Virgin Australia FY results this Tuesday, what is expected?

[oz_mark]

I think DJ will run into serious strife if they tried to do anything too overt in this area as they try and force their staff do more and more.... getting closer and closer to the QF level of service but paying them less than QF for their efforts.

Maybe during the transition this will be an issue, and is certainly something that needs to be managed. But I'm sure than more than one person has noticed the great disappearing act that happens on Qantas just after a meal service....

 

[amaroo]

The 2nd half is always bad thanks to holidays etc, and has been for a long time no matter which airline you are, the 1st half was extraordinary due to the two groundings. February will be interesting and a better litmus test of who does the better job as CEO.

Free kick from the Qantas unions in H1

If the above is true the outlook doesn't look that good for future profits!

 

[Justchecking]

I think DJ will run into serious strife if they tried to do anything too overt in this area as they try and force their staff do more and more.... getting closer and closer to the QF level of service but paying them less than QF for their efforts.

Market forces don't work like that though. As long as someone else is willing to sign up for the job on new conditions then they can set their own terms. Its not like QF is recruiting anymore on better pay.

 

[markis10]

If the above is true the outlook doesn't look that good for future profits!

Not necessarily, you have to look at all the one off costs that have been incurred such as building lounges, changing interiors and catering while also introducing new Velocity options, these take time to pay their own way. It was a big undertaking to go from LCC to where they are today and that has taken some capex.

 

[Cruiser Elite]

So who saw the interview with Borghetti last night on The Business? Interesting huh?

From memory - and I had had more than my share of red - 2 Years ago they had 2mil Velocity members - now 3.2mil - looking for 5mil - his quote 'look forward to some exciting announcements' or something to that effect.

Jeez this will be interesting - if status match, brand new lounges and the other promos in last 2 years can only secure 1.2mil new members what are they going to need to roll out to get another 1.8mil?

The long touted alliance with Coles maybe? Any other thoughts?

 

[pauly7]

Market forces don't work like that though. As long as someone else is willing to sign up for the job on new conditions then they can set their own terms. Its not like QF is recruiting anymore on better pay.

Yes and that creates it's own problem, it's incredibly expensive and time consuming to recruit, hire and train new staff to replace your old staff, not to mention the dissent and noise the old crew make on the way out.

It's a game no one wants to play - so therefore I still maintain that DJ will be very reluctant/wary about curbing their front line staff's remuneration or conditions in an overt manner given the context of transforming their business to provide more service, the fact their main competitor pays more and the job they have to try to win - corporate travel - which relies heavily on slick frontline service.

 

[markis10]

So who saw the interview with Borghetti last night on The Business? Interesting huh?

From memory - and I had had more than my share of red - 2 Years ago they had 2mil Velocity members - now 3.2mil - looking for 5mil - his quote 'look forward to some exciting announcements' or something to that effect.

Jeez this will be interesting - if status match, brand new lounges and the other promos in last 2 years can only secure 1.2mil new members what are they going to need to roll out to get another 1.8mil?

The long touted alliance with Coles maybe? Any other thoughts?

I think you will find its around 3M for the number of frequent flyers in Australia, the other 5M that QFF have are frequent shoppers and gift card recipients going by the redemption items noted in the results.

 

[Cruiser Elite]

I think you will find its around 3M for the number of frequent flyers in Australia, the other 5M that QFF have are frequent shoppers and gift card recipients going by the redemption items noted in the results.

Yes he quoted they currently have 3.2mil Velocity members - up from 2mil 2 years ago - and they want to build to 5mil - my question was what enticements / enhancements to Velocity will need to be instigated to achieve this number?

 

[markis10]

Yes he quoted they currently have 3.2mil Velocity members - up from 2mil 2 years ago - and they want to build to 5mil - my question was what enticements / enhancements to Velocity will need to be instigated to achieve this number?

Clearly a tie up with Coles, our retail landscape does not leave many alternatives when it comes to major partners.

 

[777]

Yes he quoted they currently have 3.2mil Velocity members - up from 2mil 2 years ago - and they want to build to 5mil - my question was what enticements / enhancements to Velocity will need to be instigated to achieve this number?

You're probably thinking of it from the wrong angle. A move to 5m wont be about Frequent Flyers but about all that loyalty/ retail/ etc revenue - so the easiest way to get to 5m is to cut deals with a retail chain or chains.

 

[lovestotravel]

If the Coles/Velocity deal didn't happen with the relaunch of Fly Buys I have my doubts..

However, if the revamped Fly Buys is a flop, then Coles may turn to Virgin and go "please"

 

[Oneworldplus2]

So who saw the interview with Borghetti last night on The Business? Interesting huh?

From memory - and I had had more than my share of red - 2 Years ago they had 2mil Velocity members - now 3.2mil - looking for 5mil - his quote 'look forward to some exciting announcements' or something to that effect.

Jeez this will be interesting - if status match, brand new lounges and the other promos in last 2 years can only secure 1.2mil new members what are they going to need to roll out to get another 1.8mil?

The long touted alliance with Coles maybe? Any other thoughts?

Maybe an announcement on the roll out of the new VA VIP/Invite tier. I don't think it's official yet (will it ever be? )...or more lounges/routes/partner airline???


I would love to see a tie-up with Coles and Virgin.
Since l have been doing a fair amount of shopping at IGA in recent times, it really has hit home how 'cheap+nasty' the 'FRESH' fruit + veg in WOW is. Yes, you might pay a tad more at IGA, but the quality is 100 times better.

 

[smit0847]

if the revamped Fly Buys is a flop, then Coles may turn to Virgin and go "please"

If?

Even the morons who redeem their Fly Buys points for toasters must realise what an awful program it is.

 

[lovestotravel]

If?

Even the morons who redeem their Fly Buys points for toasters must realise what an awful program it is.

Same as the morons who do the same thing with Woolies really!


How much of the below can be attributed to Fly Buys is questionable....

Resurgent Coles driving Wesfarmers profit - ABC News (Australian Broadcasting Corporation)

Conglomerate Wesfarmers has posted a 10.6 per cent rise in annual profit, largely driven by its Coles supermarket division.

 

[serfty]

If?

Even the morons who redeem their Fly Buys points for toasters must realise what an awful program it is.

Hey!

I resemble that in redeeming Fly Buys for a toaster, but wouldn't consider myself a moron for doing so. :-|

While out may be an awful program when compared to some others, it's there and sometimes it's the only game available!


Posted on a wing and a prayer ...

 

[Justchecking]

Yes and that creates it's own problem, it's incredibly expensive and time consuming to recruit, hire and train new staff to replace your old staff, not to mention the dissent and noise the old crew make on the way out.

It's a game no one wants to play - so therefore I still maintain that DJ will be very reluctant/wary about curbing their front line staff's remuneration or conditions in an overt manner given the context of transforming their business to provide more service, the fact their main competitor pays more and the job they have to try an so to win corporate travel - which relies heavily on slick frontline service.

While I dont disagree with you about the costs involved evidently it is financially worthwhile to do so, especially if Jetstar and QF are any model. They no longer offer anything except casual work in order to make the hire and fire process quick and cheaper. One would think it's an incredibly risky strategy to have a transient workforce in a business such as an airline (what if they call in sick or just don't turn up to work anymore) but on the balance this must work otherwise it wouldn't be modus operandi. Perhaps the upfront costs are offset by the flexibility of only paying for hours required month by month, the ability to instantly and without any kind of pay layoff a portion of the workforce while still retaining the option to call them back should the need arise. I'm seeing casual work becoming the norm in many industries now, especially in jobs where no special skills or talent are required to perform them.

As for slick frontline service, well perhaps that's really only important at the expensive end of the plane. For the most part the backend where the cheaper fares are, people are generally happy to get a seat, get something to eat and drink and never see the crew again as long as the price is right.

$400 mill is a lot of cost savings to make. The careful choice of words 'productivity gains' also says to me that the human resources area is likely to be a target. You make cost savings on things but productivity gains with people.

 

[Fruitcake]

One area I can think of: consider how much call centre time must be wasted dealing with things like points upgrades, deployment of complimentary upgrade certificates, multi city itineraries and pretty much anything to do with an international reservation besides booking the thing in the first place. All the stuff that QF and nearly every legacy airline does seamlessly online.

Presumably that's a "wait until we're on Sabre" thing but I think having that online could a huge difference. And not only that, but once you can do that stuff online Virgin can then add a service charge for calling up ("that will be $30 to apply the complimentary upgrade over the phone Sir..."). Not suggesting as a pax I'd be thrilled with that idea but I bet it will happen.

I doubt that's worth $400m but it must be worth a fair bit.

 

[markis10]

One area I can think of: consider how much call centre time must be wasted dealing with things like points upgrades, deployment of complimentary upgrade certificates, multi city itineraries and pretty much anything to do with an international reservation besides booking the thing in the first place. All the stuff that QF and nearly every legacy airline does seamlessly online.

Presumably that's a "wait until we're on Sabre" thing but I think having that online could a huge difference. And not only that, but once you can do that stuff online Virgin can then add a service charge for calling up ("that will be $30 to apply the complimentary upgrade over the phone Sir..."). Not suggesting as a pax I'd be thrilled with that idea but I bet it will happen.

I doubt that's worth $400m but it must be worth a fair bit.

I dont think you can put one area down as the major contributor, staff costs have risen by 100M year to year, but so has fuel (130M) & other expenses (150M). Given they are in the process of setting up infrastructure as well as local maintenance, its reasonable to assume those start up costs wont be repeated.