DJ dumps 5 aircraft

[moa999]

ASX announcement that DJ is removing 8% of capacity / up to 5 aircraft for 2009/10 (assume from Jul-09)
Aircraft to be managed as operational spares, not redeployed until next year (assume 2010)

Impacts up to 400 jobs in DJ.

 

[Nigelinoz]

Not good news ,but expected nonetheless.
Brett Godfrey (CEO) is reported to have said on Sunday that DJ may "ground" discount fares this year,apparently they will try to keep average fares lower than the competiion but the days of long term lower fares may be over-for awhile anyway,at least that's the impression I got from the press statement.
Could be some lean times ahead for DJ,but then you can say the same for the industry as a whole,I guess.

 

[ANstar]

An 8% drop in capacity is quite significant - in saying that I am glad they have finally reacted to this. I'd much rather them cut their flying now and survive than be out of business in 18 months.

 

[Nigelinoz]

An 8% drop in capacity is quite significant - in saying that I am glad they have finally reacted to this. I'd much rather them cut their flying now and survive than be out of business in 18 months.

Absolutely agree,one thing Australia doesn't need is another, Ansett like ,collapse.

 

[Saab34]

Interested to hear from other members based on experiences etc, which reductions do you forecast?

Some WA services is my guess..What about Main trunk routes, too much capacity?

 

[Nigelinoz]

Interested to hear from other members based on experiences etc, which reductions do you forecast?

Some WA services is my guess..What about Main trunk routes, too much capacity?

Could be anything really,Brett Godfrey is on record as saying that they woul d be examining their whole network,I guess we will know more on the 23rd when they release their results,unless there's a leak before that,of course.

 

[kpc]

Here is a link to the story:
Virgin Blue to shed up to 400 jobs | Travel News | News.com.au

 

[Saab34]

What about Virgin's MEL-SYD-MEL. If needed, I can usually still pick up a Go!Fare a few days before departure, and the flight was empty as ever..

Too much frequency perhaps?

I think some reductions could be up north, like Hamilton Island, which could be a seasonal service.

We are talking nearly 10% of their entire newtork to be reduced, which is quite significant when put into perspective.

I think it will be more frequencies that are reduced, rather than total pullouts

 

[JohnK]

The next couple of years are not going to be easy for airlines. Good to see that Virgin is reacting to the downturn rather than waiting until it is too late.

 

[pauly7]

The next couple of years are not going to be easy for airlines. Good to see that Virgin is reacting to the downturn rather than waiting until it is too late.

Yes I do have empathy for the staff who will lose their jobs though more than the 5 jets 'dumped'! Just thought it was an interesting choice of headline for the topic

Small business and leisure which is DJ's heartland will be hit the hardest in the 'downturn' so it is good they are doing this now rather than later.

To the above post - Also flew DJ to Mel and QF back. DJ was about 50% on a fairly early AM flight.... Could be a one off though.

There is a story in the SMH today about some Singaporeans eyeing off a vunerable DJ (as their share price has collapsed) and speculating they are an easy target for a takeover either hostile or freindly. Can't find the online link though - anyone??

 

[medhead]

A bit more in today's Australian:

VIRGIN Blue executives will take a pay cut of up to 30 per cent as the airline sheds up to 400 jobs and removes as many as five aircraft from service by May 1.
The airline announced on Wednesday that it planned to cut domestic capacity by 8 per cent by removing five aircraft from operation. It said the "prudent interim capacity management plan" was in response to a continued forecast deterioration in domestic demand.

Airline's managers take 30pc pay cut | The Australian

 

[oz_mark]

There is a story in the SMH today about some Singaporeans eyeing off a vunerable DJ (as their share price has collapsed) and speculating they are an easy target for a takeover either hostile or freindly. Can't find the online link though - anyone??

'tis the folk behind Rex.
Virgin Blue vulnerable to takeover: Rex

 

[pauly7]

'tis the folk behind Rex.
Virgin Blue vulnerable to takeover: Rex

Thanks - sorry must be blind

Interesting... Rex or their owners swallowing DJ would be a good strategic fit at first glance - take on QF Link with some grunt...?

But one would have thought the bearded one would be interested in taking DJ back right??

 

[ANstar]

Thanks - sorry must be blind

Interesting... Rex or their owners swallowing DJ would be a good strategic fit at first glance - take on QF Link with some grunt...?

But one would have thought the bearded one would be interested in taking DJ back right??

The article seems to imply the rex stake is purely a strategic investment - ie they want to be able to have a say if a new owner comes in to take DJ over.

Ie Branson has 25%, Gofrey about 3.5%, Rex about 1.8% and the owner of Rex in Singapore has something like 3%.

Is that enough combined to block a hostile take over?

Also re Branson - He seems to be cashed up and looking at the Honda F1 team!

 

[comint]

But one would have thought the bearded one would be interested in taking DJ back right??

Other than at Virgin Atlantic, Sir Richard's investment model is fairly clear and standard.

He takes a minority investment (to maintain some influence at board level). He pumps the company full of Virginites (to subtly influence control at an operational level). He makes sure the business has an iron clad licence agreement. (And thus - a cash cow for life if things go well after set up.)

Therefore, I am not sure why he would want the risk of being a majority owner?

 

[pauly7]

Other than at Virgin Atlantic, Sir Richard's investment model is fairly clear and standard.

He takes a minority investment (to maintain some influence at board level). He pumps the company full of Virginites (to subtly influence control at an operational level). He makes sure the business has an iron clad licence agreement. (And thus - a cash cow for life if things go well after set up.)

Therefore, I am not sure why he would want the risk of being a majority owner?

So thats a no thanks then

 

[dajop]

But one would have thought the bearded one would be interested in taking DJ back right??

Surely only if he could sell it again later for a much higher price. In the current economic circumstances that remains to be seen.

Interesting if Rex and it owners increased their holdings and influence over DJ (a sort of reverse Ansett takeover of Kendall/Hazelton). We would almost back to where we were 10 years ago ... DJ/ZL in one camp with an XR alliance, QF/QFlink/JQ in the other and TT playing a minor nuisance role (as DJ did when it started) in keeping a lid on things. All that would be missing is a DJ linkage with NZ. Now that won't happen again (at least ownership-wise, although an NZ/DJ/VA linkage would surely have a lot of synergies..)

 

[comint]

So thats a no thanks then

Probably. If Branson has say 100units of currency to invest, and he puts all 100units into 1 business and it fails, he’s lost the lot.

If he puts 25units into one business, 25 into another and so on, even if 1 or 2 business fail (and Virgin businesses DO FAIL) he keeps making money. Plus, after start up, I would imagine his model starts returning value very quickly and may even allow him to have re-extracted his initial investment costs within a matter of years.

 

[medhead]

Ie Branson has 25%, Gofrey about 3.5%, Rex about 1.8% and the owner of Rex in Singapore has something like 3%.

Is that enough combined to block a hostile take over?

10 percent is enough to block complete takeover and remain a minority shareholder i.e. compulsory buy out kicks in once someone gets 90%.
25% is enough to block most arrangements to takeover a company.

 

[pauly7]

If he puts 25units into one business, 25 into another and so on, even if 1 or 2 business fail (and Virgin businesses DO FAIL)

Yep get the model and yes they do fail.

Virgin Money flopped here and made a very quiet withdrawal from the market...

But I have high hopes for Virgin Active, someone needs to take it to Fitness First - they are a complete and utter rip off.