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VX Slashes Order Book, 5% Growth For Several Years  
User currently offlineenilria From Canada, joined Feb 2008, 7308 posts, RR: 14
Posted (1 year 11 months 1 week 1 day 6 hours ago) and read 1566 times:

http://www.bloomberg.com/news/2012-1...t-on-slower-winter.html?cmpid=yhoo

The carrier will now take delivery of 10 Airbus A320 planes, down from its original order for 30, in 2015 and 2016, according to a statement today. Those 10 aircraft are the last of the original batch, as the first 20 were to be handed over to the Burlingame, California-based airline from 2013 through 2015.

Virgin America also deferred the delivery range for 30 A320neo-model jets to 2020 through 2022 from the original dates of 2016 through 2019. The moves followed last month’s disclosure of a capacity reduction from January through March, the first cut in available seats since the airline started flying in 2007.

“During the summer we started looking at whether it still made sense to grow as fast as we were planning on, given fuel prices and what I’ll say is a modest economic growth climate in the U.S.,” Chief Executive Officer David Cush said in a telephone interview. “You don’t invest the capital if you can’t earn an adequate return.” There were no financial penalties associated with the cancellation, he said.


Very bad in terms of the carrier's future. I know there numbers are poor, but I don't think at their current size there is any future unless they completely change directions to something else.

67 replies: All unread, showing first 25:
 
User currently offlinesonomaflyer From United States of America, joined Apr 2010, 1842 posts, RR: 0
Reply 1, posted (1 year 11 months 1 week 1 day 6 hours ago) and read 1578 times:
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They have a limited number of options open to them:

1. Expand rapidly and take on the big airlines or;
2. Slow growth and try to raise yields in the face of stiff competition.

This industry is brutal. Competition is stiff across the board on domestic (US) flying and VX is struggling. At the same time, they can't keep bleeding cash. Slow growth is what all airlines are doing now so this should not be shocking.


User currently offlineDeltaMD90 From United States of America, joined Apr 2008, 7931 posts, RR: 52
Reply 2, posted (1 year 11 months 1 week 1 day 5 hours ago) and read 1580 times:

This is painful to watch. I wish the best for the employees but at the same time I don't see how anyone is still sinking money into them. It's not like they're really trending towards profitability either...


Ironically I have never flown a Delta MD-90 :)
User currently offlineenilria From Canada, joined Feb 2008, 7308 posts, RR: 14
Reply 3, posted (1 year 11 months 1 week 1 day 5 hours ago) and read 1583 times:

I have the same opinion I had when I first flew on them. "What a wonderful product that appeals to a small % of the traveling public". I don't think you can build something for any niche in this business and make any money, unless that niche is people who are cheap. Nobody is willing to pay more for any kind of (domestic) special service, even frequent fliers. There only those that expect it for free by virtue of being loyal. VX is a niche airline and that niche only exists profitably on a few transcon routes and possibly LAS. I don't think it is viable anywhere else.

I wonder what will happen to VX now. I don't think they can sit still. I also question whether Cush is the right leader for them. I think they need somebody with more of a route planning or financial background and less of a sales guy like they have now. They should try to get Fornaro.


User currently offlinewingnutmn From United States of America, joined Jan 2004, 645 posts, RR: 0
Reply 4, posted (1 year 11 months 1 week 1 day 4 hours ago) and read 1584 times:

How much money would it take to pull away a top exec at DL, UA, or AA to take over VX and try a new route to profitability? Is this something that a regional CEO or President could accomplish? Some industry names out there are Steenland, Mehnke, Bastian, or maybe it is a new challenge for Horton or Parker if AA/US ever tie up.

Another idea is who may want the planes and or pilots? We all keep hearing about the impending pilot shortage, so you could pick up 40 A319/320 airframes and 40 options plus 500 pilots that already have a type rating. That would be 1-2 years of hiring for DL or UA right there.

Wingnut



Any landing you can walk away from is a good landing! It's a bonus if you can fly the plane again!!
User currently offlineanstar From United Kingdom, joined Nov 2003, 5263 posts, RR: 7
Reply 5, posted (1 year 11 months 1 week 1 day 4 hours ago) and read 1581 times:

Or is there a legacy US carrier that might be interested in buying them and having them as their "leisure" fun brand but with no frills?

User currently offlineRoseflyer From United States of America, joined Feb 2004, 9665 posts, RR: 52
Reply 6, posted (1 year 11 months 1 week 1 day 4 hours ago) and read 1582 times:

I think this is a good business decision. Virgin America tried to imitate JetBlue by growing rapidly and taking on routes that were already well served, but do it with a better product. However they are not only competing against one airline, almost every route they serve has two or more competitors. The legacy airlines have killed them. UA, DL and AA matched VX fares on all their transcon routes. AS went in for the kill by dumping capacity on the west coast routes. VX has tried the notoriously low yielding California – Florida market. Every airline has been pulling Mexico capacity over the last few years because drug violence has scared tourists away (even from beach resorts), yet VX is trying to make it work.

VX has no where for these planes to go. Fortunately Airbus will have no problem with the NEO slots, although Airbus does have a gap of late production run A320s that are not in high demand at this point so those slots aren’t going to be easy to transfer. The rapid growth of VX needs to be tamed down. Virgin can’t make any money anywhere. Their management has publicized that they made a mistake by having direct competition on every route they serve. JetBlue didn’t have that, because they took advantage of JFK’s lack of domestic network.

Quoting wingnutmn (Reply 4):
How much money would it take to pull away a top exec at DL, UA, or AA to take over VX and try a new route to profitability?

If you look at Virgin America’s management offices, there is a strong contingent of UA people. Their headquarters is only a few miles from the headquarters of UA’s old technical operations business in SFO. Virgin took a lot of UA people who refused to move to ORD when UA was restructuring in bankruptcy.

Quoting anstar (Reply 5):
Or is there a legacy US carrier that might be interested in buying them and having them as their "leisure" fun brand but with no frills?

Virgin is the opposite of that. They offer more frills.



If you have never designed an airplane part before, let the real designers do the work!
User currently offlineB6WNQX From United States of America, joined Jun 2006, 245 posts, RR: 0
Reply 7, posted (1 year 11 months 1 week 1 day 4 hours ago) and read 1580 times:

What if B6 were to try to acquire VX? This would reduce a lot of competition on the same routes. Are the fleets using the same engines?

I know B6 probably wouldn't want to me in M&A activity according to the CEO, but it is a thought. It would help push yields up on the transcons for everyone.


User currently onlineMaverickM11 From United States of America, joined Apr 2000, 17649 posts, RR: 46
Reply 8, posted (1 year 11 months 1 week 1 day 4 hours ago) and read 1579 times:

Quoting Roseflyer (Reply 6):
there is a strong contingent of UA people

AA people, not UA people

Quoting B6WNQX (Reply 7):

What if B6 were to try to acquire VX?

There's no value to VX. Maybe some JFK slots that B6 doesn't have a need for and that's it.



E pur si muove -Galileo
User currently offlinewingnutmn From United States of America, joined Jan 2004, 645 posts, RR: 0
Reply 9, posted (1 year 11 months 1 week 1 day 3 hours ago) and read 1583 times:

Quoting B6WNQX (Reply 7):

The last thing B6 needs are A319's. They want A321's. Also, I am not sure that B6 has the capital right now to try and acquire another airline. The best bet is a major buying them and shutting them down for an immediate reduction in competition or a continued slow death through market predation!

Wingnut



Any landing you can walk away from is a good landing! It's a bonus if you can fly the plane again!!
User currently offlinehiloboy1 From United States of America, joined Jul 2006, 81 posts, RR: 1
Reply 10, posted (1 year 11 months 1 week 1 day 3 hours ago) and read 1578 times:

Could HA be up to something? They just signed a code share agreement the other day, HAL what do you think.

User currently offlineLAXintl From United States of America, joined May 2000, 25719 posts, RR: 50
Reply 11, posted (1 year 11 months 1 week 1 day 3 hours ago) and read 1581 times:

The airline today reported $15.8mil operating profit in the third quarter and forecasts operating profit in Q4 also.   

Strip away the growth cost and some finance cost, the airline is now in the black operationally. A good achievement.



From the desert to the sea, to all of Southern California
User currently onlineRyanairGuru From Australia, joined Oct 2006, 5706 posts, RR: 5
Reply 12, posted (1 year 11 months 1 week 1 day 3 hours ago) and read 1577 times:

Quoting Roseflyer (Reply 6):
VX has no where for these planes to go.

I think that part of their problem is CA tunnel vision. I'm sure someone could work it out better than I could, but I can't help but think that a small base, say 5 or 6 frames, in somewhere like DFW could work out for them

[Edited 2012-11-16 10:16:16]


Worked Hard, Flew Right
User currently offlinewingman From Seychelles, joined May 1999, 2288 posts, RR: 5
Reply 13, posted (1 year 11 months 1 week 1 day 3 hours ago) and read 1574 times:

I for one love this airline. It's simply the best domestic flying experience right now and I sincerely hope they make it. Everything from check in at SFO to the planes themselves, the staff, the onboard product...all at the very top of the heap. I really don't know what to suggest to them except maybe try to expand that HA codeshare strategy with others that are not part of a major global alliance. EK obviously springs to mind...perhaps an investment from them to build out some East Coast hubs that could then take on the feeds from Dubai. With HA, the Virgin Network, and EK, you'd need some kind of carrier partner covering Asia, one in LAC, and you might have a start to a new alliance model with a single massive carrier at the center and smaller regional carriers to do the feeder traffic.

All I can say is please Jesus, don't force me back to UA, after VX every ride in UA coach is like water boarding.


User currently offlineenilria From Canada, joined Feb 2008, 7308 posts, RR: 14
Reply 14, posted (1 year 11 months 1 week 1 day 3 hours ago) and read 1573 times:

Quoting wingnutmn (Reply 4):
How much money would it take to pull away a top exec at DL, UA, or AA to take over VX and try a new route to profitability? Is this something that a regional CEO or President could accomplish? Some industry names out there are Steenland, Mehnke, Bastian, or maybe it is a new challenge for Horton or Parker if AA/US ever tie up.

I'd say Fornaro has a better track record at FL than most of those, but agreed. They need new leadership.

Quoting wingnutmn (Reply 4):
Another idea is who may want the planes and or pilots?

A320s are dirt cheap, so nobody.

Quoting B6WNQX (Reply 7):
What if B6 were to try to acquire VX?

That's possible. It makes sense. i think B6 thinks they will die anyway.

Quoting B6WNQX (Reply 7):
Are the fleets using the same engines?

That'll be an afterthought if they announce a deal.

Quoting LAXintl (Reply 11):
The airline today reported $15.8mil operating profit in the third quarter and forecasts operating profit in Q4 also.   

Strip away the growth cost and some finance cost, the airline is now in the black operationally. A good achievement.

I'll say the same thing i said about F9's 3Q profit. Operating profit means almost nothing as it does not include interest on debt and a 3Q operating profit means even less since it is clearly the best quarter. Finally, all their reporting is fairly meaningless as a private company. Actions speak louder than words. Deferring future deliveries is a much more solid sign that things are going badly.

Quoting RyanairGuru (Reply 12):
I think that part of their problem is CA tunnel vision.

Agreed. I think their brand also works in MIA and LAS, possibly ORD/NYC. Cush immediately instituted a LAX/SFO-only policy when he arrived. It's one of the reasons he should be leaving.


User currently offlinemariner From New Zealand, joined Nov 2001, 25405 posts, RR: 86
Reply 15, posted (1 year 11 months 1 week 1 day 3 hours ago) and read 1575 times:
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Quoting Roseflyer (Reply 6):
I think this is a good business decision.

I agree, but the idea of profit before growth is a shocking concept in the rarified air of a.net.

I don't study Virgin America particularly, although I wish it well. So - superficially - it seems to me that it has two choices. It either changes and become (yet another) ULCC. Or - it sticks to its guns, serves those routes that will pay for its quality service in sufficient numbers and at sufficient prices.

Maybe adopt that most un-American motto - smaller is better.  

mariner



aeternum nauta
User currently offlineas739x From United States of America, joined Apr 2003, 6161 posts, RR: 24
Reply 16, posted (1 year 11 months 1 week 1 day 2 hours ago) and read 1574 times:

Quoting Roseflyer (Reply 6):
If you look at Virgin America’s management offices, there is a strong contingent of UA people.

I don't know if you have been in their HQ, but there are not as many UA people as you think. It's actually a large amount of ex-NW, DL and a few other carriers. The only large number of UA employee's are in the pilot group.



"Some pilots avoid storm cells and some play connect the dots!"
User currently onlineMaverickM11 From United States of America, joined Apr 2000, 17649 posts, RR: 46
Reply 17, posted (1 year 11 months 1 week 1 day 2 hours ago) and read 1575 times:

Quoting as739x (Reply 16):

I don't know if you have been in their HQ, but there are not as many UA people as you think. It's actually a large amount of ex-NW, DL and a few other carriers. The only large number of UA employee's are in the pilot group.

Lots of F9 people joined VX early on too, but then they left



E pur si muove -Galileo
User currently offlineyellowtail From United States of America, joined Jun 2005, 6217 posts, RR: 2
Reply 18, posted (1 year 11 months 1 week 1 day 2 hours ago) and read 1574 times:

Quoting enilria (Reply 14):
Agreed. I think their brand also works in MIA

Now there is an idea ..sorta turn it into a Virgin Caribbean using MIA as the hub...call it Virgin Americas.......maybe a little room in MSY too.



When in doubt, hold on to your altitude. No-one has ever collided with the sky.
User currently onlineairliner371 From United States of America, joined Aug 2012, 1441 posts, RR: 2
Reply 19, posted (1 year 11 months 1 week 1 day 1 hour ago) and read 1577 times:

Quoting enilria (Reply 3):
They should try to get Fornaro.

I always liked him. What is he doing now?



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 offlinelightsaber From United States of America, joined Jan 2005, 13248 posts, RR: 100
Reply 20, posted (1 year 11 months 1 week 1 day 1 hour ago) and read 1575 times:
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I think this is the required decision. But the slow growth period is for too long of a time frame.

Quoting enilria (Reply 3):
I wonder what will happen to VX now. I don't think they can sit still.

Nor I. they must grow to establish economy of scale (e.g., advertising and route network).

Quoting anstar (Reply 5):

Or is there a legacy US carrier that might be interested in buying them and having them as their "leisure" fun brand but with no frills?

It would be cheaper to acquire the aircraft and pilots on the 2nd hand market.

Quoting Roseflyer (Reply 6):
Their management has publicized that they made a mistake by having direct competition on every route they serve. JetBlue didn’t have that, because they took advantage of JFK’s lack of domestic network.

Nice summary one mistake VX made. The other was pursuing B6's rapid growth strategy without B6's large CASM advantage (when they were new). B6 was able to generate 'buzz' with their TCON fares and Florida fares as they created a new market. Early on, B6 was stimulating traffic growth. Since then, Spirit has also entered the market and that has made the number of monopoly routes drop.

As bussinessweek noted: "They had gotten to the party late."
http://www.businessweek.com/news/201...lights-labor-cost-on-slower-winter

Quoting B6WNQX (Reply 7):
Are the fleets using the same engines?

   B6 uses the V2500 and will use the PurePower PW1100G for the NEO. VX uses the CFM-56 and will use the LEAP-X for the NEO.

I join the crowd in thinking there is little to no value for B6 to pay for VX.

Quoting LAXintl (Reply 11):
Strip away the growth cost and some finance cost

Which leaves VX vulnerable to an increase in interest rates as they continue to acquire debt. I think a slowdown will help.

Quoting mariner (Reply 15):
Maybe adopt that most un-American motto - smaller is better.

Until B6 goes back into growth mode. VX is too small to maintain 'mindshare.' VX will also be competing with a much healthier AA in three years. While a few years of slow growth is wise, if they do not figure out how to profitably accelerate growth within 4 or 5 years, they will be in deep trouble.

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlineenilria From Canada, joined Feb 2008, 7308 posts, RR: 14
Reply 21, posted (1 year 11 months 1 week 1 day 1 hour ago) and read 1576 times:

Quoting MaverickM11 (Reply 17):
Lots of F9 people joined VX early on too, but then they left

That was a much better management team than what they now have IMHO.

Quoting yellowtail (Reply 18):
Now there is an idea ..sorta turn it into a Virgin Caribbean using MIA as the hub...call it Virgin Americas.......maybe a little room in MSY too.

That was talked about before they started as being a better fit for their brand, but they never did anything with it. I think with NK retrenching in FLL it opens up more options, although the cost in MIA is high. It would work even better if they were in *A.

Quoting airliner371 (Reply 19):
Quoting enilria (Reply 3):
They should try to get Fornaro.

I always liked him. What is he doing now?

He is on retainer to WN with a no compete, although I think it's up before long AND they could buy him out of it I'm sure.


User currently offlineenilria From Canada, joined Feb 2008, 7308 posts, RR: 14
Reply 22, posted (1 year 11 months 1 week 1 day 1 hour ago) and read 1575 times:

My bet is that around Feb 2013 they announce they are shedding 4-8 existing aircraft. That's going to be the next shoe to drop.

User currently offlinevaus77w From Australia, joined Aug 2011, 143 posts, RR: 0
Reply 23, posted (1 year 11 months 1 week 1 day 1 hour ago) and read 1579 times:

Quoting Roseflyer (Reply 6):
Fortunately Airbus will have no problem with the NEO slots, although Airbus does have a gap of late production run A320s that are not in high demand at this point so those slots aren’t going to be easy to transfer.

Do you think Airbus will re-market these NEO slots or just bump everyone up the queue?


User currently offlinemariner From New Zealand, joined Nov 2001, 25405 posts, RR: 86
Reply 24, posted (1 year 11 months 1 week 1 day 1 hour ago) and read 1580 times:
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Quoting lightsaber (Reply 20):
Until B6 goes back into growth mode. VX is too small to maintain 'mindshare.' VX will also be competing with a much healthier AA in three years. While a few years of slow growth is wise, if they do not figure out how to profitably accelerate growth within 4 or 5 years, they will be in deep trouble.

I have no idea what will happen in four or five years, but if Virgin America wants to continue with its present model, then I think smaller is better - eventually some growth, sure, but tempered. I think it is highly unlikely that Virgin America is ever going to take over the world - or even the USA - so, as a niche carrier, why not accept and embellish the niche?

So Qantas, for example, decided that profit - and shareholder value - is presently crucially more important than growth.

Airline geeks may fume that Qantas is postponing aircraft deliveries and making a stock buyback instead, but the shareholders are the owners.

mariner



aeternum nauta
User currently offlinebrilondon From Canada, joined Aug 2005, 4296 posts, RR: 1
Reply 25, posted (1 year 11 months 1 week 1 day ago) and read 1924 times:

Having never flown VX, I don't really have a personal opinion on the in flight product, but their business model forecasting 5% growth seems to conflict with not taking aircraft because they are not financially sound. How can a company forecast growth yet also talk of being in financial trouble. I don't see a future for a company that has a growth forecast being as rosy as they are making it seem and then also seem like they are in trouble. There is a huge conflict of ideals here that does not compute.


Rush for ever; Yankees all the way!!
User currently offlinelaca773 From United States of America, joined Nov 2004, 4049 posts, RR: 2
Reply 26, posted (1 year 11 months 1 week 1 day ago) and read 1951 times:
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I saw the Bloomberg article earlier and was alarmed at first. After reading it, I understood their position and think they are making some very smart moves and decisions to scale back markedly and proceed in a cautious fashion. If they were not taking this frame of mind, I think things would be come much worse and their survivability much more doubtful.
I think the VX/VA/VS need to join an alliance to become more competitive and expand at some point.


User currently offlineavek00 From United States of America, joined Oct 2004, 4405 posts, RR: 19
Reply 27, posted (1 year 11 months 1 week 23 hours ago) and read 2126 times:

Quoting enilria (Reply 14):
Agreed. I think their brand also works in MIA and LAS, possibly ORD/NYC. Cush immediately instituted a LAX/SFO-only policy when he arrived. It's one of the reasons he should be leaving.

They should have gone gangbusters in building MIA -- the airport has significant spare capacity for a focus city, many MIA markets are O&D heavy, AA was (and in some ways, still is) weak enough to be confronted there, and the VX Airbus fleet can hit everything from southwestern Canada to Northern South America without much trouble.



Live life to the fullest.
User currently onlineRyanairGuru From Australia, joined Oct 2006, 5706 posts, RR: 5
Reply 28, posted (1 year 11 months 1 week 23 hours ago) and read 2101 times:

Quoting avek00 (Reply 27):
They should have gone gangbusters in building MIA

I guess this is less relevant to MIA than other cities, especially if they had expanded to LatAm, but isn't FL quite a low yielding market? While there is doubtless plenty of O&D between, say, MIA and NYC there is no guarantee that it would be prepared to pay a premium for VX's product.



Worked Hard, Flew Right
User currently onlineMaverickM11 From United States of America, joined Apr 2000, 17649 posts, RR: 46
Reply 29, posted (1 year 11 months 1 week 23 hours ago) and read 2145 times:

Quoting avek00 (Reply 27):

They should have gone gangbusters in building MIA -- the airport has significant spare capacity for a focus city, many MIA markets are O&D heavy, AA was (and in some ways, still is) weak enough to be confronted there, and the VX Airbus fleet can hit everything from southwestern Canada to Northern South America without much trouble.

Most of the VX leadership is ex AA--they probably know a thing or two about MIA. It could be telling that they didn't touch MIA at all.



E pur si muove -Galileo
User currently offlineEA CO AS From United States of America, joined Nov 2001, 13634 posts, RR: 62
Reply 30, posted (1 year 11 months 1 week 21 hours ago) and read 2079 times:
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Quoting MaverickM11 (Reply 29):
It could be telling that they didn't touch MIA at all.

Probably because MIA's cost per enplanement are atrocious.



"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
User currently offlinejpetekyxmd80 From United States of America, joined Jul 2003, 4389 posts, RR: 27
Reply 31, posted (1 year 11 months 1 week 21 hours ago) and read 2067 times:

Quoting mariner (Reply 24):
I have no idea what will happen in four or five years, but if Virgin America wants to continue with its present model, then I think smaller is better - eventually some growth, sure, but tempered. I think it is highly unlikely that Virgin America is ever going to take over the world - or even the USA - so, as a niche carrier, why not accept and embellish the niche?


I completely agree. Their current model is not at all conducive to the rapid expansion the former number of aircraft would have required. It would simply mean they'd be started more lower yielding, less attractive, or thinner routes from SFO and LAX. That doesn't seem like a winning formula. Their plans may have been grander years ago, but obviously survival is now paramount.

It may have been a stark dose of reality from the current financials to arrive at this decision, but I don't think it's a bad one. They'd be far from the first airline to have bitten off more than they could chew, and that doesn't need to be a sign of impending doom.

One thing I would question is Hawaii. That's turning into a bloodbath with some really stiff competition from the Bay Area. But since Alaska has presumably been successful in their big push into Hawaii, I wonder if VX shouldn't have beaten AS to the punch.

[Edited 2012-11-16 16:44:05]


The Best Care in the Air, 1984-2009
User currently offlinemariner From New Zealand, joined Nov 2001, 25405 posts, RR: 86
Reply 32, posted (1 year 11 months 1 week 19 hours ago) and read 2053 times:
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Quoting jpetekyxmd80 (Reply 31):
They'd be far from the first airline to have bitten off more than they could chew, and that doesn't need to be a sign of impending doom.

I thought the Q3 profit was pretty good - not good enough, perhaps, but getting there. People are throwing cold water on it as "just an operating profit" - that there was really a net loss - but under those terms Southwest only made $16 million in the same quarter. Absent special charges, Southwest's operating profit was $97 million. Which one of those numbers gives the more accurate picture of how Southwest, the airline, is doing?

In Australia and New Zealand "underlying profit" - which excludes all special charges and receipts - is standard reporting. It is considered a truer picture of how the company - the airline, say - is actually performing.

Statutory (net) profit is scarcely discussed, and Qantas, as one example, does not provide guidance on it.

Quoting jpetekyxmd80 (Reply 31):
One thing I would question is Hawaii.

I think that was probably a good idea, but ETOPS can be a long laborious process for an airline (it took Allegiant a while) and probably not a priority in the early days.

mariner

[Edited 2012-11-16 18:07:31]


aeternum nauta
User currently offlineSuperDash From United States of America, joined Sep 2003, 574 posts, RR: 0
Reply 33, posted (1 year 11 months 1 week 18 hours ago) and read 2064 times:

I love the people on A-net...There needs to be a class on how to read a financial statement and how to ignore the "spin". Virgin had, yet again, another horrible quarter. Their total loss was $12M in the quarter UP from $3M last year. For just 9 months, they have posted a $120M loss, up from $69M last year for the same period. Their cash is down to $75M. Their model is not working.

With that said....Today's announcement is the smartest thing they have ever done. They need to turn fully allocated profits, not just operating profits. This will preserve cash for them as they don't need to make payments to Airbus. The airline has been making some wiser moves of late. Only time will tell if they can get yields up faster than their costs go up.


User currently offlinemariner From New Zealand, joined Nov 2001, 25405 posts, RR: 86
Reply 34, posted (1 year 11 months 1 week 18 hours ago) and read 2034 times:
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Quoting SuperDash (Reply 33):
I love the people on A-net...There needs to be a class on how to read a financial statement and how to ignore the "spin".

That would be a very good thing.

mariner



aeternum nauta
User currently offlineallegiantflyer From United States of America, joined Mar 2012, 187 posts, RR: 0
Reply 35, posted (1 year 11 months 1 week 18 hours ago) and read 2025 times:

Well im sure we should all know by now....Nothing good last forever

User currently offlineEA CO AS From United States of America, joined Nov 2001, 13634 posts, RR: 62
Reply 36, posted (1 year 11 months 1 week 17 hours ago) and read 2018 times:
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Quoting mariner (Reply 32):

I thought the Q3 profit was pretty good - not good enough, perhaps, but getting there. People are throwing cold water on it as "just an operating profit" - that there was really a net loss - but under those terms Southwest only made $16 million in the same quarter. Absent special charges, Southwest's operating profit was $97 million. Which one of those numbers gives the more accurate picture of how Southwest, the airline, is doing?

Perspective is important here, however - one carrier has been consistently profitable for the majority of its existence, whereas the other has been bathed in red ink for the entirety of its existence.

Those throwing cold water on it are doing so for good reason.



"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
User currently offlinemariner From New Zealand, joined Nov 2001, 25405 posts, RR: 86
Reply 37, posted (1 year 11 months 1 week 17 hours ago) and read 2021 times:
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Quoting EA CO AS (Reply 36):
Perspective is important here, however - one carrier has been consistently profitable for the majority of its existence, whereas the other has been bathed in red ink for the entirety of its existence.

Sure, if you want. The fact remains that the "net" was $16 million.

If Qantas added the (about) $400 million dollars it is receiving from Boeing to it's revenue column, or as a "special receipt", it would grossly inflate the profit and give a quite false perspective of how the airline is doing.

Similarly, if Virgin America is making progress to a possible turnaround - and I'm not claiming it is, I'm simply using Q3 numbers - then that should be considered.

"Perspective" applies across the board and any agenda can be misleading.

mariner

[Edited 2012-11-16 20:48:11]


aeternum nauta
User currently offlineDeltal1011man From United States of America, joined Sep 2005, 9554 posts, RR: 14
Reply 38, posted (1 year 11 months 1 week 15 hours ago) and read 1961 times:

Quoting LAXintl (Reply 11):
Strip away the growth cost and some finance cost, the airline is now in the black operationally.

.....so take away most of the reason the airline is bleeding money, and boom they turn a profit.



Surely hope you use the same idea when you talk about UA/AA/DL/US/AS/F9/NK/WN/HA etc.

Quoting hiloboy1 (Reply 10):
Could HA be up to something? They just signed a code share agreement the other day, HAL what do you think.

I hope your kidding...



yep.
User currently onlineMaverickM11 From United States of America, joined Apr 2000, 17649 posts, RR: 46
Reply 39, posted (1 year 11 months 1 week 15 hours ago) and read 1984 times:

Quoting EA CO AS (Reply 30):

They went to DFW pretty quickly; perhaps they know MIA doesn't offer the opportunity that a.net thinks it does.



E pur si muove -Galileo
User currently offlineLAXintl From United States of America, joined May 2000, 25719 posts, RR: 50
Reply 40, posted (1 year 11 months 1 week 14 hours ago) and read 1965 times:

Quoting vaus77w (Reply 23):
Do you think Airbus will re-market these NEO slots or just bump everyone up the queue?

Yes deliveries will be reshuffled.

VX might actually get some money out of this if they already made some pre-delivery payments and can turn around and get the positions reassigned for a profit.

Quoting mariner (Reply 32):
I thought the Q3 profit was pretty good - not good enough, perhaps, but getting there. People are throwing cold water on it as "just an operating profit" - that there was really a net loss - but under those terms Southwest only made $16 million in the same quarter. Absent special charges, Southwest's operating profit was $97 million. Which one of those numbers gives the more accurate picture of how Southwest, the airline, is doing?

  

Frankly I think this quarter and that they also forecast a operating profit for Q4 could be turning point.

Now they need to work to beat down the expansion and finance cost - which is exactly what they are doing with these fleet moves.

Quoting SuperDash (Reply 33):
Their cash is down to $75M.

Its actually UP. $75mil cash is a very large number for VX. Historically they have been in the $25mil range.

But being privately held, you never know how much added cash is sitting behind the curtain and off the airline books.

Quoting Deltal1011man (Reply 38):
.....so take away most of the reason the airline is bleeding money, and boom they turn a profit.

What this mean is the airline routes are profitable. The revenues exceed cost, so the continued concept that they are losing money on all their markets is frankly wrong.
Quite clearly on a macro scale their network and markets do work with revenues exceeding their cost by a nice margin (4.3%)



From the desert to the sea, to all of Southern California
User currently offlineSchweigend From United States of America, joined Jun 2010, 628 posts, RR: 2
Reply 41, posted (1 year 11 months 1 week 11 hours ago) and read 1946 times:

I wish VX were more like Australia's Virgin Blue, who started up only a few years before VX did. DJ has done in the Oz market what VX should be doing in the U.S. -- that is, competing well against incumbents like UA, the way DJ has done with QF.

And, I think ALL the Virgin brands should be linked together, if that is possible, for their mutual success.

Quoting Roseflyer (Reply 6):
VX has no where for these planes to go.

I agree. Well, they could set up a new hub or focus city somewhere, but WHERE?

St. Louis?

Quoting enilria (Reply 3):
"What a wonderful product that appeals to a small % of the traveling public".

Enjoy its lovliness while it lasts coz VX is likely to become just another memory....

Quoting B6WNQX (Reply 7):
What if B6 were to try to acquire VX?

It could happen, and their respective strengths on the East and West coasts might add up to something nice, despite the different engines on their A320s.

But they'd be focused on O&D, not connecting traffic.

Quoting LAXintl (Reply 11):
Strip away the growth cost and some finance cost, the airline is now in the black operationally. A good achievement.

That is the basic metric. At least they're in the black, so hopefully they'll have some time to work out their future.

Quoting enilria (Reply 14):
i think B6 thinks they will die anyway.

Probably so, but I feel in my gut that the two should join forces. B6 could pick up the VX pieces in a liquidation.

Quoting mariner (Reply 15):
I don't study Virgin America particularly, although I wish it well. So - superficially - it seems to me that it has two choices. It either changes and become (yet another) ULCC. Or - it sticks to its guns, serves those routes that will pay for its quality service in sufficient numbers and at sufficient prices.

YESSIR!

(Maybe they need better marketing?)


User currently offlineairbusa322 From Australia, joined Apr 2009, 258 posts, RR: 0
Reply 42, posted (1 year 11 months 1 week 11 hours ago) and read 1940 times:

Virgin Australia is chasing 16 A320's for its stake in Tiger Airways Australia. Delivery was stated by 2019.

Might be where they go?


User currently offlinePlanesNTrains From United States of America, joined Feb 2005, 5622 posts, RR: 29
Reply 43, posted (1 year 11 months 1 week 10 hours ago) and read 1926 times:

To me, MIA seemed like a no-brainer, along with DFW and perhaps BOS. Oh well...

-Dave



Next Trip: SEA-ABQ-SEA on Alaska
User currently offlineFlighty From United States of America, joined Apr 2007, 8629 posts, RR: 2
Reply 44, posted (1 year 11 months 1 week 10 hours ago) and read 1935 times:

Just generally, the theory of a startup is you do lose money until you reach critical mass. Apparently VX is saying they are at their idea mass now, but they hope yields are improving.

VX relies on LCC or ULCC yields to fund a very pretty product. Obviously customers like it. Today's yield environment could actually support VX if more industry consolidation occurs. Will Republic exit the market? US Airways? If yes, then Virgin could have breathing room.

Really its principal problem remains Jetblue. The two ought to just merge. In a fantasy world, VX should acquire and assimilate Jetblue.  


User currently offlineEA CO AS From United States of America, joined Nov 2001, 13634 posts, RR: 62
Reply 45, posted (1 year 11 months 1 week 10 hours ago) and read 1934 times:
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Quoting Flighty (Reply 44):
VX relies on LCC or ULCC yields to fund a very pretty product. Obviously customers like it.

That's great, except it's clear that customers aren't willing to pay a premium for it. That's their fundamental problem.



"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
User currently onlineRyanairGuru From Australia, joined Oct 2006, 5706 posts, RR: 5
Reply 46, posted (1 year 11 months 1 week 2 hours ago) and read 1862 times:

Quoting Schweigend (Reply 41):

DJ was launched at the same time as B6, so they have a good start on VX.

The big thing that allowed DJ to grow was the collapse of AN. Given that Australia had, in effect, two airlines (QF and AN) then the path was suddenly wide open for DJ to expand VERY quickly.



Worked Hard, Flew Right
User currently offlinediverdave From United States of America, joined Mar 2010, 335 posts, RR: 0
Reply 47, posted (1 year 11 months 1 week 2 hours ago) and read 1872 times:

Quoting mariner (Reply 32):
I thought the Q3 profit was pretty good - not good enough, perhaps, but getting there. People are throwing cold water on it as "just an operating profit" - that there was really a net loss - but under those terms Southwest only made $16 million in the same quarter. Absent special charges, Southwest's operating profit was $97 million. Which one of those numbers gives the more accurate picture of how Southwest, the airline, is doing?

Interestingly, both SouthWest and Virgin America had interest expenses of $28 million in the 3rd quarter.

SouthWest's special charges include the cost of modifying the 717s for Delta, and acquisition costs of AirTran. Those are truly special costs. But you have to pay interest unless you go bankrupt.

And VX's interest costs are up 45.7% over 3rd quarter last year, and are up 66.1% YTD over 2011 YTD. That's over 7.5% of revenue.

http://www.prnewswire.com/news-relea...2-financial-results-179638501.html

Quoting SuperDash (Reply 33):
I love the people on A-net...There needs to be a class on how to read a financial statement and how to ignore the "spin". Virgin had, yet again, another horrible quarter. Their total loss was $12M in the quarter UP from $3M last year. For just 9 months, they have posted a $120M loss, up from $69M last year for the same period.

Back in the day, many students had to take basic economics and accounting as part of a diversified education. I still remember the basics from those classes.

David


User currently offlinemariner From New Zealand, joined Nov 2001, 25405 posts, RR: 86
Reply 48, posted (1 year 11 months 1 week 1 hour ago) and read 1884 times:
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Quoting EA CO AS (Reply 45):
That's great, except it's clear that customers aren't willing to pay a premium for it. That's their fundamental problem.

But apparently, they are, at least in their mature markets. From the report:

http://www.sacbee.com/2012/11/16/499...america-reports-third-quarter.html

"The airline's core markets (those operated more than 24 months) achieved an operating margin of eight percent in the third quarter and were profitable year-to-date."

The newer markets, not so much:

" This strong performance in mature markets was offset by weaker performance in newer destinations added during the airline's rapid two-year growth phase. "

Any new market is a risk and time was when we gave those new market two years to turn a buck. These days, at least on a.net, folk seem to want it to happen overnight.

Quoting diverdave (Reply 47):
SouthWest's special charges include the cost of modifying the 717s for Delta, and acquisition costs of AirTran. Those are truly special costs. But you have to pay interest unless you go bankrupt.

Sure you do. But the only point is that the airline operation - flying folk to and from - was profitable. And that is a start.

mariner

[Edited 2012-11-17 11:54:39]


aeternum nauta
User currently offlineyeelep From United States of America, joined Apr 2011, 666 posts, RR: 0
Reply 49, posted (1 year 11 months 6 days 13 hours ago) and read 1824 times:

Quoting jpetekyxmd80 (Reply 31):
One thing I would question is Hawaii. That's turning into a bloodbath with some really stiff competition from the Bay Area. But since Alaska has presumably been successful in their big push into Hawaii, I wonder if VX shouldn't have beaten AS to the punch.

VX would have needed to start service to Hawaii within two months of their inaugural flight. The requirements to become ETOPS certified would have made that impossible. There is also the question-in my mind at least-whether the A320 can fly to the islands profitably.


User currently offline727LOVER From United States of America, joined Oct 2001, 6491 posts, RR: 20
Reply 50, posted (1 year 11 months 6 days 13 hours ago) and read 1802 times:

Time to go on ABC's Shark Tank?


Listen Betty, don't start up with your 'White Zone' s*** again.
User currently offlinedbo861 From United States of America, joined May 2004, 890 posts, RR: 1
Reply 51, posted (1 year 11 months 6 days 6 hours ago) and read 1798 times:

Quoting enilria (Thread starter):
The carrier will now take delivery of 10 Airbus A320 planes, down from its original order for 30, in 2015 and 2016, according to a statement today. Those 10 aircraft are the last of the original batch, as the first 20 were to be handed over to the Burlingame, California-based airline from 2013 through 2015.

I'm a little confused by their new delivery schedule. Is this saying they're taking 10 A320s in 2015-2016 and none in 2013-2014?


User currently offlineytz From Canada, joined Jun 2009, 2067 posts, RR: 24
Reply 52, posted (1 year 11 months 6 days 2 hours ago) and read 1804 times:

There is only one viable business model for Virgin that I can think of. CSeries for thin routes. 321/321NEO for the rest. Focus on city centre airports like MDW and HOU. Campaign hard to get restrictions on VNY, DAL and DCA lifted. That's what it'll take for a hip, urban styled airline to work.

User currently offlinelightsaber From United States of America, joined Jan 2005, 13248 posts, RR: 100
Reply 53, posted (1 year 11 months 5 days 17 hours ago) and read 1748 times:
Support Airliners.net - become a First Class Member!

Quoting mariner (Reply 24):
I have no idea what will happen in four or five years, but if Virgin America wants to continue with its present model, then I think smaller is better - eventually some growth, sure, but tempered. I think it is highly unlikely that Virgin America is ever going to take over the world - or even the USA - so, as a niche carrier, why not accept and embellish the niche?

I think our difference of opinion has to do with our different opinions of the USA aviation market. In my opinion, high premium fares are driven by route network, frequency, and a FF plan that 'traps customers.' Note: I end up switching where I fly to too often so that the 'time cost' to stay loyal to one carrier is less than the benefits of a FF program. However, I'm not the market and I respect FF plans 'trap customers.'

The issue for VX is their route network is too sparse to allow any significant number of customers to truly remain loyal unless they only fly those few city-pairs served. Even the SFO based customers will find 'holes in the map.' e.g. Austin Texas (for IT) or a number of banking and insurance centers.

Quoting mariner (Reply 49):
The newer markets, not so much:

Agreed. I will be fascinated to see how this strategy plays out.

Quoting mariner (Reply 49):
Quoting diverdave (Reply 47):
SouthWest's special charges include the cost of modifying the 717s for Delta, and acquisition costs of AirTran. Those are truly special costs. But you have to pay interest unless you go bankrupt.

Sure you do. But the only point is that the airline operation - flying folk to and from - was profitable. And that is a start.

I've posted before I believe the interest should be part of operations. It is part of the unavoidable expenses of flying people around. My concern is that the new markets generate 'buzz' and that is free advertising.

Quoting SuperDash (Reply 33):
Their total loss was $12M in the quarter UP from $3M last year. For just 9 months, they have posted a $120M loss, up from $69M last year for the same period. Their cash is down to $75M. Their model is not working.

Thank you for the summary. $120M is not a loss to be ignored. Now, I do not worry about their cash (yet) as it always seems to be replenished. I think this move is to keep the investors confident enough to continue throwing money into VX.

But I do wonder... All this slow down in growth will do at best is allow current operations to attain break even. I'm confused as to how they will grow profitably in the future.

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlineDeltal1011man From United States of America, joined Sep 2005, 9554 posts, RR: 14
Reply 54, posted (1 year 11 months 5 days 16 hours ago) and read 1739 times:

Quoting LAXintl (Reply 40):

What this mean is the airline routes are profitable. The revenues exceed cost, so the continued concept that they are losing money on all their markets is frankly wrong.

yes that is the general idea....but again. They are still bleeding money. Doesn't matter why....loss is a loss.



yep.
User currently offlinemariner From New Zealand, joined Nov 2001, 25405 posts, RR: 86
Reply 55, posted (1 year 11 months 5 days 16 hours ago) and read 1740 times:
Support Airliners.net - become a First Class Member!

Quoting lightsaber (Reply 54):
I think our difference of opinion has to do with our different opinions of the USA aviation market. In my opinion, high premium fares are driven by route network, frequency, and a FF plan that 'traps customers.'

I think that is completely valid for the legacy airlines and if we were dealing with a legacy airline here, I'd agree with you.

But I don't think there is a direct (previous) model for what Virgin America is trying to do, other than - perhaps - JetBlue, which hit the market at a different time and in very different circumstances, which had holes in its network for a long time (remember ATL?) and still has some. - much of the middle of the country and ATL.

Quoting lightsaber (Reply 54):
Agreed. I will be fascinated to see how this strategy plays out.

It's a time honored one. I recall CEO Kelly of Southwest getting a bit testy when it was suggested that DEN wasn't performing the way the rapid expansion would suggest.

Mr Kelly said that while it was true that some of the new routes were not yet profitable, the mature routes were. Which is, almost word for word, what Virgin Atlantic said in its report - the mature routes are carrying the new routes, exactly as I would expect.

Quoting lightsaber (Reply 54):
I've posted before I believe the interest should be part of operations.

I'm conscious that you've said that, and where, and I only partially agree. Obviously, eventually, the airline must be "net" profitable including the payment of interest, but if I want a picture of how the airline is doing, the financial dealings under which it operates don't provide that, in large part because I don't know what they are, it;s a privately held corporation.

But I do know that Virgin America is addressing some of it's financial issues. On the simplest level, the Airbus deal means that progress payments on the aircraft won't have to be made (yay for cash flow), some may even be returned, and as LAXIntl suggested, the airline may come out net positive.

I don't know if the airline can make it, but it has made it so far, under extraordinarily adverse conditions, and it is making, I think, many of the right moves - about the last thing it should do is carry on like it was.

And if this means reduced growth and "thinking smaller" for a while, I'm good with that.

mariner



aeternum nauta
User currently offlineXT6Wagon From United States of America, joined Feb 2007, 3416 posts, RR: 4
Reply 56, posted (1 year 11 months 5 days 16 hours ago) and read 1744 times:

Quoting lightsaber (Reply 20):
Quoting anstar (Reply 5):

Or is there a legacy US carrier that might be interested in buying them and having them as their "leisure" fun brand but with no frills?

It would be cheaper to acquire the aircraft and pilots on the 2nd hand market.

lightsaber, yes exactly. I think the other Airlines are doing no more than putting someone (intern?) on tracking VX assets for when the asset sale happens. While we haven't gotten any firm figures on the VX debt load, it should be tracking near a Billion Dollars by now, and who wants to spend a billion dollars to aquire a couple hundred million in assets? AA had a massively better asset to debt ratio before it whent chapter 11, and guess what, even for them no one was stepping up to buy or merge till they could send lots of debt packing to bring that ratio positive or atleast as close to it as possible.


User currently offlineNWADTWE16 From United States of America, joined Jun 2012, 242 posts, RR: 0
Reply 57, posted (1 year 11 months 5 days 16 hours ago) and read 1750 times:

Im glad to hear VX made money..people REALLY hate on VX here..since F9 started turning profits everyone switched to taking their hatred out on VX. I have said for months once the enormous costs for implementing Sabre were absorbed, once they had time in the network and were now sold repeatedly thru the network, things would look better. VX tickets are selling very well. I check their loads every day and while i only have a small look at what they are getting for tickets, its not cheap by any means to fly them and people have no problem. In fact when they find out VX is an option they ALWAYS go with them. Ive also been doing ALOT of upselling and the people request it, so VX programs to get into Main cabin Select and First Class, day of, are working to drive last minute revenue. Keep going VX and like in anything in life, when people hate, its because you ruffled some feathers, which is exactly Virgin's point to begin with.

User currently offlineOB1504 From United States of America, joined Jul 2004, 3391 posts, RR: 6
Reply 58, posted (1 year 11 months 5 days 16 hours ago) and read 1745 times:

Quoting enilria (Reply 14):
Agreed. I think their brand also works in MIA and LAS, possibly ORD/NYC. Cush immediately instituted a LAX/SFO-only policy when he arrived. It's one of the reasons he should be leaving.

It's a shame that the only time we see get to see a VX airplane at MIA is when it's being prepped for entry into service.

Quoting yellowtail (Reply 18):
Now there is an idea ..sorta turn it into a Virgin Caribbean using MIA as the hub...call it Virgin Americas.......maybe a little room in MSY too.

It's too late for MIA. AA is bankrupt, yes, but they will be ruthless in defending MIA and DFW against a competitor threatening their most lucrative operations. They would absolutely destroy VX.

Quoting avek00 (Reply 27):
They should have gone gangbusters in building MIA -- the airport has significant spare capacity for a focus city, many MIA markets are O&D heavy, AA was (and in some ways, still is) weak enough to be confronted there, and the VX Airbus fleet can hit everything from southwestern Canada to Northern South America without much trouble.

DL could probably make an MIA focus city (or hub) work, but VX wouldn't be able to survive against the wrath of AA. Over their dead bodies will they allow another airline to take away their dominance over MIA-Latin America.

Quoting RyanairGuru (Reply 28):
I guess this is less relevant to MIA than other cities, especially if they had expanded to LatAm, but isn't FL quite a low yielding market? While there is doubtless plenty of O&D between, say, MIA and NYC there is no guarantee that it would be prepared to pay a premium for VX's product.

MIA-LAX tends to be a more premium market than other FL routes, as evidenced by AA running two three-class 772s on the route per day.


User currently offlinediverdave From United States of America, joined Mar 2010, 335 posts, RR: 0
Reply 59, posted (1 year 11 months 5 days 8 hours ago) and read 1704 times:

Quoting lightsaber (Reply 54):
My concern is that the new markets generate 'buzz' and that is free advertising.

An excellent point.

Quoting NWADTWE16 (Reply 58):
Keep going VX and like in anything in life, when people hate, its because you ruffled some feathers, which is exactly Virgin's point to begin with.

I thought the point was to make money?

David


User currently offlinestrfyr51 From United States of America, joined Apr 2012, 1294 posts, RR: 1
Reply 60, posted (1 year 11 months 5 days 7 hours ago) and read 1707 times:
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IMHO VX and F9 are "one trick ponies" who could Really use the synergies of a combination. in either F9's or VX's colors.
VX cannot get expansion with only the single Hub at SFO and F9 needs more traction than just Denver with a damn good east West network they could be a force, since Alaska is primarily North- South, on the west coast and Jet Blue and Spirit don't have any real traction beyond the east coast. B6 does fly to the coast but are they a force there ? No!
Were JBLU -F9 and VX to all get on the same page. and even Interline or code share? UA-AA-US-WN, and DL would All have a real problem on heir hands.. But as long as they have the "go it alone" Syndrome ??
Each will continue to be marginalised as "Niche Players" instead of the FORCE they could be as a United Carrier. Even WN had to take on a partner to get to their final MASS, So the Go it ALONE theory is DEAD MEAT!! They Need a NEW plan!!


User currently offlineReggaebird From Jamaica, joined Nov 1999, 1176 posts, RR: 0
Reply 61, posted (1 year 11 months 5 days 7 hours ago) and read 1696 times:

I think they need to participate in an alliance or partner with one of the majors (DL would be good).

User currently offlineytz From Canada, joined Jun 2009, 2067 posts, RR: 24
Reply 62, posted (1 year 11 months 5 days 6 hours ago) and read 1689 times:

A lot of places list VX aircraft as having 19.7" wide economy seats. How is this possible on an A319/A320?

User currently offlinebrilondon From Canada, joined Aug 2005, 4296 posts, RR: 1
Reply 63, posted (1 year 11 months 5 days 5 hours ago) and read 1692 times:

Quoting LAXintl (Reply 11):
Strip away the growth cost and some finance cost, the airline is now in the black operationally. A good achievement.



No it isn't. Those are still costs that have to be added or subtracted from your bottom line. You can't just ignore one part of you financials to show a profit and yet have massive long term debt. You have to look at the WHOLE picture to get a sense of how an airline is doing. Carrying costs of debt, revenue, current and long term revenues and charges or costs if you will, there are more to reading a balance sheet and income statements, you have to look at the whole picture. That's what I keep telling my clients when they come to me at the outset.



Rush for ever; Yankees all the way!!
User currently offlinelightsaber From United States of America, joined Jan 2005, 13248 posts, RR: 100
Reply 64, posted (1 year 11 months 5 days 1 hour ago) and read 1669 times:
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Quoting XT6Wagon (Reply 56):
I think the other Airlines are doing no more than putting someone (intern?) on tracking VX assets for when the asset sale happens.

   Congrats college junior, your job is to track SRB leftovers.  


We are in agreement. I see no ROI buying VX for anyone.

Quoting NWADTWE16 (Reply 57):
Im glad to hear VX made money..people REALLY hate on VX here

   VX didn't make money. They shifted columns in the book so that the red was on page 2. (Which nobody reads.) Legal?    A profit? Nope. See below:

Quoting brilondon (Reply 63):
Those are still costs that have to be added or subtracted from your bottom line. You can't just ignore one part of you financials to show a profit and yet have massive long term debt. You have to look at the WHOLE picture to get a sense of how an airline is doing. Carrying costs of debt, revenue, current and long term revenues and charges or costs if you will, there are more to reading a balance sheet and income statements, you have to look at the whole picture.

Well said. VX is doing better and this strategy might save them, but they are still bleeding.

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlinemah4546 From Sweden, joined Jan 2001, 33010 posts, RR: 71
Reply 65, posted (1 year 11 months 5 days 1 hour ago) and read 1668 times:

Quoting OB1504 (Reply 58):
MIA-LAX tends to be a more premium market than other FL routes, as evidenced by AA running two three-class 772s on the route per day.

Three daily 772s as of 01JAN13. And all F/J passengers, as of 01SEP12, now have AC access on this route like JFKLAX/SFO.

Quoting EA CO AS (Reply 30):
Quoting MaverickM11 (Reply 29):
It could be telling that they didn't touch MIA at all.

Probably because MIA's cost per enplanement are atrocious.

No, they really aren't that bad, among the highest, but in the same high cost range as airports like Toronto and Seattle. It's just when FLL is right next door, that figures into the equation, and hurts MIA, a lot. But FLL's enplanement costs are soaring - expected to triple to fund a new runway - while MIA's are holding steady due to unexpected traffic growth. Landing fees were lowered for FY2013 by 7% and are expected to keep falling; while Moody's forecasts the increase in CPE will be much smaller than previously predicted.

And of course, there's the fact that MIA, as a common use facility, doesn't have gate lease costs. This helps airlines with smaller operations tremendously.

[Edited 2012-11-19 12:46:27]


a.
User currently offlinediverdave From United States of America, joined Mar 2010, 335 posts, RR: 0
Reply 66, posted (1 year 11 months 5 days ago) and read 1649 times:

Quoting mah4546 (Reply 65):

No, they really aren't that bad, among the highest, but in the same high cost range as airports like Toronto and Seattle.

Here's an article form March 2012 with a nice little chart showing CPEs for selected airports. The Delta hubs at MSP, DTW, and ATL are at the low end.

http://centreforaviation.com/blogs/a...ce-alaska-to-fort-lauderdale-70637

Fitch Ratings projected (in 2011) a CPE at MIA of around $30 in the next 5 to 7 years.

http://www.miami-airport.com/pdfdoc/clips_cnbc-fitch-rating.pdf

David


User currently offlinePassedV1 From United States of America, joined Oct 2012, 221 posts, RR: 0
Reply 67, posted (1 year 11 months 4 days 9 hours ago) and read 1599 times:

Quoting strfyr51 (Reply 60):
Alaska is primarily North- South, on the west coast and Jet Blue and Spirit don't have any real traction beyond the east coast

Not sure I agree with this statement. Most of Alaskas ASM's are actually NOT North South on the West Coast. Jet Blue is slowly expanding it's west coast presence and I think Spirit seems to be doing quite well with it's Vegas expansion.

I don't think VX can merge to survive. First, why would anyone want them. Alaska wouldn't because of the Airbuses and how different their business model is.

Virgin+Frontier are too small and again, VX has such a unique business model would defeat that. Without the business model, VX is just 50 airplanes +/-, no more. It would be much easier for the established players to recreate VX then it would be to buy the whole airline.

A merger for VX is not going to happen, they are either going to make it or they are not.


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FR: Contemplates 300 Order & SP Ops For 1 Hr Flts posted Thu Dec 30 2010 19:09:15 by planemaker
Goodbye Midwest-Thanks For 25 Years Of Excellence. posted Fri Nov 5 2010 23:37:24 by GeneralAviator
DFW: Ambitious Plans For Next 3-5 Years posted Thu Jun 24 2010 15:41:35 by DFWEagle
Internal Letter: BER Delayed For 1 Or 2 Years posted Sat May 29 2010 02:22:22 by Tobias2702