Virgin Blue set to post loss / cancel routes

[pauly7]

I am hoping hoping that all this will not affect Virgin's America flights starting up (selfishly I must admit as I'm flying with them over and QF back!)


Virgin heads for red


VIRGIN BLUE is expected to become a bigger thorn in the side of its 62.7 per cent owner Toll Holdings. One broker warns the airline is not only losing money but could need an injection of funds if fuel prices remain at current levels.

Virgin heads for red | smh.com.au

 

[Mal]

Ouch, not looking good if the brokers are right (and they do tend to have some inside information at times, and a good grasp of how things affect stocks).

Hopefully someone has deep pockets.

 

[Evan]

Does not sound good.
If QF/JQ and DJ are suffering i have no idea how TR must be coping.
Could get ugly, and if its bad in Australia i can really see lots of issues in other countries !
E

 

[Mal]

Could get ugly, and if its bad in Australia i can really see lots of issues in other countries !

Australia has relatively high airfares, a good business base who is prepared to pay $ and a young fleet. Compare to the U.S where discounting is the main game, people who don't want to pay for First (or Business) and really old aircraft, then yep there is some serious suffering happening.

 

[pauly7]

Does not sound good.
If QF/JQ and DJ are suffering i have no idea how TR must be coping.
E

TR has a parent with very very deep pockets. I'm sure they will live.

Not so for DJ or for QF/JQ!

 

[pauly7]

Australia has relatively high airfares, a good business base who is prepared to pay $ and a young fleet.

I think the crux of the article is that the 'business base prepared to pay $' lies dominantly with QF - that is why DJ (and perhaps JQ although they are cost advantaged v DJ) is suffering..

 

[NM]

The VBA share price is not looking very healthy. Has been steadily dropping this year. It was at $2.10 at the beginning of the year, and had dropped to $0.90 at the beginning of May, and down to $0.645 at today's close.

 

[stuartfaz]

The VBA share price is not looking very healthy. Has been steadily dropping this year. It was at $2.10 at the beginning of the year, and had dropped to $0.90 at the beginning of May, and down to $0.645 at today's close.

I wonder how long Toll is going to be forced to hang on to DJ.

And if they do sell, will Sir Richard be waiting in the wings to get majority control back, or possibly take it private again?

Interesting times ahead, that's for sure.

 

[NM]

I wonder how long Toll is going to be forced to hang on to DJ.

And if they do sell, will Sir Richard be waiting in the wings to get majority control back, or possibly take it private again?

Interesting times ahead, that's for sure.

I guess it becomes a harder and harder decision for Toll as the price continues to drop. If someone had a plan to ensure string profits, then there may be a bargain to be found.

 

[dajop]

I guess it becomes a harder and harder decision for Toll as the price continues to drop. If someone had a plan to ensure string profits, then there may be a bargain to be found.

Hmmm, SQ used to be interested in the AUS mkt big time - wonder if they'd ever be interested again? DJ/TT along the QF/JQ model? Then they could help DJ to shed their LCC image, and join an international alliance! Not going to happen though.

 

[JohnK]

This is not good news for DJ and all Australians. There does not appear to be any relief in sight either with most analysts predictiing that crude oil will continue to rise until at least the end of the year.

 

[oz_mark]

This is not good news for DJ and all Australians. There does not appear to be any relief in sight either with most analysts predictiing that crude oil will continue to rise until at least the end of the year.

Who knows where the price of crude will go, but there must come a point where the economy is unable to sustain such continuing rises. If oil, for example got to US200 a barrel, I think we would see massive problems. Also, if it is a price bubble driven by speculators the bubble will in time burst, but predicting when that will happen is not something I would do.

 

[QF WP]

Whilst a little off the original topic, but firmly part of the discussions here, the following story confirms SQ's belief in TR:

Singapore Airlines remains confident that new domestic entrant Tiger Australia will succeed despite the threat of high fuel prices...

I agree, Tolls management team must be looking at any or all of the options at present (my list is not exhaustive):

1. Should they they buy more shares now at the depressed price (dollar cost averaging) or look to offload some of all of the shares now (booking a loss on their balance sheet) - but hard given the lack of people who have the cash and determination to enter this market now
2. If they continue holding VB shares, are they willing to fireproof VB's fuel price on the upside (assuming it goes further up)

 

[pauly7]

Whilst a little off the original topic, but firmly part of the discussions here, the following story confirms SQ's belief in TR:

Singapore Airlines remains confident that new domestic entrant Tiger Australia will succeed despite the threat of high fuel prices...

Its really interesting the tone the airlines are increasingly taking, again in this article - 'its a matter who can last the longest', 'being the last one standing' - almost hoping that others go under first!

Another article here, same vein but interesting that Brett Godfrey's stake has been reduced from $75 million to $18 million. Still enough to buy a few kebabs with change though!

Fuel costs shoot down Virgin | The Daily Telegraph

 

[Fluid-Flyer]

You know, they will probably start a new airline, a second brand, and it will soon go the way of Ted, and then the whole business will flop.



My two cents worth, is, they need to get seating right –

• They are the only major domestic jet airline that doesn’t advise what type of aircraft you will be flying, at the time of booking. This is most annoying, as I like their E170 and dislike their B737… (NB: you can tell the aircraft at JQ & TT* from the seat allocation maps. *I know, TT hasn’t got its A319s yet.)
• Immediately drop this stupid PE flying empty gimmick. The seats are convertible, so that’s 18 seats on a full Economy flight that could be interspersed amongst the guests that THEY DO HAVE, to make their flights more comfortable, rather than positioning for guests that THEY DON’T HAVE. (If it is intended to make me want to fly PE, it fails; it makes me want to fly another airline.) Even Qantas has never been so rude as to leave empty “business converter” seats in business formation when not filled.
• Give their “elite level” Velocity members good seat assignments. Personally, I know how to get a good seat assignment on TT, JQ & QF, but it’s not happening on DJ. I thought I might notice a Qantas-style improvement after my QF-DJ status match, but I haven’t.
• Realistically, they have to generate loyalty by doing MORE than Qantas does, not slightly less. So, big hint… pull out a row of seats in front of the emergency exits & shove it back in behind the emergency exits (737). Effectively creating a 3 seat zone (e.g.) –
  • Economy (29” pitch?),
  • Economy Plus (35” pitch?)
  • Premium Economy (middle seat tablized).
• During booking immediately confirm upgrades (if available) for Silver Velocity holders & below who book Flexible & Corporate fares into Economy Plus. AND for Gold Velocity members, immediately confirm an upgrade into the next level of seat (if available); thus, for Promo & Blue Savers this is Economy Plus, and for Flexible & Corporate this means Premium Economy.
• Additionally, when OLCI opens, allow Silver & the Lounge members to upgrade themselves (where available) to the next level of seat. I.E. Silver travelling on Corporate or Flexible also gets access to any available Premium Economy seats, and Silver travelling on Promo or Saver, gets access to any available Economy Plus seats.
• …