Is John Borghetti doing a good job?

[flying_double]

To me, I think he's doing an okay job considering he's winning corporate accounts and transforming the business, however he's not doing much for shareholders right now. Ultimately, he's a pawn of 3 other players who have another agenda. Whether he realises that and is fine with it or not, who knows.

I fail to see how he's a pawn for the three other airlines who have another agenda??? Their interests are aligned. To grow VA to be a sustainable and strong domestic carrier to compete with QF, and provide feed into the NZ, SQ and EY international networks for the benefit of all parties.


JB is a very smart operator, the biggest mistake QF made was to let him go to the opposition in favour of low-cost AJ.

 

[IainF]

IMO JB is doing a great job. I've never had the service from qantas I get from Virgin Australia either in the air or on the ground. Ive never had the perks from qantas I get from VA.
I haven't flown qantas since the first day of Virginblue.
Well done, keep up the good work.

I was a QF Plat (and AA Exec Plat) for a number of years. I never felt I was a valued customer on QF.
AA, BA & CX gave me far better treatment.
MrsF started flying DJ (VA) and loved it so I swapped.
I haven't looked back.
One of the most interesting things about JB is that he will reply to emails sent to him.
I sent a direct email to him with some on board issues and got a reply several minutes later.
That alone shows he has his finger on the pulse.
I now fly VA, EY, SG & NZ and will continue to do so for the foreseeable future.

 

[Clivem]

I thought one area that was interesting but has not drawn much comment / discussion is the turn around to the negative in the VA international result. A $29.5 million loss, from a previous profit of $26.6 million.

It would appear that not much has changed on the surface ... pretty much constant fleet / routes etc. Any thoughts or comments on the reasons for the fall or the future?

 

[Must...Fly!]

I thought one area that was interesting but has not drawn much comment / discussion is the turn around to the negative in the VA international result. A $29.5 million loss, from a previous profit of $26.6 million.

It would appear that not much has changed on the surface ... pretty much constant fleet / routes etc. Any thoughts or comments on the reasons for the fall or the future?

Well they have expanded flying in to DPS I believe? Perhaps their strategy of flying narrowbodies in to DPS is wearing a bit thin, particularly now that JQ has the marketers aircraft in the 787 plying the MEL/SYD-DPS/HKT routes. Maybe VA feed from the East, through Perth and on to HKT is suffering as well.

What would you take - an A330 across the country then 6 hours in a 737 to HKT and a ground transit bus, followed by the return being an overnight 6 hour 737 sector, then schlepping bags over to T3 from T1 in PER to connect on to the East, or a direct widebody 787 each way?

No contest.

 

[civinod]

I thought one area that was interesting but has not drawn much comment / discussion is the turn around to the negative in the VA international result. A $29.5 million loss, from a previous profit of $26.6 million.

It would appear that not much has changed on the surface ... pretty much constant fleet / routes etc. Any thoughts or comments on the reasons for the fall or the future?

I dare say we are seeing the gradual squeeze of both our airlines QF and VA. With time they both may become just domestic players only.

Imagine what would happen if the LAX route came under the same sort of pricing pressure as Europe.

The alliance partners are only friends to a point. When it comes to international its every man for himself.

 

[moa999]

I agree that JB has done a good job of moving Virgin upmarket with the new name and colour scheme, subject to some missteps
- the botched Sabre implementation and continued website issues (though some here have benefited)
- a too white design for the lounges that has dated (somewhat softened by the intro of wood features in recent SYD/MEL renovations)
- not refitting QFA/QFB where VA otherwise has a massive advantage
- recent downgrading of Flexi fares by offering substandard snacks along with the rest of the plane

JB has also however done a good job of losing a lot of money, and tanking the share price.
I suspect this is part due to his owners wanting to stretch Qantas Domestic so it doesn't have the money to put into Qantas International.

However I suspect these moves will bring forward positive changes in Qantas
- some government assistance (most likely QSA changes)
- a much more brutal focus on costs, as per the 5,000 job losses
This will ultimately be detrimental to Virgin

 

[eastwest101]

Well they have expanded flying in to DPS I believe? Perhaps their strategy of flying narrowbodies in to DPS is wearing a bit thin, particularly now that JQ has the marketers aircraft in the 787 plying the MEL/SYD-DPS/HKT routes. Maybe VA feed from the East, through Perth and on to HKT is suffering as well.

What would you take - an A330 across the country then 6 hours in a 737 to HKT and a ground transit bus, followed by the return being an overnight 6 hour 737 sector, then schlepping bags over to T3 from T1 in PER to connect on to the East, or a direct widebody 787 each way?

No contest.

Some valid points there, and as other posters have commented VA International seem to have gone backwards despite their fleet and network being similar to last year (or not a lot of significant changes, with 777s to AUH and LAX and a few narrowbody 737 international runs).

But the "no contest" premise is based on the fact that you live in SYD, and believe it or not, not every Australian lives in SYD. I live in a town that QFd mainline can't even bother to connect to ther hub in SYD, so for me to go to DPS or HKT I would get to schlep it in JQd to SYD or MEL and then do the lovely Domestic to International in SYD airport for a B787 service to DPS or HKT and then the reverse back home. Or fly a narrowbody VA to BNE and then to DPS on a VA 737. So really depends on where you live. But I can see what you are saying by JQi running the B787 to HKT and DPS from SYD/MEL it looks like they are certainly trying to squeeze VA out of those destinations, or at least hurt VA. I guess there are other technical reasons why the JQi B787s went there first but it is interesting that VA haven't responded yet, maybe VA just consider HKT and DPS as a low yield graveyard anyway so it may be better just to use their resources to fight QFd elsewhere rather than take on JQ at the bottom of the market.... after all - if JQ want to have a fare war between DPS and HKT then I guess all the other guys like Air Asia X, Scoot, Tiger, Lionair etc will be happy to oblige them!

 

[maninblack]

The websites, both Virgin and Velocity which are significant retail shopfronts are still an absolute shambles. A really good CEO would have had them fixed them by now. He seems to be doing a reasonable job in a tough space but has not set the world on fire, probably a C+. The whole effort still feels a bit LCC with a bit of upmarket veneer pretendies :-|

 

[bullerdude]

The websites, both Virgin and Velocity which are significant retail shopfronts are still an absolute shambles. A really good CEO would have had them fixed them by now. He seems to be doing a reasonable job in a tough space but has not set the world on fire, probably a C+. The whole effort still feels a bit LCC with a bit of upmarket veneer pretendies :-|

A new premium feel website with great online booking management and integrated frequent flyer accounts would probably make a decent difference to Virgin's image.

 

[peterk]

John Borghetti has done a great job in driving Virgin’s strategy I think

Over the longer term, I would expect Virgin to emerge as the "Stronger Competitor" then Qantas

And I think the best is yet to come from/for Virgin Australia and it's Frequent Flyer's and Partners

 

[eastwest101]

The websites, both Virgin and Velocity which are significant retail shopfronts are still an absolute shambles. A really good CEO would have had them fixed them by now. He seems to be doing a reasonable job in a tough space ...

This really puzzles me as well, I noted in another thread that in Jan 2014 when JB was interviewed about what he will be up to in 2014 he specifically mentioned getting VA's IT issues sorted out and levereging the fact that his partner airlines all use Sabre. Even putting aside the issue that VA Sabre seems to have problems talking to EY DL NZ or indeed any other Sabre, its the front door of your business, and its like having a broken door on the shop front as it looks bad and only invites further problems, costs and mischef.

I cannot beleive he would be ignorant that the VA web site sucks unless someone else is doing a brilliant job of hiding it from him? The question is - and we really need an insider for this - is what happened and what is happening at the VA IT team? To be fair - they have fixed the most laughable and shambolic problems with the VA web site, but there are still numerous integration problems a year after it went live.

 

[lovestotravel]

I give him a 5/10 - Virgin tries, but just doesn't really get it. I have actually flown Virgin three times in the past month MEL-SYD-MEL. Firstly as I had a credit voucher with Virgin that I wanted to use and the other time QF wanted $329 for the flight where VA was $109.

Lounges:
MEL Lounge - I am starting to like it more now, especially as it's bigger, but breakfast.. Something hot please, I don't really like cereal and fruit, and I didn't see the pancake machine there last week, maybe I missed it as I was in a rush.
SYD Lounge - It just doesn't feel welcoming, somethings not right about it, and yes Hot Dogs....

Flight:
Crew - Either really good or really cough
Food - Talking up their snack service, breakfast was a bottle of water and a almost frozen banana cake.

Website:
Still pretty poor. Although some of the little touches are nice, EG: Popular routes can be booked by clicking on one button. I don't like having to enter my credit card details for each and every flight. I don't like having to log-in multiple times. But it's getting better I guess

Future:
Well seems that VA have no plans for much going off their latest report. Personally I'd love them to fly to more destinations, but at the end of the day SQ covers SIN far better than anyone else can and for Europe well it's well covered by Emirates (then Etihad/Qatar etc) and having a token flight operated by VA is kinda pointless. Not sure where they could expand really as much as I'd love them too.

Overall:
They still feel like a LCC that has moved upmarket, improve the food offerings in the lounge and on-board and I really don't like the lack of IFE either


AJ gets a 4/10 - He's doing what the board wants and he does have everything stacked up against him (wages mainly)

 

[Deleted member 29185]

Any thoughts or comments on the reasons for the fall or the future?

Internationally, it's simple for me. Although I'm VA plat and QF NB and PX nothing, I've been flying my short haul BNE-POM route roughly once a month predominantly on Air Niugini. The reasons are 1) the Koru Club at BNE is cough. I prefer to relax in the general terminal where I can buy nice food and sit comfortably; 2) PX allows me to pre-select any seat including exit rows; 3) PX is nearly always the cheaper option; 4) PX feed me!!!!! (and the meal is actually not too bad) and give me a drink or two; 5) PX is mostly a 767 and VA 737; 6) PX offer in-flight duty free with an occasional item of interest; 7) the only lounge in POM is a PX one; 8) PX have in seat screens or flip up ones on a bracket.

Why would I fly VA?

 

[AdMEL]

I thought one area that was interesting but has not drawn much comment / discussion is the turn around to the negative in the VA international result. A $29.5 million loss, from a previous profit of $26.6 million.

It would appear that not much has changed on the surface ... pretty much constant fleet / routes etc. Any thoughts or comments on the reasons for the fall or the future?

My guess is competition on one of their key international routes - LAX. Prices on this route have been unsustainably low for a year or two now, with currency and fuel prices moving against them. I would guess this route makes up around half of their international passengers, so these things could easily result in profit turning to a loss.

Imagine what would happen if the LAX route came under the same sort of pricing pressure as Europe.

Excuse my ignorance, but could you please explain this?

I agree that JB has done a good job of moving Virgin upmarket with the new name and colour scheme, subject to some missteps
- the botched Sabre implementation and continued website issues (though some here have benefited)
- a too white design for the lounges that has dated (somewhat softened by the intro of wood features in recent SYD/MEL renovations)
- not refitting QFA/QFB where VA otherwise has a massive advantage
- recent downgrading of Flexi fares by offering substandard snacks along with the rest of the plane

JB has also however done a good job of losing a lot of money, and tanking the share price.
I suspect this is part due to his owners wanting to stretch Qantas Domestic so it doesn't have the money to put into Qantas International.

However I suspect these moves will bring forward positive changes in Qantas
- some government assistance (most likely QSA changes)
- a much more brutal focus on costs, as per the 5,000 job losses
This will ultimately be detrimental to Virgin

Generally agree with your comments, except for the Lounge. Didn't notice that. I assume you mean (VH) XFA and XFB?

The websites, both Virgin and Velocity which are significant retail shopfronts are still an absolute shambles. A really good CEO would have had them fixed them by now. He seems to be doing a reasonable job in a tough space but has not set the world on fire, probably a C+. The whole effort still feels a bit LCC with a bit of upmarket veneer pretendies :-|

Maybe I'm just used to them now, but I don't think the websites are a shambles now - not the best/could be better, but certainly not that bad.

 

[AdMEL]

In light of my comments above, I just had a very brief scan of the VA annual report for 2013 (first time I've looked at their annual report) and a few key things stuck out:

1. Passengers declined slightly in last year and have been relatively flat for 5 years;
2. Revenue was up slightly.
3. Cash burnt was in the order of $250M! A lot more than their loss.
4. No breakdown of revenue at all!
5. A lot of fluff!

Overall, it doesn't really tell you much! But what it does say, is that given how much they are spending, fares are only going to increase substantially!

 

[markis10]

In light of my comments above, I just had a very brief scan of the VA annual report for 2013 (first time I've looked at their annual report) and a few key things stuck out:

1. Passengers declined slightly in last year and have been relatively flat for 5 years;
2. Revenue was up slightly.
3. Cash burnt was in the order of $250M! A lot more than their loss.
4. No breakdown of revenue at all!
5. A lot of fluff!

Overall, it doesn't really tell you much! But what it does say, is that given how much they are spending, fares are only going to increase substantially!

Revenue was up significantly over the scale shown:



As for cash burn being greater than $100M loss, that's to be expected when their is $400M of investment spend, they actually had positive operating cash flow that surpassed the loss.

Cashflow breakdown.

 

[AdMEL]

Revenue was up significantly over the scale shown:

View attachment 25923

As for cash burn being greater than $100M loss, that's to be expected when their is $400M of investment spend, they actually had positive operating cash flow that surpassed the loss.

Cashflow breakdown.

View attachment 25924

Agree revenue was up significantly from FY11 to FY12, but my comment was referring to FY12 to FY13. Why did revenue not increase substantially in FY13 too, given they continued increasing fares? The only thing I can think of was they increased seats available substantially.

As for the investment spend - agree. Lucky they have investors with deep pockets! Still think this only means an increase in fares.

 

[markis10]

Agree revenue was up significantly from FY11 to FY12, but my comment was referring to FY12 to FY13. Why did revenue not increase substantially in FY13 too, given they continued increasing fares? The only thing I can think of was they increased seats available substantially.

As for the investment spend - agree. Lucky they have investors with deep pockets! Still think this only means an increase in fares.

The answer to that is on the next page, the delta started growing between ASKs and RPKs, when that happen your profits dive as you chase unprofitable revenue.

 

[QF WP]

This really puzzles me as well, I noted in another thread that in Jan 2014 when JB was interviewed about what he will be up to in 2014 he specifically mentioned getting VA's IT issues sorted out and levereging the fact that his partner airlines all use Sabre. Even putting aside the issue that VA Sabre seems to have problems talking to EY DL NZ or indeed any other Sabre, its the front door of your business, and its like having a broken door on the shop front as it looks bad and only invites further problems, costs and mischef.

I cannot beleive he would be ignorant that the VA web site sucks unless someone else is doing a brilliant job of hiding it from him? The question is - and we really need an insider for this - is what happened and what is happening at the VA IT team? To be fair - they have fixed the most laughable and shambolic problems with the VA web site, but there are still numerous integration problems a year after it went live.

Well the VA Sabre Project team work in the building next to mine - I'll go and ask them. Not as many work there since the Navitaire>Sabre switchover on 15 Jan. The heady days were good - I could read their plans and current outcomes on the butchers paper throw the ground floor meeting room. They had meetings every morning

 

[MarkD]

But the "no contest" premise is based on the fact that you live in SYD, and believe it or not, not every Australian lives in SYD. I live in a town that QFd mainline can't even bother to connect to ther hub in SYD, so for me to go to DPS or HKT I would get to schlep it in JQd to SYD or MEL and then do the lovely Domestic to International in SYD airport for a B787 service to DPS or HKT and then the reverse back home. Or fly a narrowbody VA to BNE and then to DPS on a VA 737. So really depends on where you live.

So you find the transfer between BNE terminals so much smoother than Syd, that you would prefer to be on a 737 than a 787 ? Give me the syd transfer and a 787 any day. Also I note you failed to mention the easy transfer at melbourne option, which would be far quicker/easier than bne. When someone wants to dislike something, they will pick out the bad bits and disregard the good wont they