Interestingly this article appeared in the Sydney Morning Herald recently suggesting that Patrich should dump DJ
( no word as to whether they actually want to bail out though!)
"Budget airline Virgin Blue has become a noose around the neck of majority stakeholder Patrick Corp Ltd, according to brokers Citigroup Smith Barney.
Citigroup analyst Jason Smith said logistics and ports operator Patrick Corp would have a brighter future without its 62.4 per cent stake in Virgin Blue.
"Virgin Blue continues to be a noose around Patrick's neck, with fuel prices remaining high, with Jetstar adding 30 per cent capacity in the next year and with Virgin Blue's muddled attempt at trying to be something to everyone," Mr Smith said in a research note to clients.
He said Virgin Blue was also trying to cope with significant management change and a rising cost base, the successful segmentation of the market by Qantas, Jetstar's strong growth and disappointing operating statistics for March to May.
"The unfortunate thing is that without its 62.4 per cent holding in Virgin Blue, we believe that Patrick would be the stand-out stock in the sector on a two to three-year view," Mr Smith said.
AdvertisementPatrick's earnings were expected to gain significant benefit from expansion of its Fisherman's Island and Port Botany ports, the introduction of auto straddle technology in Brisbane and the removal of a container movement levy in mid-2006.
The outlook for Pacific National - Patrick's joint-venture rail operations with Toll Holdings Ltd - was also very robust as governments spend more on improving rail infrastructure, the expansion of Pacific National into Queensland and the return to normal grain harvests following good rains in June.
Citigroup said that following Virgin Blue's poor monthly data, it had cut its estimated reported net profit for Patrick Corp by 5.5 per cent to $210.4 million for the 2005 full year and by nine per cent to $248.8 million for 2006.
It warned that further downside risk was possible given Jetstar's rapid expansion, with fuel costs unhedged and with Virgin Blue's decision to expand internationally.
Patrick shares were steady at $5.53 at 1215 AEST on Wednesday. Virgin Blue was 0.5 cents lower at $1.65."
Presumably if ( and it is a big "if" ) Patrick sold to SQ
it would put an end once and for all to any possible merger between QF
( not that I really thought that would ever happen anyway )