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timtam
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Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 12:38 am

CEO Borghetti strikes again........with Virgin Australia posting a $224.7 million annual net loss. So much for his transformation project. All he did was lead VA down the path of a loss making strategy.

Full report here:

http://www.afr.com/business/transport/aviation/virgin-australia-posts-2247-million-fullyear-loss-20160727-gqfdds

Hopefully its not stuck behind the AFR firewall.
 
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thekorean
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Re: Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 12:43 am

QF wins the war. I am not sure how viable two full service carriers are for a country of less than 25 million people.

I would strongly consider moving to ULCC model and rebranding away from Virgin brand. Doubt Richard Branson really gives a damn about VA.
 
jbs2886
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Re: Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 1:20 am

timtam wrote:
CEO Borghetti strikes again........with Virgin Australia posting a $224.7 million annual net loss. So much for his transformation project. All he did was lead VA down the path of a loss making strategy.

Full report here:

http://www.afr.com/business/transport/aviation/virgin-australia-posts-2247-million-fullyear-loss-20160727-gqfdds

Hopefully its not stuck behind the AFR firewall.


You can't just look at the final number and jump to a conclusion. In fact, the first sentence of that article and a Reuters one (http://www.reuters.com/article/virgin-a ... SL4N1AD63N) state this is due to one off costs of restructuring.

Further, the article states:

Without the one-off charges, Virgin said, annual pre-tax profit was $41 million, better than the previous year's A$49 million pre-tax loss and within guidance it gave this month of posting underlying profit between A$30 million and A$60 million.

"The group improved its underlying performance, passenger numbers and load factors in the fourth quarter in a challenging operating environment," chief executive John Borghetti said in a statement.
 
IndianicWorld
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Re: Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 1:26 am

He keeps talking about challenging operating conditions but many airlines around the globe are thriving at present.

His strategy has not payed off and needs another transformation to try again. Not exactly confidence building :)
 
keitherson
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Re: Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 1:30 am

So between VA's 225mil loss, AB's 500mil loss, AZ's 200mil loss, how exactly is EY staying afloat with these investments?
 
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mariner
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Re: Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 1:59 am

jbs2886 wrote:
You can't just look at the final number and jump to a conclusion. In fact, the first sentence of that article and a Reuters one (http://www.reuters.com/article/virgin-a ... SL4N1AD63N) state this is due to one off costs of restructuring.

Further, the article states:

Without the one-off charges, Virgin said, annual pre-tax profit was $41 million, better than the previous year's A$49 million pre-tax loss and within guidance it gave this month of posting underlying profit between A$30 million and A$60 million.


Given the accumulated losses under Borghetti and the huge amounts of money sunk into the airline by the principal shareholders, $41 million is a poor return. The continuing poor numbers are why Air NZ sold the majority of its shareholding.

You can argue that they're clearing the decks for a rosy future - it's always been "jam tomorrow" from Borghetti - but many (including Air NZ's CEO) believe that there needs to be a change at the top. Which may just have happened, at least conceptually, with the appointment of John Thomas to actually run the airline. Mr. Borghetti, it is said, will concentrate on building relationships with the new Chinese shareholders.

http://www.theaustralian.com.au/busines ... 815daed0ae

"The restructure will allow Mr Borghetti to focus on the airline’s partnership with its new Chinese shareholders, HNA Group and Nanshan Group."

It's start, I guess, but there's a lot of work to do to pay for Broghetti's grandiose dreams.

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TWA772LR
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Re: Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 4:33 am

Any chance DL would buy a stake?
When wasn't America great?


The thoughts and opinions shared under this username are mine and are not influenced by my employer.
 
zkncj
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Re: Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 4:40 am

TWA772LR wrote:
Any chance DL would buy a stake?


Most of the NZ shareholding is now sold, there is just under 5% left which is yet to be sold.

I bet NZ must be very happy right now to have VA off there books, I don't get how VA can make such an loss yet NZ is proposed to announce an profit of around $800 million.
 
a320fan
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Re: Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 6:24 am

VA should have focussed on the JetBlue style business model rather than trying to imitate Qantas.
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zkncj
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Re: Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 7:17 am

a320fan wrote:
VA should have focussed on the JetBlue style business model rather than trying to imitate Qantas.


Maybe they should of followed NZ's Seat2Suite Product that is very profitable, and which Virgin uses on the Tasman as part of there partnership with NZ.
 
SYDSpotter
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Re: Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 9:27 am

jbs2886 wrote:
You can't just look at the final number and jump to a conclusion. In fact, the first sentence of that article and a Reuters one (http://www.reuters.com/article/virgin-a ... SL4N1AD63N) state this is due to one off costs of restructuring. Further, the article states: Without the one-off charges, Virgin said, annual pre-tax profit was $41 million, better than the previous year's A$49 million pre-tax loss and within guidance it gave this month of posting underlying profit between A$30 million and A$60 million.


So without the one-off charges VA would've made a pre-tax profit of $41m which might seem like a decent result compared with the prior year, but QF is expected to record a $1.5bn profit before tax. I think that's all you need to put the VA result in perspective. It's a mediocre result.

http://www.theaustralian.com.au/busines ... 1398a5c471

zkncj wrote:
Maybe they should of followed NZ's Seat2Suite Product that is very profitable


Sorry but changing seats doesn't fix a deeply flawed business model.
319_320_321_332_333_359_388 / 734_737_738_743_744_762_763_772_773_77W_788_789
 
IndianicWorld
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Re: Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 10:41 am

VA just seems to have lost its energy and momentum that it was building.

From my recent experience, the tension at management level seems to have crept down to their front line staff who really aren't offering the same level of enthusiasm as they once did. Concerning really.

The upcoming TT move to 737 is a good start, hopefully rebalancing the group's fleet needs and give VA less pressure to operate on sectors it no longer has the cost base to operate.

Something will have to change as what they have now just isn't going to cut it.
Last edited by IndianicWorld on Thu Jul 28, 2016 11:46 am, edited 1 time in total.
 
81819
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Re: Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 11:31 am

In reality, the majority of the restructuring costs centre around the Virgin Regional business which put simply has not performed. VA are ridding themselves of 18 E190's which on average are less than five years of age. The ATR's leaving the fleet are even younger.

Even though VA's passenger numbers are up, I suspect the business will decrease in size once these aircraft are removed and VA exits markets. This will have a knock on affect with its mainline business.

I see these moves as positive. If there isn't room for two full service carriers, there definitely isn't room for two major regional carriers.

The question becomes. What will VA's share of the market ultimately be. I suspect somewhere in the 30-32% range. If so there is still a lot more pain fir VA and its staff.

Time will tell!
 
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zkojq
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Re: Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 12:47 pm

jbs2886 wrote:
this is due to one off costs of restructuring.

They've been 'restructuring' since 2011....

a320fan wrote:
VA should have focussed on the JetBlue style business model rather than trying to imitate Qantas.

Yeah. The problem is that they keep trying to emulate Qantas, fail (at least in the eyes of consumers) and then have to deal with the resultant rise in their cost base which makes them less competitive.

For the record, I do want VA to succeed (one way or another), but its time for the excuses to end. The reality is that there is a genuine risk that the airline won't be flying in five years.
First to fly the 787-9
 
qf002
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Re: Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 1:31 pm

What VA is fundamentally lacking is a vision for where they are headed and what they want to become. There was a glimmer of that five years ago but the rebranding appears to have had very little substance at this stage.

And China is only going to make things even worse for them, unfortunately. VA needs to knuckle down and focus on making their core business really successful before they have any chance at making these silly follies work.
 
MIflyer12
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Re: Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 2:59 pm

TWA772LR wrote:
Any chance DL would buy a stake?


I don't know why DL would, unless Virgin's Australia's very existence (and their USA-Australia JV) was at stake. They're already sharing profits. VA is in a pretty fully-developed market, unlike Brazil, Mexico, or China where DL has made equity investments.
 
zkncj
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Re: Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 6:59 pm

SYDSpotter wrote:

zkncj wrote:
Maybe they should of followed NZ's Seat2Suit Product that is very profitable


Sorry but changing seats doesn't fix a deeply flawed business model.


Seats2Suit isn't an hardware product - http://www.airnewzealand.co.nz/the-choice-is-all-yours
 
743Flyer
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Re: Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 9:37 pm

VA is beginning to look a little bit like Ansett. VA shouldn't start flights to China/HK (with their own metal) even though they will have the feed from HNA. They need to to consolidate their strength on the domestic market.

When Ansett started international flights they had a very good hard product in all cabins, VA would be in the same boat with their good hard product, but completely relying on feed from HNA won't be sustainable in the long term. VA should deploy the aircraft for domestic runs, whether it be on the PER or triangle runs.

VA also need to get their fleet in order, dumping the E190's and TT a320's is a start, but they need to figure out their new direction before there should be further fleet changes. If they still want to be QFII they could be better off getting a couple more a330's and getting rid of a handful more 738's. If they choose to slim down (a more viable option IMHO) they should get rid of some 738's and some more regional aircraft. While VA's fleet isn't as bloated as Ansett's was at the time of the collapse, it needs further consolidation to help VA get back into the black.
 
a320fan
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Re: Virgin Australia Posts $224.7 Million Loss

Thu Jul 28, 2016 11:50 pm

To be honest I'm quite surprised they are not dumping the F100 and retaining the E190 in those markets. I guess the Fokkers are fully paid off so can sit around when not needed while the Embraer has high lease payments. I do hope to get a chance to fly on a VA 190 before they disappear.
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QF29
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Re: Virgin Australia Posts $224.7 Million Loss

Fri Jul 29, 2016 12:07 am

VA are just too over the place.They have no consistency in hard and soft product. Most of the time their fares are higher than QF's which just doesn't make sense since their base fare does not include checked Luggage, in addition to the BoB drinks unless you're buying during "happy hour". VA seriously need to sort their Sh*t out.
Last edited by QF29 on Fri Jul 29, 2016 1:23 am, edited 1 time in total.
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qf789
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Re: Virgin Australia Posts $224.7 Million Loss

Fri Jul 29, 2016 12:59 am

a320fan wrote:
To be honest I'm quite surprised they are not dumping the F100 and retaining the E190 in those markets. I guess the Fokkers are fully paid off so can sit around when not needed while the Embraer has high lease payments. I do hope to get a chance to fly on a VA 190 before they disappear.


The F100 also has a better take off performance when taking off from mine sites than other aircraft hence why it is popular on the FIFO runs
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sq256
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Re: Virgin Australia Posts $224.7 Million Loss

Fri Jul 29, 2016 1:01 am

QF29 wrote:
VA are just too over the place.They have no consistency in hard and soft product. Most of the time their fares are higher than QF's which just doesn't make sense since their base fare does not include checked Luggage, in addition to the BoB drinks unless you're lying during "happy hour". VA seriously need to sort their Sh*t out.


All of VA's flights (except the Trans-Tasman flights operated by the former Pacific Blue crew) had baggage included in the checked fare for over a year now. International Long Haul, Coast 2 Coast & Aust-Bali flights had baggage in their base fare years before that. I agree with you on VA's food offerings though (Snack only on all domestic flights except the Coast 2 Coast & other flights over 3 hours which gets full meals)
 
QF29
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Re: Virgin Australia Posts $224.7 Million Loss

Fri Jul 29, 2016 1:40 am

sq256 wrote:
QF29 wrote:
VA are just too over the place.They have no consistency in hard and soft product. Most of the time their fares are higher than QF's which just doesn't make sense since their base fare does not include checked Luggage, in addition to the BoB drinks unless you're lying during "happy hour". VA seriously need to sort their Sh*t out.


All of VA's flights (except the Trans-Tasman flights operated by the former Pacific Blue crew) had baggage included in the checked fare for over a year now. International Long Haul, Coast 2 Coast & Aust-Bali flights had baggage in their base fare years before that.


TIL. I've only ever looked at VA between MEl and AKL. Shouldn't the baggage rules be the other way round then? You're more likely to take a bag on an international flight versus a SYD-MEL hop
(or better yet why not just include it over the board).

VA should follow in Jetblue's footsteps and be a "funky" LCC with inclusions to differ from a standard LCC like JQ or TT
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zkncj
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Re: Virgin Australia Posts $224.7 Million Loss

Fri Jul 29, 2016 2:00 am

QF29 wrote:
TIL. I've only ever looked at VA between MEl and AKL. Shouldn't the baggage rules be the other way round then? You're more likely to take a bag on an international flight versus a SYD-MEL hop
(or better yet why not just include it over the board).

VA should follow in Jetblue's footsteps and be a "funky" LCC with inclusions to differ from a standard LCC like JQ or TT


It's because NZ doesn't offer Bags,Meals,Drinks,Movies on any flights under 10 hours on the base fare. Since Virgin has the Tasman Alliance with NZ, Virgin has to do what NZ wants ton the Tasman otherwise its good by VA on the Tasman.

Been on an NZ A320 service on the Tasman recently? just about everybody is traveling carry-on only = more sell-able freight space = more profit.
 
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qf789
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Re: Virgin Australia Posts $224.7 Million Loss

Fri Jul 29, 2016 10:04 am

In SIA's first quarter results they booked a S$41 million loss from its shareholding in VA

http://australianaviation.com.au/2016/0 ... g-outlook/
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