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VS Profits...a Question.  
User currently offlineManhattanbeach From , joined Dec 1969, posts, RR:
Posted (5 years 3 months 2 weeks 2 days 20 hours ago) and read 2249 times:

I was looking at the VS typical daily schedules from LHR.

JFK New York VS 3 Virgin Atlantic Airways 9:30 AM
MIA Miami VS 5 Virgin Atlantic Airways 10:35 AM
ORD Chicago VS 39 Virgin Atlantic Airways 11:00 AM
LAX Los Angeles VS 7 Virgin Atlantic Airways 11:15 AM
SFO San Francisco VS 19 Virgin Atlantic Airways 11:30 AM
IAD Washington VS 21 Virgin Atlantic Airways 11:50 AM
PVG Shanghai VS 250 Virgin Atlantic Airways 1:00 PM
NRT Tokyo VS 900 Virgin Atlantic Airways 1:45 PM
JFK New York VS 45 Virgin Atlantic Airways 2:00 PM
BOS Boston VS 11 Virgin Atlantic Airways 2:50 PM
LAX Los Angeles VS 23 Virgin Atlantic Airways 3:10 PM
EWR Newark VS 1 Virgin Atlantic Airways 3:45 PM
JFK New York VS 9 Virgin Atlantic Airways 3:55 PM
NBO Nairobi VS 671 Virgin Atlantic Airways 7:15 PM
EWR Newark VS 17 Virgin Atlantic Airways 8:25 PM
JNB Johannesburg VS 601 Virgin Atlantic Airways 8:30 PM
DXB Dubai VS 400 Virgin Atlantic Airways 9:00 PM
DEL Delhi VS 300 Virgin Atlantic Airways 10:00 PM
LOS Lagos VS 651 Virgin Atlantic Airways 10:00 PM
HKG Hong Kong VS 200 Virgin Atlantic Airways 10:30 PM

Just 20 departures but they're all what I would call 'fail safe' routes even in the present climate. Now VS have just reported that they doubled annual profits but then I read :

'The profits are “entirely attributable” to a gain from the strength of the dollar that has yet to be crystallised and may not even arrive,

and

'The airline is 49 per cent owned by Singapore Airlines and figures from the Singapore group, produced under the widely adopted international financial reporting standards, show Virgin Atlantic barely broke even in the 12 months to the end of March and was heavily lossmaking in the final quarter of that period,

I only ask because as far as I can see VS is a unique airline in the world. I can't think of another airline that enjoys the same kind of 'high yielding only' network from another major hub? They have a low cost base and no debt so if the above quotes are true and they havn't made any money with those kinds of benefits then the airline industry as far as I can see it is...well... screwed frankly.

The oil price is going up, demand is dropping..you see headlines like this :

4,000 British Airways staff axed as bosses admit 'we could go under'

Who's going to survive and who isn't ?

(All the major U.S, airlines are unlikely to survive the next 12 to 18 months according to British airline mogul Richard Branson.) ?????

9 replies: All unread, jump to last
 
User currently offlineTheginge From United Kingdom, joined Oct 2006, 1132 posts, RR: 0
Reply 1, posted (5 years 3 months 2 weeks 2 days 20 hours ago) and read 2227 times:



Quoting Manhattanbeach (Thread starter):
only ask because as far as I can see VS is a unique airline in the world. I can't think of another airline that enjoys the same kind of 'high yielding only' network from another major hub? They have a low cost base and no debt so if the above quotes are true and they havn't made any money with those kinds of benefits then the airline industry as far as I can see it is...well... screwed frankly.

Yields have dropped substantially in the recent year, and VS is not immune from this, so even though planes are quite full, the amount of money being made is marginal.
VS have also made people redundant in the last few months.


User currently offlineManhattanbeach From , joined Dec 1969, posts, RR:
Reply 2, posted (5 years 3 months 2 weeks 2 days 20 hours ago) and read 2218 times:



Quoting Theginge (Reply 1):
Yields have dropped substantially in the recent year, and VS is not immune from this, so even though planes are quite full, the amount of money being made is marginal.
VS have also made people redundant in the last few months.

Hey look fair play to VS, i'm not saying they're immune i'm just using them as a bench mark.


User currently offlineTheginge From United Kingdom, joined Oct 2006, 1132 posts, RR: 0
Reply 3, posted (5 years 3 months 2 weeks 2 days 19 hours ago) and read 2157 times:

I wasn't having a go at VS at all, just stating what it is like out there at the moment. But VS is a good bench mark to look at as they 'cherry pick' the best routes.

User currently offlineJfk777 From United States of America, joined Aug 2006, 8375 posts, RR: 7
Reply 4, posted (5 years 3 months 2 weeks 2 days 19 hours ago) and read 2133 times:
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Quoting Manhattanbeach (Thread starter):
I only ask because as far as I can see VS is a unique airline in the world. I can't think of another airline that enjoys the same kind of 'high yielding only' network from another major hub?

Cathay and Singapore are widebody long haul airlines from their home cities with no short haul fleets, they do operate A330 & 777 regionaly.


User currently offlineCloudyapple From Hong Kong, joined Jul 2005, 2454 posts, RR: 9
Reply 5, posted (5 years 3 months 2 weeks 2 days 16 hours ago) and read 1993 times:



Quoting Manhattanbeach (Thread starter):
I only ask because as far as I can see VS is a unique airline in the world. I can't think of another airline that enjoys the same kind of 'high yielding only' network from another major hub? They have a low cost base and no debt so if the above quotes are true and they havn't made any money with those kinds of benefits then the airline industry as far as I can see it is...well... screwed frankly.

The reason Virgin was in profit last year was because of the BA T5 fiasco when they lost EVERYONE's bags and cancelled tons of flights for weeks. BA's premium passengers flocked en masse to Virgin paying full fare to get to where they wanted to go to. Take this effect away they would have lost money. Having these routes do not automatically mean they are immune to the downturn. Most of their routes have fierce competition. Which route they fly from Heathrow has not at least 2 if not more other airlines competing?

Quoting Jfk777 (Reply 4):
Cathay and Singapore are widebody long haul airlines from their home cities with no short haul fleets, they do operate A330 & 777 regionaly.

 redflag  They may only have widebody fleets but they run a lot of shorthaul flights less than 3 hours. There can be narrowbody longhaul routes and widebody shorthaul routes. One doesn't automatically imply the other.



A310/A319/20/21/A332/3/A343/6/A388/B732/5/7/8/B742/S/4/B752/B763/B772/3/W/E145/J41/MD11/83/90
User currently offlineJfk777 From United States of America, joined Aug 2006, 8375 posts, RR: 7
Reply 6, posted (5 years 3 months 2 weeks 2 days 15 hours ago) and read 1918 times:
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BA's premium passengers flocked en masse to Virgin paying full fare to get to where they wanted to go to. Take this effect away they would have lost money.

LHR is the most competitive intercontinental airport, most Virgin routes have British Airways and the destination country's airline or two, ANA & JAL from Japan both fly to LHR.

Having these routes do not automatically mean they are immune to the downturn. Most of their routes have fierce competition.

Virgin has always been a pioneer in new amenities for passengers and doesn't have the baggage of history that BA has to deal with. Its 49% owner Singapore Airline is less then 40 Years old.


User currently offlineManhattanbeach From , joined Dec 1969, posts, RR:
Reply 7, posted (5 years 3 months 2 weeks 2 days 15 hours ago) and read 1874 times:



Quoting Cloudyapple (Reply 5):
The reason Virgin was in profit last year was because of the BA T5 fiasco when they lost EVERYONE's bags and cancelled tons of flights for weeks. BA's premium passengers flocked en masse to Virgin paying full fare to get to where they wanted to go to. Take this effect away they would have lost money.

What ?????

Virgin Atlantic announced a pre-tax profit of £68.4m in the year to February 28, up from £34.8m in the same period last year, but analysts cautioned that the figures were pushed into the black by a £68m gain in operating income from the airline's dollar-denominated cash balances.

The airline, which is privately-owned by Sir Richard's Virgin group and Singapore Airlines, did not publish full profit and loss accounts today.

Analysts said Virgin Atlantic's prediction of a loss this year reflects its similarities with BA, although the smaller airline is more exposed to the less depressed leisure market.

Virgin Atlantic, whose destinations include New York, Barbados and Sydney, carried 5.8 million passengers last year compared with 33 million at BA.

"These results show that the operating performance is not dissimilar to BA's," said Andrew Lobbenberg, analyst at Royal Bank of Scotland.

Virgin Atlantic's results were flattered in comparison with BA's because its year-end, in February, allowed the airline to avoid putting March in its figures.

A dire March contributed to BA's £401m loss, with more than three-quarters of that deficit being booked in the three months since January

Isn't the 'quoted' above probably more likely ?


User currently offlineSteve6666 From United Kingdom, joined Sep 2003, 411 posts, RR: 0
Reply 8, posted (5 years 3 months 2 weeks 2 days 14 hours ago) and read 1846 times:

Speaking as a dull accountant, who hasn't researched this fully, I would caution that Virgin and BA's accounts are probably both drawn up under IFRS (BA's certainly so) - and if Virgin's are still drawn up under UK GAAP, well UK GAAP is converging on IFRS, so......

The reason this is important is because IFRS produces (imo) nonsensical Income Statements. The entire focus of IFRS is the balance sheet, and what gets recognised as profit in the Income Statement is increasingly bizarre and has contributed significantly to inflated profits across industries up to 2007 and inflated losses since then, as items such as:
- unrealised property revaluation surpluses and deficits
- unrealsed currency gains (as above) and losses
- in the money/out of the money positions on derivatives
are taken to profit rather than to reserves.

Essentially, for some attempt to measure the underlying performance of a business, cash flow statements are becoming much much more relevant and reliable than an IFRS or UK GAAP Income Statement.

Please address all comments to Sir David Tweedie, Head of the International Accounting Standards Board.



eu nasci ha dez mil anos atras, e nao tem nada nesse mundo que eu nao saiba demais
User currently offlineEghansen From , joined Dec 1969, posts, RR:
Reply 9, posted (5 years 3 months 2 weeks 2 days 13 hours ago) and read 1781 times:



Quoting Steve6666 (Reply 8):
Speaking as a dull accountant, who hasn't researched this fully, I would caution that Virgin and BA's accounts are probably both drawn up under IFRS (BA's certainly so) - and if Virgin's are still drawn up under UK GAAP, well UK GAAP is converging on IFRS, so......

As an even duller accountant and math teacher, I only know about US GAAP and know nothing about UK GAAP and IFRS.

But I do know that if you are going to discuss VS profit, you need to see the entire income statement. Not only net income, but also operating income and gross income. Net income can be affected by all sorts of extraordinary charges (sale of aircraft or other assets, sale of investments, fuel hedges, refinancing, severance payments for redundancies, etc.) which we know nothing about.

Unfortunately, a private company is just that. They do not have to disclose (much) about their operations and income.


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