VA Financial Results Thread: Turnaround may prove tricky for new Virgin Australia CEO

[pauly7]

Turnaround may prove tricky for new Virgin Australia CEO Scurrah

Shareholders will press Virgin Australia Holdings' new CEO Paul Scurrah to present a robust strategic plan on Wednesday, when the airline is expected to report its seventh consecutive annual loss, on top of $1.2 billion worth of red ink over the previous six years.

With shares trading near all-time lows, Scurrah's options include cutting costs, restructuring management, rebranding its underperforming budget carrier Tigerair Australia, ending loss-making flights to Hong Kong and tightening control over the loyalty division.

But they say that because of decisions by his long-serving predecessor, John Borghetti, Scurrah may lack room to maneuver amid a weakening domestic market.

His legacy at Australia's No. 2 carrier includes rising costs, expensive fleet and airport contracts, the sale of part of its frequent flyer business, a looming U.S. dollar debt refinancing and a complex share register and boardroom, the sources said.

Major Virgin shareholders Singapore Airlines, Etihad Airways, HNA Group, Nanshan Group and Richard Branson's Virgin Group have baulked at providing more capital, the sources said, and Scurrah has told staff the airline cannot rely on shareholder financing.

For Scurrah, looming decisions include whether to rebrand poorly performing budget carrier Tigerair Australia, which has struggled to recover its reputation since regulators grounded it in 2011, before it was owned by Virgin.

Scurrah also must decide whether to axe flights to Hong Kong launched after HNA invested in the airline. They were not lucrative even before recent anti-government protests hurt travel demand to the city, according to the sources.

Virgin has had negative free cash flow for the last 11 financial years, according to Refinitiv data, which has led it to rely heavily on funding from equity, debt and asset sales. It has a non-investment grade credit rating because of its high debt levels.

Some strategic changes are likely to be announced on Wednesday, with others later in the year, one of the sources said.

Full article including JB’s rebuttal (jokes) here:

Turnaround may prove tricky for new Virgin Australia CEO Scurrah

Shareholders will press Virgin Australia Holdings' new CEO Paul Scurrah to present a robust strategic plan on Wednesday, when the airline is expected to report its seventh consecutive annual loss, on top of $1.2 billion worth of red ink over the previous six years. With shares trading near...

au.finance.yahoo.com

 

[cove]

Is beardy bloke still getting a royalty on the Virgin name?
Selling part of the loyalty scheme was an error.
Mostly the product is good....so just need to fix the cost structure and get rid of HNA.

 

[jakeseven7]

Is beardy bloke still getting a royalty on the Virgin name?
Selling part of the loyalty scheme was an error.
Mostly the product is good....so just need to fix the cost structure and get rid of HNA.

Yes fat old Santa Claus is still siphoning money out of VA unfortunatey and adding zero value these days

I truly hope PS can undo the mess that JB created and get VA back on course but it isn’t going to be quick.

 

[Bundy Bear]

Hong Kong is going to be a real problem now; I also think that New Zealand can't be going that well now that AirNZ and Virgin broke up.

Also not sure if flying a 737 on some regional routes is going to go that well.

I guess Virgin need to make the hard choices on some routes.

Shareholders like to see increasing profits; and I guess this is a problem with having shareholders, think of the money they could make just flying around just the 737s around the major routes.

 

[SeaWolf]

Hong Kong is going to be a real problem now;

It has just been terrible timing for them, if the unrest hadn't occurred that route would probably be doing a lot better, but QF is suffering from a downturn on that route as well.

There's quite a good breakdown here of which routes are likely to see changes but it really is hard to know for sure at this stage.

Virgin Australia is 'reviewing all routes' — which ones are most likely to go?

The airline says it is "reviewing all routes" as it tries to cut costs and bounce back from a $349 million loss. Aviation analysts take a look at which ones are most likely to be cut back, or chopped altogether.

www.abc.net.au