of late.

 

[Saab34]

Double Daily out of Sydney-Hong Kong hopefully by the end of next year I hope. That slot they are holding took a while to get.

 

[TheInsider]

Double Daily out of Sydney-Hong Kong hopefully by the end of next year I hope. That slot they are holding took a while to get.

Dreaming I think. Don't have the aircraft, nor the passenger numbers.

 

[eastwest101]

Seems like a bit of a missed opportunity, the initial 750 job losses and delay of B737-Max8 orders were absolute "no brainers" and a sign that PS meant business.

1. The cuts to HGK totally predictable, especially since the start of civil disobedience and demonstrations in HGK - it was the right idea but executed about 7-10 years too late so missed the best of the Chinese tourism boom and get money out of China story. Shown to be a Chinese vanity project which is a shame as they have now lost some of the obvious opportunities to do something sensible with VS - their one logical long haul partner that they completely ignored despite sharing the same brand.

2. Foray in VAi Japanese international services - a risk, but the proof will be in the pudding, may have better yield and HND slots meant it was "worth a shot", no complaints about partnering with ANA and will see if this gamble pays off, if they have to keep the A330s this may not be the worst use of them at the moment.

3. Very conservative but unsurprising focus on main trunk routes with VAd using B737s, still less A330 transcons so no real market advantage to VAd in the transcon market. If you can't make money flying B738's between SYD-MEL-BNE then you don't deserve to be in the airline business.

4. Tigerair band still out there and still has the brand/marketing appeal and goodwill of cancer, a mixed fleet clusterf#$k that that constantly distracts management and bleeds cash wherever it flies. The reduction on golden triangle TT flights and increase in use of TT on leisure routes will just hand more market share to JQ. The overstretched mixed fleet of A320 and B737 with last minute "saviour/rescue flights" by Alliance F100s is just embarrassing with typical days showing the timetable has 50% of flights with delays of 2 hours or more, every time they lose aircraft they are losing economy of scale, and now I think they've almost got to the point where their cost per seat mile is probably higher than JQ and approaching VAd, no wonder it loses money. Solution needs to be a complete relaunch/rebrand and reinvestment commitment or close it down entirely - neither of which PS has decided to do.

5. Not sure where the F100 retirements are coming from (presumably from WA) but they have managed to schedule a fleet reduction in WA just at the start of a resource resurgence in WA, thus handing more regional and lucrative FIFO charter work directly over to Qantas and its affiliates. The aircraft still have life in them and if used properly can make money, I'm sure alliance and/or network aviation will take them and make money out of them. I assume the A320 retirements are the old "clunkers" based in Perth so some modest savings there?

6. Reduction in domestic capacity goes straight to the yield margin and bottom line of QF mainline. Alan Joyce and Qantas shareholders will be sending Paul a Xmas card this year. Most decisions from VA seen as too reactive with dubious timing, they don't know who their owners are going to be, so they don't know what they want to be in the market, and consequently they don't have the right aircraft in the right time to compete.

7. Meanwhile - E190s still on lease sitting out in the desert costing VA money, ATRs that every operator in the world except for VA can make money from, sitting parked around costing VA lease fees.

8. Still wouldn't surprise me if a lot of these decisions have got to do with aircrew and resources (pilot and flight attendant) - or the lack therof.

9. If a competent well run competitor with deep enough pockets to survive the initial onslaught could actually launch, (unlikely due to barriers to entry and gate space allocation) in the Australian domestic market I reckon they would really do some serious damage to this cosy complacent duopoly. Qantas have enough cash and embedded loyalty/public service/politician protection to survive but Virgin doesn't have all those advantages and has a divided dysfunctional ownership structure to contend with, and owners who are sick of losing money.

10. No mention of loyalty in PS speech - buying back Velocity is just correcting a previous stupid mistake, but I though PS might have had more to say about loyalty contributing to the business? Due to their dysfunctional ownership structure their loyalty scheme is also totally compromised in that they can't grow up and wear big pants and join an alliance - although maybe Skyteam in the more achievable of the two remainng choices, obviously in a perfect world in SQ were committed to VA then joining Star Alliance would be a good option. Without an alliance - they are asking Velocity to compete with the QFF/OneWorld loyalty scheme with one arm tied behind their back, they are just not going to move people without an alliance.

11. Late addition - I see that VA have also dived into MEL-DPS market - which is super-competitive and already served by 5 different airlines - seems like another way to lose money to me...

 

[Cool Cat Phil]

Seems like a bit of a missed opportunity, the initial 750 job losses and delay of B737-Max8 orders were total "no brainers" and a sign that PS meant business.

1. The cuts to HGK totally predictable, especially since the start of civil disobedience and demonstrations in HGK - it was the right idea but executed about 7-10 years too late so missed the best of the Chinese tourism boom and get money out of China story. Shown to be a Chinese vanity project which is a shame as they have now lost some of the obvious opportunities to do something sensible with VS - their one logical long haul partner that they completely ignored despite sharing the same brand.

2. Foray in VAi Japanese international services - a risk, but the proof will be in the pudding, may have better yield and HND slots meant it was "worth a shot", no complaints about partnering with ANA and will see if this gamble pays off, if they have to keep the A330s this may not be the worst use of them at the moment.

3. Very conservative but unsurprising focus on main trunk routes with VAd using B737s, still less A330 transcons so no real market advantage to VAd in the transcon market. If you can't make money flying B738 between SY-MEL-BNE then you don't deserve to be in the airline business.

4. Tigerair band still out there and still has the brand/marketing appeal and goodwill of cancer, a mixed fleet clusterf#$k that that constantly distracts management and bleeds cash wherever it flies. The reduction on golden triangle TT flights and increase in use of TT on leisure routes will just hand more market share to JQ. The overstretched mixed fleet of A320 and B737 with last minute "saviour/rescue flights" by Alliance F100s is just embarrassing. Solution needs to be a complete relaunch/rebrand and reinvestment commitment or close it down entirely - neither of which PS has decided to do.

5. Not sure where the F100 retirements are coming from (presumably from WA) but they have managed to schedule a fleet reduction in WA just at the start of a resource resurgence in WA, thus handing more regional and lucrative FIFO charter work directly over to Qantas and its affiliates. The aircraft still have life in them and if used properly can make money, I'm sure alliance and/or network aviation will take them and make money out of them. I assume the A320 retirements are the old "clunkers" based in Perth so some modest savings there?

6. Reduction in domestic capacity goes straight to the yield margin and bottom line of QF mainline. Alan Joyce and Qantas shareholders will be sending Paul a Xmas card this year.

7. Meanwhile - E190s still on lease sitting out in the desert costing VA money, ATRs that every operator in the world except for VA can make money from, sitting parked around costing VA lease fees.

8. Still wouldn't surprise me if a lot of these decisions have got to do with aircrew and resources (pilot and flight attendant) - or the lack therof.

9. If a competent well run competitor with deep enough pockets to survive the initial onslaught could actually launch, (unlikely due to barriers to entry and gate space allocation) in the Australian domestic market I reckon they would really do some serious damage to this cosy complacent duopoly. Qantas have enough cash and embedded loyalty/public service/politician protection to survive but Virgin dosen't have all those advantages and has a divided dysfunctional ownership structure to contend with and owners who are sick of losing money.

10. No mention of loyalty in PS speech - buying back Velocity is just correcting a previous stupid mistake, but I though PS might have had more to say about loyalty contributing to the business?

Well said !

I’m a former VA “mum and dad” shareholder, who has never held shares in QF, who has watched VA make many costly decisions that have failed to deliver real growth for the airline.
I do think PS is showing real grit with some of his recent decisions and has arrived just in time to save the airline and hopefully position the airline for growth in the near future.

 

[Melburnian1]

Seems like a bit of a missed opportunity, the initial 750 job losses and delay of B737-Max8 orders were total "no brainers" and a sign that PS meant business....

2. Foray in VAi Japanese international services - a risk, but the proof will be in the pudding, may have better yield and HND slots meant it was "worth a shot", no complaints about partnering with ANA and will see if this gamble pays off, if they have to keep the A330s this may not be the worst use of them at the moment.

3. Very conservative but unsurprising focus on main trunk routes with VAd using B737s, still less A330 transcons so no real market advantage to VAd in the transcon market. If you can't make money flying B738 between SY-MEL-BNE then you don't deserve to be in the airline business.

4. Tigerair band still out there and still has the brand/marketing appeal and goodwill of cancer, a mixed fleet clusterf#$k that that constantly distracts management and bleeds cash wherever it flies...

The usual outstanding analysis that we all expect from eastwest101, who must be one of AFF's best contributors.

Tigerair (TT) has even less appeal than cancer because at least with the latter, on occasion it can go into remission. Its competitor, the 'orange cancer' is no better though.

The rule with newly elected governments used to be 'act quickly on your mandate'. Make what some may see as 'harsh decisions' in the early weeks after election when there's still some goodwill towards you from the electorate.

VA is not a 'government' but a similar principle applies. I agree Mr Scurrah has somewhat missed the opportunity taking over presented him, but as eastwest101 opines, there may be other factors such as lack of availability of flight (and cabin?) crews that inhibit some decisions.

 

[pauly7]

The usual outstanding analysis that we all expect from eastwest101, who must be one of AFF's best contributors.

Tigerair (TT) has even less appeal than cancer because at least with the latter, on occasion it can go into remission. Its competitor, the 'orange cancer' is no better though.

The rule with newly elected governments used to be 'act quickly on your mandate'. Make what some may see as 'harsh decisions' in the early weeks after election when there's still some goodwill towards you from the electorate.

VA is not a 'government' but a similar principle applies. I agree Mr Scurrah has somewhat missed the opportunity taking over presented him, but as eastwest101 opines, there may be other factors such as lack of availability of flight (and cabin?) crews that inhibit some decisions.

It could be that he got a bit excited and came out swinging with lots of big statements then reality hit and the actual exit costs of some of the proposals are probably astronomical, especially for a business bleeding cash and have to be staged out over a period of time...

I mean the massive redundancies in Brisbane will be costing them a bomb...

 

[Melburnian1]

It could be that he got a bit excited and came out swinging with lots of big statements then reality hit and the actual exit costs of some of the proposals are probably astronomical, especially for a business bleeding cash and have to be staged out over a period of time...

I mean the massive redundancies in Brisbane will be costing them a bomb...

Latter very true, but at least over time there are bankable savings, unless those remaining then start hiring new casuals/contractors because they find work is not being done (or the managers don't want to do 'four jobs.')

VAd is not bleeding cash and nor is the Velocity FF program. It's the other activities that are problematical, including as eastwest101 sagaciously points out, TT.

 

[HS-TQE]

Not to mention the A330 leases (supposedly on a 10 year contract starting from when each a/c is delivered). They haven't had much luck with the subfleet, and they have to either put them somewhere (Trans-con, Asia) or pay a heftier price for ending the A330 leases early.

 

[pauly7]

Not to mention the A330 leases (supposedly on a 10 year contract starting from when each a/c is delivered). They haven't had much luck with the subfleet, and they have to either put them somewhere (Trans-con, Asia) or pay a heftier price for ending the A330 leases early.

They were not getting the loads or yields on trans con in the first place that is why they were put onto the international experiment(s).

 

[Melburnian1]

They were not getting the loads or yields on trans con in the first place that is why they were put onto the international experiment(s).

In respect to passenger numbers, that's not been my experience. Close to full every time on the A332s transcon.

 

[mannej]

In respect to passenger numbers, that's not been my experience. Close to full every time on the A332s transcon.

The load itself doesn’t indicate yield

 

[pauly7]

In respect to passenger numbers, that's not been my experience. Close to full every time on the A332s transcon.

I bet VA wish you were on every single trans con flight ever then

 

[dajop]

In respect to passenger numbers, that's not been my experience. Close to full every time on the A332s transcon.

Maybe that's a symptom of "right sizing" the operations.

 

[Melburnian1]

The load itself doesn’t indicate yield

Which is why I didn't comment about it!

 

[ethernet]

I like eastwest101's comments.
I am sure if TT eased up on being a luggage weight naz_, they could get more customers. The bogans have decided HK is not cheap when you get there, and Chinese carriers own that space. I would have thought Indian destinations worth a thought, although suspect Singapore is saved as a parent feeder hub.

A thinking flaw is daily services, and not adding demand on peaks, Thereagain, this defeats price gouging in the high season. So far nobody is trying to fill special flights using external promotions.

 

[Melburnian1]

I like eastwest101's comments.... I would have thought Indian destinations worth a thought, although suspect Singapore is saved as a parent feeder hub...

As what will in not so many years be the world's most populous nation, India "deserves" to have more nonstop flights to and from Oz than the tiny number from AI that operate in 2019.

I gather the problem is it's a very price sensitive, relatively low yielding market. As you imply, many use SQ and connect in SIN to various Indian destinations. If it is very low yields per seat kilometre, no Australian-domiciled carrier could likely make a go of it even if foreign staff on lower rates (I'm looking at you JQ) were cabin crew.