Blood on the walls - vah full year results

[Clivem]

Well 'T' plus 24 hours until VAH is set to release its full year results........10 AM Aug 30 / 2013.

Where O where is this going to take the good ship VA ? .........

Expectation of a lot of red are written large on the walls already - question is the red writing in blood as the ink.

Key thing maybe to look at the critical rate of 'cash burn' in the last six (6) months in particular - it will be interesting to see if (as some are pondering) VA is starting to run out of money - VA could find it's self to be very vulnerable in deed - watch the trend line with interest if not concern.

It may take some serious support from key shareholders to keep the ship afloat.

Opppsssss their goes that 'Air New Zealand / Ansett cold wind' down my spin again ............ History tells you in very large font that ANZ knows the previously taken path to the 'emergency' exit very well ....... hell those geezers don't even need the track lighting on the floor to lead the way.

If you ever see the Virgin Storemen furiously loading a lot of spare parts into crates or containers with AKL destination stickers slapped on the side its games over .......AGAIN !

Anybody know the contact details of a good contract 'CLEANER' - proven experience in blood stain removal is considered essential as is a rapid response time.

Watch the cash burn rate ............ there in lies the devil ........

 

[cove]

Running an airline is quite a difficult task. Virgin is trying to transition from a Low Cost Carrier to a full service operation and profits and cash flow have been affected. How bad the year has proven to be will be a great read.
All the pieces have been assembled with regional, LCC and full service in a very short period so there will be some pain in the figures.
Qantas made 6 million and is still in the red on international.
The fuel price is not helping at the moment.

 

[maninblack]

Very few airlines make a profit. Qantas was a rare beast but they also had a near monopoly for a decade, everyone knows that the future will be much tougher for them. As for Virgin I fear it's going to be very ugly. Will heads roll? I think they will. From the customer perspective VA is a bit of a schmozzle and that will be reflected in longer term sales. Having flown QF a few times recently it just comes across as so much more professional and that builds customer confidence. Bit OT perhaps but that's how I see it. There's only so long you can burn cash as the OP observes.

 

[jpk]

I think JB has the right strategy for the long term, and EY/NZ/SQ seem to agree with him, so I think he will be safe for now. The problem is the people under JB don't seem to be executing all that well - it started out good, but everything is stagnating now. Possibly due to cost controls to slow the burn rate? As a result, the attempt to increase yield hasn't worked, because people have run out of patience and don't want to pay similar fares to QF for an inferior experience.

 

[Fruitcake]

As a result, the attempt to increase yield hasn't worked, because people have run out of patience and don't want to pay similar fares to QF for an inferior experience.

Is that assessment based on gut feel or statistics? The Australian reported this morning that VA yield, load factors, and passenger numbers have all risen over the past year. Although crucially that seems to have mostly been in July - outside of FY13.

The AFR reported yesterday on the yield growth, adding that Roy Morgan figures show business traveller satisfaction is at 86%, up from 77% two years ago. Personally I don't place too much value on things like Roy Morgan, Skytrax etc but if nothing else, it's a data point.

 

[maninblack]

Roy Morgan figures show business traveller satisfaction is at 86%, up from 77% two years ago.

Personally I don't place too much value on things like Roy Morgan, Skytrax etc but if nothing else, it's a data point.

Interesting. I took a few Qantaslink flights last week and they served the dinner service for about 120 passengers with impressive efficeincy and friendliness too. VA still can't serve 8 passengers in Business class without making a total mess of it most of the time, not to mention the frequently almost inedible food and lack of 2 choices. Sorry, straying OT again!

 

[smit0847]

I think JB has the right strategy for the long term, and EY/NZ/SQ seem to agree with him, so I think he will be safe for now. The problem is the people under JB don't seem to be executing all that well - it started out good, but everything is stagnating now. Possibly due to cost controls to slow the burn rate? As a result, the attempt to increase yield hasn't worked, because people have run out of patience and don't want to pay similar fares to QF for an inferior experience.

But where is the strategy going from now? Okay they have their J product and they have lured Business pax away from QF but they still have a very confusing 'virtual alliance' but is not nearly as good as if they were part of a real alliance, and apart from possible A330 expansion into Asia their international operations on their own metal have stagnated where they only fly to a small list of cherry-picked destinations with very varying product.

Now that VA have done all the work getting new customers I suspect the next 12 months will revolve around keeping them.

 

[anat0l]

I'd like to think that this year's losses are mostly down to major transformational costs, e.g. Sabre. Without those burdens, VA should've been doing honky-dory, just like the previous year (recorded profit).

So maybe the pundits will mostly write off tomorrow's announcement and instead focus on the future.

 

[moa999]

Definitely see some one-offs.

$$s for Sabre intro, $$s for lost bookings dur to Sabre intro, $$s for new IT, and $$s for Bananas

 

[Deleted member 29185]

I can't see VA folding simply because VA is still largely seen as an LCC and still most pax are only expecting between LCC and full service experiences but seem inexplicably happy to pay full service fares whilst receiving less than full service experience. Maybe many of us are subliminally prepared to wear the extra cost to ensure we do keep that ideal of a full service competitor alive. Heaven knows that VA are struggling to walk the talk and I'm not the only one annoyed with the shemozzle they've lumped upon us, but in all reality, they are better than JQ and lots are still keen to punish the leprechaun for risking our national heritage in such a risky stunt like he pulled last year.

 

[nlagalle]

I can't see VA folding simply because VA is still largely seen as an LCC and still most pax are only expecting between LCC and full service experiences but seem inexplicably happy to pay full service fares whilst receiving less than full service experience. Maybe many of us are subliminally prepared to wear the extra cost to ensure we do keep that ideal of a full service competitor alive. Heaven knows that VA are struggling to walk the talk and I'm not the only one annoyed with the shemozzle they've lumped upon us, but in all reality, they are better than JQ and lots are still keen to punish the leprechaun for risking our national heritage in such a risky stunt like he pulled last year.

What risky stunt was that?

 

[Fruitcake]

What risky stunt was that?

I saw Mr Joyce crossing Phillip Street without using the pedestrian crossing last year. That could have been it. I guess dramatically turning around his airline's on-time performance and customer satisfaction by grounding it a couple of years ago must have been a personal confidence booster .

 

[serfty]

What risky stunt was that?

I think it was late the year before last ... somewhat more than a year ago.

 

[Deleted member 29185]

I think it was late the year before last ... somewhat more than a year ago.

Was it that long ago? How time flies!

@nlagalle, I was referring to what I call the reckless grounding of QF. I know he had reasons, but those reasons were not good enough to risk damaging the 2nd oldest airline in the world, nor blatantly ignoring the needs of his own clients and was akin to a spoilt childs dummy spit, but with a lot more at risk.

 

[moa999]

OT.
But at risk was the International airline which was hurtling towards the ground in an uncontrolled descent. That 'risk' has pulled up the nose somewhat such that the rate of descent (annual losses in QFi) has slowed, and will hopefully be flying level next year.

 

[jpk]

Is that assessment based on gut feel or statistics? The Australian reported this morning that VA yield, load factors, and passenger numbers have all risen over the past year. Although crucially that seems to have mostly been in July - outside of FY13.

I based it on a thread we had here about a month ago (which of course I can't find now!), when the Sabre costs and earnings downgrade was announced - there was a few quotes by analysts saying the yield strategy has not worked so far (yield was slowly going up but revenue load factors were going down faster). I appreciate your links here, although they both need accounts to read so I haven't. Perhaps things are improving now.

In so far as gut feel goes, the recent Sabre outages and website mess is I feel contributing to an element of dissatisfaction out there, and recent conversations with other travellers in lounges bear that out. We all wanted a decent competitor to QF and were happy to support them initially, but now we are paying similar fares and the improvements have stopped coming. As others have said, the challenge will be to retain pax now.

 

[Markmat]

I think he needed to do what he did, the uncertainty of flying on QF with sudden stoppages designed to disrupt the business made flying them unpalatable. I had at least 5 flights disrupted substantially due to stoppages. That destructive cycle had to stop as they were losing market share to VA at a time when VA was starting down the full service airline route. In fact that is when my company moved to using VA as well as QF. As a result of the action the stoppages finished and as a customer I started flying QF again, but also kept flying VA as well as BFOD.

 

[eastwest101]

It was in one of the numerous "VA Web sites are rubbish" threads that it was about $50M attributable to Sabre and Web booking site issues.......

Which makes about sense, when you consider the previous years result - the cost of sabre + slightly better yields - increased fuel costs.

 

[straitman]

Interesting. I took a few Qantaslink flights last week and they served the dinner service for about 120 passengers with impressive efficeincy and friendliness too. VA still can't serve 8 passengers in Business class without making a total mess of it most of the time, not to mention the frequently almost inedible food and lack of 2 choices. Sorry, straying OT again!

Still OT but whilst we are here.

maninblack, I have to ask when did you last fly VA business?

They have two (normally) good food offerings and their service is almost faultless. Penegal and I had a meal that was not quite hot enough on 10th Aug but the service recovery was great. Meal was fixed quite quickly and we were each give a bottle of wine as compensation. (My wine was very good.)

I have had 8 VA J flights in the last 19 days so I feel, sort of, qualified to comment. My current trip was going to be Qantas but they got themselves tied in knots with booking classes, times, availability and cost. IMHO their web site is now worse that that of Virgin.

VA were much easier to deal with and so I'm back with them.

 

[JohnPhelan]

I know he had reasons, but those reasons were not good enough to risk damaging the 2nd oldest airline in the world, nor blatantly ignoring the needs of his own clients and was akin to a spoilt childs dummy spit, but with a lot more at risk.

He wasn't risking anything at all, he was fixing it!! And he was meeting the needs of his customers by giving them certainty about their future flights.

Yes, people were inconvenienced for 48 hours. Small price to pay for a big result.