Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
Rumor : VX Given 1 Year To Turn A Profit Or Close  
User currently offlinephxa340 From United States of America, joined Mar 2012, 891 posts, RR: 1
Posted (2 years 3 days 18 hours ago) and read 35130 times:

Rumor : A few sources have said that VX has been given the ultimatum of turning a profit in 1 year or they will be shut down by the investors. The sources also said that all new plane orders are going to start being deferred and or cancelled. Anyone hear anything like this ?

We all know VX is struggling but Cush keeps promising profits that never come. Not sure what is next for this company.

59 replies: All unread, showing first 25:
 
User currently offlinePlanesNTrains From United States of America, joined Feb 2005, 5582 posts, RR: 28
Reply 1, posted (2 years 3 days 18 hours ago) and read 34875 times:

It would be good to know who the sources are. That would seem like information that would be privy to very few people.

-Dave



Next Trip: SEA-ABQ-SEA on Alaska
User currently offlineLV From United States of America, joined Jun 2001, 2005 posts, RR: 0
Reply 2, posted (2 years 3 days 17 hours ago) and read 34647 times:

If it's true I think it might be DL's newest source of slightly used planes. Second hand 320's anyone?      

User currently offlinebestwestern From Hong Kong, joined Sep 2000, 7152 posts, RR: 57
Reply 3, posted (2 years 3 days 17 hours ago) and read 34622 times:

This kind of information would be known by very very few people, as this kind of competitive information would be manna to the competition - one year of heavy losses on certain routes, such as LAX JFK would result in future years of less competitive profits.

I call false on the rumor.



The world is really getting smaller these days
User currently offlineanstar From United Kingdom, joined Nov 2003, 5244 posts, RR: 6
Reply 4, posted (2 years 3 days 16 hours ago) and read 34443 times:

Why would the board have approved and expansion strategy - keeping in mind that it costs money to expand as new routes don't turn a profit overnight?

User currently offlineeastalt From United States of America, joined Aug 2009, 29 posts, RR: 0
Reply 5, posted (2 years 3 days 14 hours ago) and read 33739 times:

Would a merger between Virgin and Frontier solve some of thier problems. They use the same reservations system, have the same fleet. They could delay aircraft deliveries and save some money. At the same time they could grow and save money by merging stations.

User currently offlinekoruman From , joined Dec 1969, posts, RR:
Reply 6, posted (2 years 3 days 13 hours ago) and read 33672 times:

I would be very, very surprised.

Pretty much everyone outside the USA recognises that all the legacy carriers have a horribly and eternally flawed business model, in which they try to raise all sorts of ancillary revenue to partially offset that they give all their most profitable seats away as upgrades instead of selling them. This leaves them on a never-ending roundabout of endless cycles into bankruptcy.

Virgin America is the only carrier in the USA which adheres to the basic fundamentals of running a business. I'd be disappointed if they fail.


User currently offlinekl911 From Czech Republic, joined Jul 2003, 5141 posts, RR: 15
Reply 7, posted (2 years 3 days 12 hours ago) and read 33011 times:

Quoting koruman (Reply 6):
Pretty much everyone outside the USA recognises that all the legacy carriers have a horribly and eternally flawed business model, in which they try to raise all sorts of ancillary revenue to partially offset that they give all their most profitable seats away as upgrades instead of selling them. This leaves them on a never-ending roundabout of endless cycles into bankruptcy.

Main problem is that the legacy carriers staff is way to expensive. They should focus on bringing that back in line with the rest of the world.


User currently offlinebobnwa From United States of America, joined Dec 2000, 6471 posts, RR: 9
Reply 8, posted (2 years 3 days 12 hours ago) and read 32919 times:

Quoting eastalt (Reply 5):
Would a merger between Virgin and Frontier solve some of thier problems. They use the same reservations system, have the same fleet. They could delay aircraft deliveries and save some money. At the same time they could grow and save money by merging stations.

I don't think merging two companies with financial problems would be a good fit.


User currently offlineual777 From United States of America, joined Aug 2003, 1556 posts, RR: 5
Reply 9, posted (2 years 3 days 11 hours ago) and read 32146 times:

Quoting koruman (Reply 6):

Then why are the US legacies outperforming almost all foreign airlines with the exception of EK? Yes domestic upgrades are free, but many seats are still bought, upgrades purchased, and many of those being upgraded are on full fare onomy tickets.

Quoting kl911 (Reply 7):

The salaries are already in line.


VA is simply being squeezed by the competition.



It is always darkest before the sun comes up.
User currently offlineKC135TopBoom From United States of America, joined Jan 2005, 12146 posts, RR: 51
Reply 10, posted (2 years 3 days 11 hours ago) and read 31975 times:

Quoting anstar (Reply 4):
Why would the board have approved and expansion strategy - keeping in mind that it costs money to expand as new routes don't turn a profit overnight?

Their DFW-LAX and DFW-SFO routes (both started in Dec. 2010) seem to be their most profitable routes to date. However investors are still bailing out on them as they have not (yet) made any real money.

Quoting LV (Reply 2):
If it's true I think it might be DL's newest source of slightly used planes. Second hand 320's anyone?

I doubt DL would be interested in the used A-320s or A-319s. DL has a large fleet of new build B-737-800s, and a smaller fleet of B-737-700s (as well as 100 B-737-900ERs on order). DL will be phasing out their NW aquired A-320s and A-319s soon and looks like they will settle on the B-737NG/MAX types in their fleet.


User currently offlinemichman From United States of America, joined Dec 2006, 505 posts, RR: 0
Reply 11, posted (2 years 3 days 11 hours ago) and read 31722 times:

Quoting koruman (Reply 6):
Virgin America is the only carrier in the USA which adheres to the basic fundamentals of running a business.

Actually making money is generally considered to be a basic fundamental of running a business.


User currently offlinegdg9 From United States of America, joined Jun 2005, 644 posts, RR: 0
Reply 12, posted (2 years 3 days 11 hours ago) and read 31293 times:

Quoting KC135TopBoom (Reply 10):
DL will be phasing out their NW aquired A-320s and A-319s soon

Oh? When? I hadn't heard this.


User currently onlineusdcaguy From United States of America, joined Jan 2004, 972 posts, RR: 2
Reply 13, posted (2 years 3 days 11 hours ago) and read 31158 times:

Quoting koruman (Reply 6):
they try to raise all sorts of ancillary revenue to partially offset that they give all their most profitable seats away as upgrades instead of selling them.

You're kidding, right? They do NOT give their most profitable seats away, they just happen to be in economy. The problem is that very few, if any, passengers are willing to pay for First Class within the US apart from transcontinental routes. If they aren't given out, the carriers do sell first class, but it is in the form of upgrades; many times, they may be sold at the airport or online as an extra to one's flight, and that in turn generates income for the airline. The problem that legacy carriers in the States face is competition; it is incredibly difficult to push through industry fare increases on the front end due to price transparency, so they strive to earn revenue in more opaque channels on the back end, and that does include upgrades from time to time. Upgrades are prolific, but this is to get people flying one carrier; it is much more expensive to win new passengers over than to keep the ones you have, so giving away seats in First Class is more of a cheap marketing investment, which in turn generates future business. The growing number of elites (particularly silver) that are not upgraded on a regular basis proves that the carriers are likely benefiting from the arrangement much more than the fliers themselves.

Quoting michman (Reply 11):
Actually making money is generally considered to be a basic fundamental of running a business.

That's not true. Just ask AA.  


User currently offlinejfklganyc From United States of America, joined Jan 2004, 3479 posts, RR: 5
Reply 14, posted (2 years 3 days 11 hours ago) and read 31126 times:

"DL will be phasing out their NW aquired A-320s and A-319s soon and looks like they will settle on the B-737NG/MAX types in their fleet."

Will they? Or is this a.net opinion spoken as fact?

An airline the size and scope of DL, UA, AA/US can and will have multiple fleets due to the sheer vastness of the fleet. The days of a "gentlemans agreement" with B or A are over.


User currently offlineLHRFlyer From United Kingdom, joined Apr 2010, 815 posts, RR: 1
Reply 15, posted (2 years 3 days 11 hours ago) and read 30934 times:

I would caution against rumours concerning the financial viability of a company that cannot be attributed to sources.

If investors are unwilling to invest any more money in the company then the likely option is that they will seek to sell to another buyer. Shutting down an airline is an expensive (and messy) process.

If there are questions over the airline it would be interesting to see whether Virgin withdraws the brand licence beforehand to mitigate the negative brand impact.


User currently offlineBobloblaw From United States of America, joined Jan 2012, 1725 posts, RR: 1
Reply 16, posted (2 years 3 days 10 hours ago) and read 30573 times:

Quoting eastalt (Reply 5):
Would a merger between Virgin and Frontier solve some of thier problems

No, very different airlines. Both airlines have problems in that they have provided capacity in markets where no additional capacity was or is needed and where most of the markets were already stimulated.


User currently offlineDTWPurserBoy From United States of America, joined Feb 2010, 1633 posts, RR: 6
Reply 17, posted (2 years 3 days 10 hours ago) and read 30300 times:

Quoting kl911 (Reply 7):
Main problem is that the legacy carriers staff is way to expensive. They should focus on bringing that back in line with the rest of the world.

The bankruptcy courts took care of that. All of the legacy carriers took huge cuts in salary and benfits.



Qualified on Concorde/B707/B720/B727/B737/B747/B757/B767/B777/DC-8/DC-9/DC-10/A319/A320/A330/MD-88-90
User currently offlinesrbmod From , joined Dec 1969, posts, RR:
Reply 18, posted (2 years 3 days 10 hours ago) and read 30194 times:

Considering VX is a privately owned airline, the public does not have access to their financials like those of a publicly traded company. Like Spirit, Virgin America is a privately owned airline and they do release a limited amount of financial details to the public.

If VX is looking at a potential ultimatum from its' investors, they may start to entertain merger options with another airline or perhaps sell it to another investor who may or may not retain the Virgin America name. We can easily pencil in multiple airlines that could be potential merger partners (JetBlue, Spirit, Frontier, US Airways, United, etc.), but the reality is that this is a rumor and we all know that rumors are part and parcel of the airline industry.

Could VX be gone in a year? It's quite possible. We cannot predict the future and there can always be some sort of major event that impacts the world and in particular the airline industry. Look at the number of airlines that folded in the wake of the slump in travel after 9/11 and those in the last 5 years or so for whom the spike in fuel prices coupled with the ongoing global economic issues.


User currently offlineN757ST From United States of America, joined Feb 2002, 362 posts, RR: 0
Reply 19, posted (2 years 3 days 10 hours ago) and read 29975 times:

Quoting srbmod (Reply 18):
Considering VX is a privately owned airline, the public does not have access to their financials like those of a publicly traded company. Like Spirit, Virgin America is a privately owned airline and they do release a limited amount of financial details to the public.

We know quite a bit about thier financials... and they are dismal. As of last quarter VX is running a 20% operating loss, which is unprecidented in this industry.

FYI, spirit is a public company under the symbol SAVE.


User currently offlineJHCRJ700 From United States of America, joined Oct 2009, 377 posts, RR: 0
Reply 20, posted (2 years 3 days 10 hours ago) and read 29769 times:

Quoting koruman (Reply 6):
Virgin America is the only carrier in the USA which adheres to the basic fundamentals of running a business. I'd be disappointed if they fail.

VX is the best airline in the USA currently. If they go belly up it'd truly be a shame.



RUSH
User currently offlinejetfuel From Australia, joined Jan 2005, 2225 posts, RR: 0
Reply 21, posted (2 years 3 days 9 hours ago) and read 29640 times:

A rumour started by another airline? Dangerous stuff. BEST totally ignored


Where's the passion gone out of the airline industry? The smell of jetfuel and the romance of taking a flight....
User currently offlinesrbmod From , joined Dec 1969, posts, RR:
Reply 22, posted (2 years 3 days 9 hours ago) and read 29595 times:

Quoting N757ST (Reply 19):
FYI, spirit is a public company under the symbol SAVE.

I definitely missed that one.

Quoting N757ST (Reply 19):
We know quite a bit about thier financials... and they are dismal. As of last quarter VX is running a 20% operating loss, which is unprecidented in this industry.

Which is not common for privately traded companies to do, especially one that has been reporting these sort of numbers. It seems like corporate suicide, as what investment firms would be interested in investing in them with these sort of losses? In some ways, it is an embarrassment to the Virgin name until you think about all of the other business failures that the Virgin Group has put the Virgin name on...... Branson wanted a Virgin airline in the US, fought hard to get it off of the ground, and five years later the venture continues to sputter along and at some point, the investors have to decide whether this venture should be allowed to continue


User currently offlineairliner371 From United States of America, joined Aug 2012, 1394 posts, RR: 2
Reply 23, posted (2 years 3 days 9 hours ago) and read 29492 times:

Quote:
Will they? Or is this a.net opinion spoken as fact?

The -900ERs are replacing A320, A319 and 757s.



You will either love or hate the airline industry. If you love it, it will get in your blood and it will never leave.
User currently onlineMaverickM11 From United States of America, joined Apr 2000, 17504 posts, RR: 45
Reply 24, posted (2 years 3 days 8 hours ago) and read 27902 times:

Quoting bestwestern (Reply 3):
This kind of information would be known by very very few people

It would be a prudent, and believable course of action. I don't know who these investors are that endlessly want to burn cash.

Quoting koruman (Reply 6):

Virgin America is the only carrier in the USA which adheres to the basic fundamentals of running a business

VX is losing more money than any carrier in recent memory (in US history?). Their business plan has zero upside any time soon. Something has to give.



E pur si muove -Galileo
25 hohd : If the carriers adhere to stricly sell the first class seats or expensive upgrades, then you will have most first class cabins (with the exception of
26 DeltaMD90 : While I don't believe this specific rumor, I could totally see something like this happening... this carrier just bleeds money. Then again, the invest
27 ASFlyer : You clearly don't know a lot about Virgin. Virgin leads the pack in ancillary fees. They charge for checked bags, change fees, food onboard, internet
28 burnsie28 : Given that the 739 is nearly 40-50 seats larger than the Airbus series, and the Airbus' are larger than the 737 fleet, thats not exactly true. The 73
29 Post contains links smpplnohow2fly : No they arn't! They are replacing aging A320s, 757s, and 767s....plz check your sources before you post false statements. http://news.delta.com/index
30 drerx7 : Wrong. They haven't been able to make any money. Question. Would expansion into more routes at this juncture be the solution? I've always felt that t
31 will777 : I would add in the PHL routes as well. Any chance we could see them doing some expanding outside of LAX/SFO?
32 N505FX : Well, except for the legacies making money and VX losing money - but if you discount making a profit as the basic fundamental of running a business,
33 wedgetail737 : Unfortunately, the best airline in the nation doesn't necessarily mean profits.
34 airliner371 : I am sorry we all don't make mistakes.[Edited 2012-09-16 11:49:48]
35 Viscount724 : Not that messy or expensive for a small carrier with leased aircraft that will quickly find new homes. Look at the dozens of carriers that have shut
36 B777LRF : Uhh, aren't we a special little flower. The only thing wrong here is you sprouting false information, information you yourself could have easily fact
37 peachair : Not with this many airplanes on order. The 717 will fill the voids DL needs in the A319 market, and the second hand MD-90's will fill the other narro
38 XT6Wagon : back on topic, while we don't have "proof", VX has already had one crisis with its investors. One that was rumored to only have been solved with some
39 usa330300 : Really? An 11 year FA at US Airways brings in maybe $30k/year. That is abysmal. I would say the salaries are way out of line.
40 milemaster : It's well known that VX plans to IPO in the coming months, yet the private investors all colluded to give an ultimatum to the VX board that they have
41 Acey559 : I recently spoke with a VX pilot, and while not always a reliable source, he seemed to make sense. He said management recently sent out an email and s
42 brilondon : This is interesting. I would like to see the source of this information, not that I doubt you, but to see what else is being said and by who.
43 SWALUV : Would AA go for these as there A320's will be coming a little late? Or maybe there A319's at least?
44 Roseflyer : Fares have been rebounding drastically and are significantly up this year over last year. Virgin cherry picks large capacity routes, so they face stif
45 ASFlyer : Based on the 2004 contract, an 11 year FA at US Airways makes 38.82 per flight hour with a 71 hour guarantee. That equates to somewhere just north of
46 Deltal1011man : ......yes they are showing the others how to lose money hand over fist even if they have some of the lowest cost out there. Are you kidding me? 320s(
47 phxa340 : They said this in early 2012. With that being said Cush also said "Virgin America aims to go public "within a couple of years," but before it can, "w
48 KochamLOT : Just throwing it out there..would it be possible for Virgin America, Frontier and JetBlue merge? Would that be of interest to any of those 3 airlines
49 Post contains links and images lightsaber : Obviously this information wouldn't be public. But they fact we're discussing shows it is plausible. VX has their supporters. But at some time they mu
50 SANFan : "Aggressive expansion"? LOL! In my opinion, VX's growth strategy is certainly part of their problem but "aggressive expansion"? Hardly. Five years af
51 Reggaebird : It's time for Virgin America to finally form that long-rumored alliance with Delta.
52 DeltaMD90 : =a bigger carrier in a financial mess =a good healthy airline with a huge new burden I don't see much in it for B6 First time I heard of this rumor..
53 gigneil : Whee made up words. Those 88 used 717s sure must be 737s then. NS
54 strfyr51 : All the other USA majors are making money hand over fist Except for American who's busy lying about NOT making any! The USA passengers rejected Full
55 Post contains images DeltaMD90 : But the public is asking for $100 fares AND full fledged service... greedy corporations!
56 silentbob : Exactly. Merger? No. Asset sale? Possibly. How dare they!!!!!
57 Post contains images Flighty : I suppose you're one of those anti hub & spoke people Have you been paying attention these last few years? DL, UA , AS US are doing just fine. AA
58 Deltal1011man : err. 717 doesn't really have an (economical) 737NG or a 737MAX(at all? only 7/8/9 right?) for the 737/A320 size aircraft my bet is Delta slowly but s
59 Post contains images OB1504 : If a passenger wants the champagne and caviar, he or she has to be willing to pay for it. It makes more sense to fly a split fleet so they can pit bo
Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
How Long Does It Take An Aircraft To Turn A Profit posted Sun Dec 4 2005 19:47:33 by Pdxtriple7
Transaero Close To Ordering A350's Or A380's.. posted Thu Oct 2 2008 01:38:35 by Beaucaire
Pilots, Happy Or Sad To See Kai-tak Close? posted Mon Jun 19 2006 18:38:26 by Nycfuturepilot
How To Find The Profit Or Loss Of An Airline? posted Fri Apr 7 2006 18:39:59 by JoeCattoli
B772 Or 773: Or How To Turn A Beauty Into A Dog posted Thu Oct 16 2003 19:29:46 by Na
Air China To Join Star Or OneWorld This Year posted Thu Jun 6 2002 06:22:34 by Jiml1126
Rumor - All DL FAs To Be Issued IPads posted Tue May 15 2012 10:03:35 by max999
DTW Wants To Get DL Or EK Service To DXB posted Mon Apr 23 2012 11:01:55 by PSU.DTW.SCE
Iran Fleet To Be Replaced Or Lifespan Extended? posted Mon Apr 16 2012 02:27:28 by haveasafeflight