Virgin Blue shares plunge 29% after profit downgrade

[pauly7]

VIRGIN BLUE shares plummeted 29 per cent today after the airline cut its profit forecast by up to 75 per cent because of a rapid deterioration in leisure travel. The airline, in which British billionaire Richard Branson's Virgin Group owns 26 per cent, shocked financial markets this morning by announcing pre-tax profit would be in the $20 million to $40 million range compared to recent guidance of $80m.


Virgin Blue plunges on profit warning | The Australian




Meanwhile over at Qantas:


QANTAS confirmed today its full-year profit outlook after smaller rival Virgin Blue's surprise downgrade.
The "flying kangaroo" said in traffic statistics released this afternoon that its profit guidance remained unchanged.
"Qantas expects underlying profit before tax for the full year ending June 30, 2010 to be in the range of $300 million-$400 million," it said.
Passenger numbers rose 5.3 per cent with all units except Qantas international showing growth compared to last year.


Qantas retains profit forecast | The Australian










Seems V Australia is still struggling and the Virgin domestic business is faltering now too. Some analysts point that instead of being trapped in a 'pincer movement' between QF and JQ, DJ has actually and perhaps unintentionally been pushed to the bottom more and is competing with the LCC's whilst QF successfully reaps the premium market.


Interesting times! Bit of a challenge for John, sure he will pull a few rabbits out!

 

[albatross710]

DJ has actually and perhaps unintentionally been pushed to the bottom more and is competing with the LCC's

I thought DJ were a low cost carrier...extra for this, extra for that, no meals etc. But their business structures are no longer LCC. They are stuck in the middle and need to decide where they want to play. More so their choice.

 

[cove]

VBA shares were around this price when they were losing plenty of money.
Be brave little Noddy,you and Big Ears should again make a profit on a share trade like last time.
Actually I cannot figure out why Singapore doesn't just buy a chunk and really make a difference to the Australian carrier.

 

[brissyflyer]

Looks like panic selling, 221 million shares changed hands today. The thing to remember is that while lots of people were selling there was plenty of buying too and there were some quite sizeable trades happening, saw a number of $100,000+ trades on a quick look at the days trade history.

 

[cove]

With more than 3 Billion shares on issue and a 52 week low of 26 cents and a 52 week high of 80 cents you would say that VBA shares closing at 31 cents makes it look interesting if you are trying to buy low and sell higher.
More sellers than buyers today because the price dropped.

 

[odysseus]

Airlines shares are always growth plays rather than yield, so the succession of downgrades (particularly when profit was still forecast as being double to 4x this only a few weeks back) was going to be a hit.

Though the share price is at the low end of its 52 week range, it still hasn't reached value; the forecast PE ratio is still ~23 so priced for future growth.

Turnover today was almost 10% of shares though which is massive!

 

[Slats7]

Give me QAN over VBA shares anyday.

 

[albatross710]

With just one month in the job, I wonder if this new price will be the strike price for the new CEO share options.

Am i too cynical or is the standard new CEO takes the axe to all of the provisions and sets the company for the next period.

I'll be a buyer on MOnday of it isn't too late.

 

[pauly7]

With just one month in the job, I wonder if this new price will be the strike price for the new CEO share options.

Am i too cynical or is the standard new CEO takes the axe to all of the provisions and sets the company for the next period.

I'll be a buyer on MOnday of it isn't too late.

You haven't been the first to mumble this.....!! But proving it - another thing entirely!!!

 

[cove]

It appears Virgin only have 2.2 billion shares not the higher figure I mentioned earlier.
Their enterprise is now valued at about $685 million.

 

[odysseus]

I'll be a buyer on MOnday of it isn't too late.

I'd say you should be able to get in. Nothing's a certainty though.

 

[cove]

After 20 minutes I coughed up and paid 32 cents and left my 30.5 cent order on.
Fingers crossed.

 

[Slats7]

Up nearly 5% this morning.

 

[Slats7]

Macquarie still have an outperform recommendation on VBA this morning but have dropped their target price to $0.50 from $0.76.

 

[ric_melb]

According to John Durie in The Australian, John Borghetti had his performance rights granted at approximately 80 cents a share. He can get those shares free if he raises the price 25% over 3 years. So as a shareholder i am looking forward to him getting the price up from 32 cents to $1.00.

 

[markis10]

According to John Durie in The Australian, John Borghetti had his performance rights granted at approximately 80 cents a share. He can get those shares free if he raises the price 25% over 3 years. So as a shareholder i am looking forward to him getting the price up from 32 cents to $1.00.

If he fails what has he lost compared to what you or other shareholders have lost, he still gets paid? Whats to stop the board repricing those options during the 3 year stint? I think he will do well but share options are not something shareholders benefit from IMHO, they reward success by diluting equity!