Virgin Blue shares plunge

[Standby]

Unless they ask for a suspension of trading, or ASX implements one, they can trade for quite a while yet.

I believe the minimum for a new listed company is ~$10 mill capitalisation.

The double banger here is that besides the share value dropping due to current economic conditions, all airlines have been hit by diving valuations
of their assets (Aircraft both old and new), this inturn puts preassure on their Credit rating making borrowings more expensive as the debt to equity ratio skyrockets on the falling value of aircraft.I'm sur I have read the value of 737s (even newer models 700&800 series have dropped by 10% this year)
Having said all that they are a well run business just bad timing being locked into having to take lots of new aircraft when potentially a lot less will be flying will make any profitability this year (and next probobly) very hard
At a market capitalisation of well under 300M if you were SQ inc. (read Tiger losing 30-50M a year with 5 planes..why not ante up and buy DJ outright just like Comm bank has done with Bankwest...just something to ponder

 

[Mal]

At a market capitalisation of well under 300M if you were SQ inc. (read Tiger losing 30-50M a year with 5 planes..why not ante up and buy DJ outright just like Comm bank has done with Bankwest...just something to ponder

And that's the weird thing nobody seems to be able to work out.

Why isn't Branson chomping at the block wanting to get full ownership. Why isn't Singapore Airlines, or another eligible suitor taking the challenge?

I can't work it out. Nor can I work out why the shares keep dropping...

 

[Bundy Bear]

Another buyer could be Emirates; unless Tiger is killing profitability domestically making it unviable to buy Virgin Blue at any price. If the value of the business has declined then its harder to borrow money, as the value of the company has gone down; in VBA case lots.

 

[Standby]

And that's the weird thing nobody seems to be able to work out.

Why isn't Branson chomping at the block wanting to get full ownership. Why isn't Singapore Airlines, or another eligible suitor taking the challenge?

I can't work it out. Nor can I work out why the shares keep dropping...

SQ seems more likely, The cardigan mans "Money" has been a lot of smoke and mirrors...he actually never puts too much of his own in except upfront ...doubt he'll put more in

 

[brissyflyer]

I think there is still a lot of Toll shareholders selling off their stakes and if you get some shares essentially for free its not going to really matter what you get for them. A bonus dividend of 30c a share is still pretty good.

Also a lot of companies are selling at crazy prices atm for no apparent reason.

 

[stuartfaz]

And that's the weird thing nobody seems to be able to work out.

Why isn't Branson chomping at the block wanting to get full ownership. Why isn't Singapore Airlines, or another eligible suitor taking the challenge?

I can't work it out. Nor can I work out why the shares keep dropping...

I dont think Branson would be too eager to get full ownership. Why would he? He's been gifted the number 1 shareholding by Toll pulling out.

If it gets to 20-25c I might jump on, because thats when I reckon SQ or someone will jump on too.

 

[ANstar]

And that's the weird thing nobody seems to be able to work out.

Why isn't Branson chomping at the block wanting to get full ownership. Why isn't Singapore Airlines, or another eligible suitor taking the challenge?

I can't work it out. Nor can I work out why the shares keep dropping...

I think it owuld be difficult for an overseas company to buy them out now as they must be 51% majority Aus owned to be able to fly internationally (ie Pac Blue and V Aus).

Branson comes across as the type that would be heavily leveraged and pershops has seen a huge chink of personal wealth wiped out in the past few months and would save Atlantic before Blue.

 

[oz_mark]

Why isn't Branson chomping at the block wanting to get full ownership. Why isn't Singapore Airlines, or another eligible suitor taking the challenge?

Maybe someone is....

The Singaporeans behind regional aviator Rex Airlines have quietly bought a strategic stake in Virgin Blue. They are lurking beneath the 5% disclosure threshold and had no comment when contacted by BusinessDay.


Entities associated with Rex have soaked up around 3% of the carrier. Whether Kim Hai Lim and Thian Soo Lee can get their hands on the readies to make a full bid is an issue in itself. Rex's market cap is only $120 million and though its management runs a tight ship - costs are low and government lobbying high - a scrip bid would have little chance of getting off the ground.


The move to soak up a few shares in Virgin is more likely strategic than a prelude to a bid although Virgin's bombed out share price and cash reserves could present a tasty asset strip.

Rex Airlines owners up Virgin Blue stake; Michael West

 

[stuartfaz]

Maybe someone is....



Rex Airlines owners up Virgin Blue stake; Michael West

Consequently, Virgin ended up over 13% today, to a whopping 39c.

 

[drron]

Though the article also gives reasons why it is being ignored ie cash burn-they are 101 days from burn out so by my maths that means they need to make $6million a day to stand still.

 

[Evan]

Ouch ! thats really not a great situation right now. Lets hope things pick up for them.
(No i don't fly them, it woud be a last resort or a location where there is no QF flights, but i for sure do not want them to leave the market, some competition is good)
E

 

[ANstar]

Though the article also gives reasons why it is being ignored ie cash burn-they are 101 days from burn out so by my maths that means they need to make $6million a day to stand still.

I presume the 101 days from burn out is if they had to operate with no income. Ie they have something like $600M in the bank - so as you say that is $6m per day. Now they obivously have some money coming in, so even if it were $5m per day (ie $1m loss per day which I am sure it isnt) then they would still have alot of time up their sleeve... ie 2 years +

 

[brissyflyer]

VBA Share price up a further 11.5% today to 43.5c.

 

[ANstar]

Airline profits predicted to take a nosedive | smh.com.au

JPMorgan believes Qantas carries "as much or more risk" than Virgin Blue's mostly domestic leisure market operations. The former generates about half its earnings in international markets while Australia's second-largest airline takes less than 10 per cent from overseas.
"As the economy slows and travellers respond to the weaker dollar, we expect the domestic aviation market to outperform international markets," a JPMorgan analyst, Matt Crowe, said in a note.
"We believe Virgin Blue is better positioned to benefit from this. We also expect increased travel budget scrutiny to help Virgin Blue finally win corporate market share."

 

[Mal]

I noticed today that VBA were added to the Standard&Poors ASX 200 on the 18th November (due to St George Bank being taken over by Westpac - hence their shares being removed from the market and leaving a vacancy in the S&P ASX 200)

This should hopefully add some value to their share price due to certain funds being required to thus invest in the company as part of their market exposure.

VBA closed at 35.5c today, so still way below it's highs. Well above it's 52 week low of 27c though!

 

[Mal]

Currently trading around 29c. Things still aren't looking better!

 

[kpc]

VIRGIN Blue shares have dropped to a record low of just 18.5c, making the company the worst performing airline stock in the Asia Pacific region.

Virgin Blue shares worst performers in region | Business | News.com.au

Who wants to admit now that they bought some DJ shares?:shock:

 

[JohnK]

Who wants to admit now that they bought some DJ shares?:shock:

If I had money I would buy some now. Could be a good long term investment or at worst no different to throwing money away on slot machines. :-|

 

[comint]

If I had money I would buy some now.

Virgin Blue (like many airlines) is presumably projecting future cash flow challenges. Qantas (like many companies) has/is dealing with a similar issue by issuing new shares.

One of Virgin Blue's minority shareholders may be stifling the company's ability to do something similar, as he doesn't want to dilute his holding past his magic number, nor does he want to put any more of his own cash into the business. Presumably this has caused the extremely dramatic announcement (from the CEO) that DJ can no longer afford to participate in the discount end of the market. (If this is followed through on - strategically it could mean a vast number of routes and staff being ditched by Virgin Blue, as it concentrates on recreating itself as a lean/mean business traveller machine).

Additionally, I would imagine that Tiger will be in Sydney by the end of the year. Macquarie Airport's debt and cash flow issues are probably at the point that they simply can't keep saying no, to the price Tiger is demanding to pay for access.

 

[yo yo ma]

Who wants to admit now that they bought some DJ shares?:shock:

Not me... I bought Qantas instead which have more than halved!:mrgreen: