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Polot
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Re: Virgin Atlantic needs government support?

Tue May 12, 2020 3:05 pm

VS11 wrote:
Westerwaelder wrote:
VS11 wrote:

No, it is not all relative. BA will retire paid-off assets precisely because they are paid-off. The more assets you have that do not earn to pay off their costs the higher your financial burden.


And in the case of BA, those assets flew profitably throughout the last years and resulted in a position of £9 billion in the bank. VS with around 1/7th of the fleet has more than £1.3billion in the bank? Good luck with your theory. You'll need it.


To achieve higher yields, airlines like BA, LH, KL, AF, DL, AA, UA will have to cut frequency and capacity. The money they have in the bank is not to fly empty planes but to keep empty planes parked. I don't really understand what you are arguing about.


You don’t really seem to understand that the airlines are not all shrinking to the same size.

Yes BA has higher fix costs, but they are not shrinking down to 30-whatever planes. Post-covid they will be smaller than before, but still a lot larger than VS. That means they can earn more revenue to cover the higher costs. VS is shrinking to 30 whatever planes because of their current size, not because that is some optimal number that all airlines should be at and all the market will support post-covid.

Owned planes are cheap to park (essentially you are just paying storage fees) and cheap to get rid of if necessary.
 
VS11
Posts: 1661
Joined: Mon Jul 02, 2001 6:34 am

Re: Virgin Atlantic needs government support?

Tue May 12, 2020 3:22 pm

Polot wrote:
VS11 wrote:
Westerwaelder wrote:

And in the case of BA, those assets flew profitably throughout the last years and resulted in a position of £9 billion in the bank. VS with around 1/7th of the fleet has more than £1.3billion in the bank? Good luck with your theory. You'll need it.


To achieve higher yields, airlines like BA, LH, KL, AF, DL, AA, UA will have to cut frequency and capacity. The money they have in the bank is not to fly empty planes but to keep empty planes parked. I don't really understand what you are arguing about.


You don’t really seem to understand that the airlines are not all shrinking to the same size.

Yes BA has higher fix costs, but they are not shrinking down to 30-whatever planes. Post-covid they will be smaller than before, but still a lot larger than VS. That means they can earn more revenue to cover the higher costs. VS is shrinking to 30 whatever planes because of their current size, not because that is some optimal number that all airlines should be at and all the market will support post-covid.

Owned planes are cheap to park (essentially you are just paying storage fees) and cheap to get rid of if necessary.


Nobody is arguing that BA will be bigger than VS. That's the whole point. BA will retire the planes it owns and it will still be left to pay for the planes it cannot retire nor can profitably fly. In the next 2-3 years, BA and all of the big carriers are going to be stuck with more planes than they can profitably fly. This should be pretty obvious.
 
Westerwaelder
Posts: 250
Joined: Fri Apr 03, 2020 12:27 pm

Re: Virgin Atlantic needs government support?

Tue May 12, 2020 3:41 pm

VS11 wrote:
Polot wrote:
VS11 wrote:

To achieve higher yields, airlines like BA, LH, KL, AF, DL, AA, UA will have to cut frequency and capacity. The money they have in the bank is not to fly empty planes but to keep empty planes parked. I don't really understand what you are arguing about.


You don’t really seem to understand that the airlines are not all shrinking to the same size.

Yes BA has higher fix costs, but they are not shrinking down to 30-whatever planes. Post-covid they will be smaller than before, but still a lot larger than VS. That means they can earn more revenue to cover the higher costs. VS is shrinking to 30 whatever planes because of their current size, not because that is some optimal number that all airlines should be at and all the market will support post-covid.

Owned planes are cheap to park (essentially you are just paying storage fees) and cheap to get rid of if necessary.


Nobody is arguing that BA will be bigger than VS. That's the whole point. BA will retire the planes it owns and it will still be left to pay for the planes it cannot retire nor can profitably fly. In the next 2-3 years, BA and all of the big carriers are going to be stuck with more planes than they can profitably fly. This should be pretty obvious.


I would suggest to go back and read over your own comments. The size argument in itself is a moot point. If an airline with a large fleet flies their planes profitably for ten years and builds up reserves, it can then park these planes for a period of time and pay its bills from their past profits. If an airline with a small fleet flies their planes at a loss for years and builds up debts instead of reserves it has nothing to pay its bills with once it has to park its planes for a period of time.

Can you guess who is who? Can you guess who desperately needs a cash injection of the two and who has room to play with?
 
Lucifer656
Posts: 4
Joined: Tue May 12, 2020 3:41 pm

Re: Virgin Atlantic needs government support?

Tue May 12, 2020 3:43 pm

To claim Delta is unable to financially support their 49% share in VS at this time seems to be at odds with their purchase of further shares in a far larger partner airline just a few days ago, Korean Air.
 
VS11
Posts: 1661
Joined: Mon Jul 02, 2001 6:34 am

Re: Virgin Atlantic needs government support?

Tue May 12, 2020 3:54 pm

Westerwaelder wrote:
VS11 wrote:
Polot wrote:

You don’t really seem to understand that the airlines are not all shrinking to the same size.

Yes BA has higher fix costs, but they are not shrinking down to 30-whatever planes. Post-covid they will be smaller than before, but still a lot larger than VS. That means they can earn more revenue to cover the higher costs. VS is shrinking to 30 whatever planes because of their current size, not because that is some optimal number that all airlines should be at and all the market will support post-covid.

Owned planes are cheap to park (essentially you are just paying storage fees) and cheap to get rid of if necessary.


Nobody is arguing that BA will be bigger than VS. That's the whole point. BA will retire the planes it owns and it will still be left to pay for the planes it cannot retire nor can profitably fly. In the next 2-3 years, BA and all of the big carriers are going to be stuck with more planes than they can profitably fly. This should be pretty obvious.


I would suggest to go back and read over your own comments. The size argument in itself is a moot point. If an airline with a large fleet flies their planes profitably for ten years and builds up reserves, it can then park these planes for a period of time and pay its bills from their past profits. If an airline with a small fleet flies their planes at a loss for years and builds up debts instead of reserves it has nothing to pay its bills with once it has to park its planes for a period of time.

Can you guess who is who? Can you guess who desperately needs a cash injection of the two and who has room to play with?


This is not an accurate representation of reality. But if that suits your narrative, be my guest.
 
jomur
Posts: 360
Joined: Sun Jun 19, 2016 6:36 pm

Re: Virgin Atlantic needs government support?

Tue May 12, 2020 4:05 pm

sevenheavy wrote:
jomur wrote:
DobboDobbo wrote:

Agree it is a massive road bump - as things stand VS has been grounded for coming up to two months and is still operating. I consider that a circa two month grounding would constitute more than a slight road bump, yet VS is still here (for now).


Virgin are still operating because they have not paid back millions owed to customers whose flights have been cancelled going back to the beginning of April. Now that the CAA is stated they will go after airlines dragging out repayments Virgin could run out of money pretty quickly if they target Virgin, the worse of alll UK airlines not repaying refunds in the legally obligatory 7 days.


Do you have a source, or is this just a personal opinion? VS are no better or worse than most of the other airlines and (as I mentioned in a previous, and conveniently ignored, post) the majority of the money for future ticket sales will still be with the credit card companies anyway. It’s purely resource driven and no airlines are able to suddenly meet such a huge increase in demand


On several holiday forums there are polls showing which airlines have been refunding and how quickly. Virgin is one of the top UK airlines that are dragging their feet and saying it will take 100 days to give passengers their money back. No one on them have got any money back since early April. Virgin will be royally screwed once the CAA and CMA flex their muscles as they have given warning to all airlines to refund promptly or otherwise suffer the consequences. Virgin should have kept passengers money separately until they has supplied the services.

As to SRB selling some of his stake in Virgin Galactic, maybe he should have done this first and as long as it all went to Virgin Atlantic, he might have then Virgin might have been given a Government loan in the first place.
 
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F737NG
Posts: 61
Joined: Thu Aug 30, 2018 7:12 pm

Re: Virgin Atlantic needs government support?

Tue May 12, 2020 4:26 pm

VS11 wrote:
Polot wrote:
VS11 wrote:

To achieve higher yields, airlines like BA, LH, KL, AF, DL, AA, UA will have to cut frequency and capacity. The money they have in the bank is not to fly empty planes but to keep empty planes parked. I don't really understand what you are arguing about.


You don’t really seem to understand that the airlines are not all shrinking to the same size.

Yes BA has higher fix costs, but they are not shrinking down to 30-whatever planes. Post-covid they will be smaller than before, but still a lot larger than VS. That means they can earn more revenue to cover the higher costs. VS is shrinking to 30 whatever planes because of their current size, not because that is some optimal number that all airlines should be at and all the market will support post-covid.

Owned planes are cheap to park (essentially you are just paying storage fees) and cheap to get rid of if necessary.


Nobody is arguing that BA will be bigger than VS. That's the whole point. BA will retire the planes it owns and it will still be left to pay for the planes it cannot retire nor can profitably fly. In the next 2-3 years, BA and all of the big carriers are going to be stuck with more planes than they can profitably fly. This should be pretty obvious.



Your point is not at all obvious. There have been plenty of excellent thoughts given already, but they all boil down to just one:

Westerwaelder wrote:
And have you ever considered economies of scale?



VS will have fewer revenue-earning opportunities than BA due to BA's larger fleet.
The list of destinations served plus the frequency offered matters now as well as later this year.
At a certain level of demand, BA will deploy the appropriate sized aircraft on a frequency to match. The numbers will be awful, but that is revenue to offset against the losses being incurred.
With such a small fleet of large aircraft and restricted to no more than a couple of rotations in a day, VS are much more limited in what they can do.

There comes a point where size really does matter.

For instance, looking into the data (if it is correct), VS has 67% of its fleet (28 frames) leased from 10 lessors. The only lessor to have exposure of more than 5 frames with VS is AerCap with 8.

Worse still for VS, is that the entire A330 fleet and 5 of the 7 B747 fleet are leased. These are the thirsty aircraft that they would prefer to keep parked up (as they currently are) and not having to pay leases on them, rather than operate long-haul. Yes, price of oil is way down, but how much is being purchased at previously hedged prices?

Compare this to BA. 53% of its fleet (146 frames) is leased from 22 lessors. 5 lessors are exposed with > 10 frames with BA. BBAM has ~40 and Itochu ~20.

None of the B747s and only 6 of the B777-200s are leased. That's 67 older, thirstier and outright owned aircraft that are not needed if the economics don't stack up. The newer, more efficient and leased 77Ws, 787s and A350s could be the bulk of the flying long-haul fleet for the rest of the year.

What's the old saying? If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem.

I expect BA to be able to renegotiate more favourable lease terms given the numbers of aircraft involved, whereas VS would appear to be in a less commanding position.
 
VS11
Posts: 1661
Joined: Mon Jul 02, 2001 6:34 am

Re: Virgin Atlantic needs government support?

Tue May 12, 2020 4:48 pm

F737NG wrote:

VS will have fewer revenue-earning opportunities than BA due to BA's larger fleet.


Computer says NO. This is not Field of Dreams "If you build it they will come" type of situation.

F737NG wrote:
The list of destinations served plus the frequency offered matters now as well as later this year.


Not currently the case. Nor will be the case in the next 2-3 years.

F737NG wrote:
There comes a point where size really does matter.


This point is NOT coming anytime soon.

F737NG wrote:
None of the B747s and only 6 of the B777-200s are leased. That's 67 older, thirstier and outright owned aircraft that are not needed if the economics don't stack up.


That still leaves BA with 235 aircraft that they have to pay for. 6 times more than VS has to pay for.

F737NG wrote:
I expect BA to be able to renegotiate more favourable lease terms given the numbers of aircraft involved, whereas VS would appear to be in a less commanding position.


Sure. I expect BA to be able to renegotiate its leases, same way as VS and other carriers.

Somehow you still don't get it that currently and in the foreseeable future, it is best to NOT be an airline of any kind at all. Right now owning an airplane means a loss. Operating a flight means a loss. What else is there to say?
 
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F737NG
Posts: 61
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Re: Virgin Atlantic needs government support?

Tue May 12, 2020 6:00 pm

VS11 wrote:
Sure. I expect BA to be able to renegotiate its leases, same way as VS and other carriers.

Somehow you still don't get it that currently and in the foreseeable future, it is best to NOT be an airline of any kind at all. Right now owning an airplane means a loss. Operating a flight means a loss. What else is there to say?



And yet you managed to miss the crux of the argument.
VS is an airline and it has to find a way to keep itself alive.
It tried to obtain UK taxpayer money, but thankfully was given short-shrift.

VS' chances of renegotiating leases is a lot lower than an airline that is 6.5x bigger.

The amount of cash an airline has in the bank to tide them over the next several months matters.

As an airline, you can sit out flying altogether, incur nothing but costs and end-up bankrupt.
Or you operate a small number of flights, on certain routes and with certain frequencies, to meet some of the demand to ensure that there is at least some revenue to offset the costs.

A fundemental reshaping of their flying programme and an injection of investor funds will hopefully keep them in the game.
However, given it's previous financial performance, VS is looking down the barrel of a shutdown decision a lot sooner than a lot of its rivals.
 
VS11
Posts: 1661
Joined: Mon Jul 02, 2001 6:34 am

Re: Virgin Atlantic needs government support?

Tue May 12, 2020 6:17 pm

F737NG wrote:
VS11 wrote:
Sure. I expect BA to be able to renegotiate its leases, same way as VS and other carriers.

Somehow you still don't get it that currently and in the foreseeable future, it is best to NOT be an airline of any kind at all. Right now owning an airplane means a loss. Operating a flight means a loss. What else is there to say?



And yet you managed to miss the crux of the argument.
VS is an airline and it has to find a way to keep itself alive.
It tried to obtain UK taxpayer money, but thankfully was given short-shrift.

VS' chances of renegotiating leases is a lot lower than an airline that is 6.5x bigger.

The amount of cash an airline has in the bank to tide them over the next several months matters.

As an airline, you can sit out flying altogether, incur nothing but costs and end-up bankrupt.
Or you operate a small number of flights, on certain routes and with certain frequencies, to meet some of the demand to ensure that there is at least some revenue to offset the costs.

A fundemental reshaping of their flying programme and an injection of investor funds will hopefully keep them in the game.
However, given it's previous financial performance, VS is looking down the barrel of a shutdown decision a lot sooner than a lot of its rivals.


Nope. Virgin Atlantic is not going anywhere. It will be happy to watch BA burn its cash stash and then cut the capacity it had been dumping on the TATL routes.
 
TC957
Posts: 3840
Joined: Wed May 23, 2012 1:12 pm

Re: Virgin Atlantic needs government support?

Tue May 12, 2020 7:07 pm

Now that VS are about to go on sale with their S21 flying programme, and nearly all their regular routes will be back. Including the seasonal GLA / BFS - MCO. Shame on all the doom and gloom merchants on here predicting VS's demise.
 
DobboDobbo
Posts: 1141
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Tue May 12, 2020 7:41 pm

TC957 wrote:
Now that VS are about to go on sale with their S21 flying programme, and nearly all their regular routes will be back. Including the seasonal GLA / BFS - MCO. Shame on all the doom and gloom merchants on here predicting VS's demise.


There’s a long way to go yet for the entire industry - so I would count any chickens just yet - but certainly VS’s prospects today look better than last week. Scant consolation for the staff who are to lose their jobs, but comfort for those who retain them.
 
3AWM
Posts: 232
Joined: Sat Jul 23, 2016 1:01 pm

Re: Virgin Atlantic needs government support?

Tue May 12, 2020 7:48 pm

I think releasing this schedule is somewhat of a PR exercise and maybe more for investors than for customers. What's the chances that flights from GLA/BFS and MAN are all for hub through LHR intially? There is going to be a lot of spare capacity.

RE: BA in a lot of ways their conundrum is more complicated and difficult than Virgin's. They might own a lot of aircraft but they also still lease a lot. Even paid for frames cost money to park up. The ones they have may not be the right size for the route network. Pre Covid19 they weren't maxing out their slot portfolio so they may have to service a lot of slots with loss making flights for some time and they are still tied into the leases. Of course they can swap frames around other IAG airlines but does that help any?

At least VS have an easy way to shed unwanted leases through prepack administration and many unserved destinations to do the odd flight to. They can also reduce the number of flights as they were maxing out their LHR slots as it was.
 
DobboDobbo
Posts: 1141
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Tue May 12, 2020 7:49 pm

jomur wrote:
On several holiday forums there are polls showing which airlines have been refunding and how quickly. Virgin is one of the top UK airlines that are dragging their feet and saying it will take 100 days to give passengers their money back. No one on them have got any money back since early April. Virgin will be royally screwed once the CAA and CMA flex their muscles as they have given warning to all airlines to refund promptly or otherwise suffer the consequences. Virgin should have kept passengers money separately until they has supplied the services.


So your source are polls on “several holiday forums” which apparently show Virgin to be “one of the top UK airlines that are dragging their feet”.

I don’t doubt that VS are taking their time, I don’t doubt that in normal times this would be unacceptable, I don't doubt that they are probably very under staffed to turn these requests around, but I ask so suspect this go slow may be to preserve cash.

Having said all that, there are relatively few airlines in the U.K. and you said VS was the worst (see quote below) when you meant one of the worst. Thanks for clarifying.

jomur wrote:
Virgin, the worse of alll UK airlines not repaying refunds in the legally obligatory 7 days.



jomur wrote:
As to SRB selling some of his stake in Virgin Galactic, maybe he should have done this first and as long as it all went to Virgin Atlantic, he might have then Virgin might have been given a Government loan in the first place.


Agreed - credit to the treasury and the chancellor in protecting the taxpayer’s interests, let’s hope its worth it! :thumbsup:
 
Cedar
Posts: 76
Joined: Mon Dec 25, 2017 1:07 am

Re: Virgin Atlantic needs government support?

Wed May 13, 2020 4:37 am

VS11 wrote:
F737NG wrote:

VS will have fewer revenue-earning opportunities than BA due to BA's larger fleet.


Computer says NO. This is not Field of Dreams "If you build it they will come" type of situation.

F737NG wrote:
The list of destinations served plus the frequency offered matters now as well as later this year.


Not currently the case. Nor will be the case in the next 2-3 years.

F737NG wrote:
There comes a point where size really does matter.


This point is NOT coming anytime soon.

F737NG wrote:
None of the B747s and only 6 of the B777-200s are leased. That's 67 older, thirstier and outright owned aircraft that are not needed if the economics don't stack up.


That still leaves BA with 235 aircraft that they have to pay for. 6 times more than VS has to pay for.

F737NG wrote:
I expect BA to be able to renegotiate more favourable lease terms given the numbers of aircraft involved, whereas VS would appear to be in a less commanding position.


Sure. I expect BA to be able to renegotiate its leases, same way as VS and other carriers.

Somehow you still don't get it that currently and in the foreseeable future, it is best to NOT be an airline of any kind at all. Right now owning an airplane means a loss. Operating a flight means a loss. What else is there to say?


No offense - but I'm not quite sure what you've been reading or who you've been listening to: I'll keep this very simple as opposed to delving deep into corporate finance of airlines

It's obvious bigger fleet requires more cash to maintain costs - but that also means you've made more money & have more cash reserves in the case of BA - this alone pretty much cancels out your entire argument. Cash held in reserves is a percentage based on a number of factors such as costs, debt etc.
Also, ownership of planes (BA) vs Leasing planes (VS) = cheaper costs
As someone mentioned above - economies of scale - the bigger you are, the more leverage you have in negotiating down costs
Smaller is not better if you've mismanged your airline, have huge debt, can't get loans due to no assets, have not made profits in years.

Not to mention, VS though small has not been very nimble until very recently - that is usally an advantage for small airlines & they failed to even succeed in that sense.
And in relations to size - VS's costs are higher per flight & per A/C than BA.

It doesn't matter if no flying or reduced pax flying is taking place on both carriers - And let's not forget BA has lots of flexibility, they can easily swap a smaller plane onto a route with little pax, thus reducing fuel & other costs. VS has no choice but to use the larger planes because that's all they have.

Cedar
 
Westerwaelder
Posts: 250
Joined: Fri Apr 03, 2020 12:27 pm

Re: Virgin Atlantic needs government support?

Wed May 13, 2020 6:24 am

VS11 wrote:
Westerwaelder wrote:
VS11 wrote:

Nobody is arguing that BA will be bigger than VS. That's the whole point. BA will retire the planes it owns and it will still be left to pay for the planes it cannot retire nor can profitably fly. In the next 2-3 years, BA and all of the big carriers are going to be stuck with more planes than they can profitably fly. This should be pretty obvious.


I would suggest to go back and read over your own comments. The size argument in itself is a moot point. If an airline with a large fleet flies their planes profitably for ten years and builds up reserves, it can then park these planes for a period of time and pay its bills from their past profits. If an airline with a small fleet flies their planes at a loss for years and builds up debts instead of reserves it has nothing to pay its bills with once it has to park its planes for a period of time.

Can you guess who is who? Can you guess who desperately needs a cash injection of the two and who has room to play with?


This is not an accurate representation of reality. But if that suits your narrative, be my guest.


Maybe you can enlighten us?
 
SueD
Posts: 267
Joined: Sat Jul 27, 2019 11:35 am

Re: Virgin Atlantic needs government support?

Wed May 13, 2020 7:03 am

3AWM wrote:
I think releasing this schedule is somewhat of a PR exercise and maybe more for investors than for customers. What's the chances that flights from GLA/BFS and MAN are all for hub through LHR intially? There is going to be a lot of spare capacity.

RE: BA in a lot of ways their conundrum is more complicated and difficult than Virgin's. They might own a lot of aircraft but they also still lease a lot. Even paid for frames cost money to park up. The ones they have may not be the right size for the route network. Pre Covid19 they weren't maxing out their slot portfolio so they may have to service a lot of slots with loss making flights for some time and they are still tied into the leases. Of course they can swap frames around other IAG airlines but does that help any?

At least VS have an easy way to shed unwanted leases through prepack administration and many unserved destinations to do the odd flight to. They can also reduce the number of flights as they were maxing out their LHR slots as it was.


Zero chance - Manchester is a BASE operation -JFK/Atlanta are explicitly none stop routes providing feed into the Deltas network whilst Los Angeles is a work in progress and Orlando is probably Virgins biggest revenue generator on its entire network - All are supported by the holiday arm.

Similarly the Glasgow - MCO And Belfast- MCO are quasi tour flight Ps again for the Holiday division.

Belfast operates for a very few weeks during the province’s annual summer school term break.

None of these will be routing via Heathrow and certainly not via the competition (BA)
 
3AWM
Posts: 232
Joined: Sat Jul 23, 2016 1:01 pm

Re: Virgin Atlantic needs government support?

Wed May 13, 2020 7:12 am

SueD wrote:
3AWM wrote:
I think releasing this schedule is somewhat of a PR exercise and maybe more for investors than for customers. What's the chances that flights from GLA/BFS and MAN are all for hub through LHR intially? There is going to be a lot of spare capacity.

RE: BA in a lot of ways their conundrum is more complicated and difficult than Virgin's. They might own a lot of aircraft but they also still lease a lot. Even paid for frames cost money to park up. The ones they have may not be the right size for the route network. Pre Covid19 they weren't maxing out their slot portfolio so they may have to service a lot of slots with loss making flights for some time and they are still tied into the leases. Of course they can swap frames around other IAG airlines but does that help any?

At least VS have an easy way to shed unwanted leases through prepack administration and many unserved destinations to do the odd flight to. They can also reduce the number of flights as they were maxing out their LHR slots as it was.


Zero chance - Manchester is a BASE operation -JFK/Atlanta are explicitly none stop routes providing feed into the Deltas network whilst Los Angeles is a work in progress and Orlando is probably Virgins biggest revenue generator on its entire network - All are supported by the holiday arm.

Similarly the Glasgow - MCO And Belfast- MCO are quasi tour flight Ps again for the Holiday division.

Belfast operates for a very few weeks during the province’s annual summer school term break.

None of these will be routing via Heathrow and certainly not via the competition (BA)


But that is pretty much what the announcements say, regional flying : https://www.dailymail.co.uk/news/articl ... -2021.html

"Regional flying from Manchester, Glasgow and Belfast will continue to play an important part in offering choice to customers and connecting UK travellers to Orlando, Barbados, Atlanta, New York and Los Angeles."
 
Westerwaelder
Posts: 250
Joined: Fri Apr 03, 2020 12:27 pm

Re: Virgin Atlantic needs government support?

Wed May 13, 2020 7:25 am

SueD wrote:
3AWM wrote:
I think releasing this schedule is somewhat of a PR exercise and maybe more for investors than for customers. What's the chances that flights from GLA/BFS and MAN are all for hub through LHR intially? There is going to be a lot of spare capacity.

RE: BA in a lot of ways their conundrum is more complicated and difficult than Virgin's. They might own a lot of aircraft but they also still lease a lot. Even paid for frames cost money to park up. The ones they have may not be the right size for the route network. Pre Covid19 they weren't maxing out their slot portfolio so they may have to service a lot of slots with loss making flights for some time and they are still tied into the leases. Of course they can swap frames around other IAG airlines but does that help any?

At least VS have an easy way to shed unwanted leases through prepack administration and many unserved destinations to do the odd flight to. They can also reduce the number of flights as they were maxing out their LHR slots as it was.


Zero chance - Manchester is a BASE operation -JFK/Atlanta are explicitly none stop routes providing feed into the Deltas network whilst Los Angeles is a work in progress and Orlando is probably Virgins biggest revenue generator on its entire network - All are supported by the holiday arm.

Similarly the Glasgow - MCO And Belfast- MCO are quasi tour flight Ps again for the Holiday division.

Belfast operates for a very few weeks during the province’s annual summer school term break.

None of these will be routing via Heathrow and certainly not via the competition (BA)


I agree on the PR exercise. There is no way of knowing how demand will unfold so this is a "look, we are getting ready if you are" exercise.

As in "zero chance", I'd be very careful with these absolute comments at this time. ATL as you rightly say is feeding into the DL network. They might have to chose (because of reduced demand) to feed via LHR or via MAN.

MCO will depend on people's willingness to spend 9 hours in confined conditions with 300 strangers. Perhaps my next summer we are all ready to do that. Perhaps not. Social distancing is not going to work on this route as it is incredibly price sensitive.
 
3AWM
Posts: 232
Joined: Sat Jul 23, 2016 1:01 pm

Re: Virgin Atlantic needs government support?

Wed May 13, 2020 7:33 am

The thing about these destinations is they are already sold in the network and many are probably literally already sold. Within the terms of carriage they can change the routing without having to offer a refund. For many holiday PAX they may not want to travel but the cancellation terms may not be that attractive, so the ticket is still sold even if they don't fly. Virgin are also offering re-bookings at a later date that some may take up.
 
SueD
Posts: 267
Joined: Sat Jul 27, 2019 11:35 am

Re: Virgin Atlantic needs government support?

Wed May 13, 2020 7:45 am

Not disputed however the social distancing rules are spurious and seem to vary from country to country and are almost certainly more of a political construct than scientific evidence based imho.

Right now MOL , Willy and others are rightly pointing out their complete impracticality in the aviation industry .

Solutions may need to be paper and testing somewhat similar to those of the like of Saudi Arabia ( for various existing contagions ) with proof via Doctor notes that testing for COVID19 has been completed within 14 days of travel - Perhaps a positive result with antibody or a completely negative result being required and further temperature check prior to any boarding.

Still 2021 gotta be an improvement on this anus !

VS is Branson’s baby and true it’s run on a rather small family business model with revenues squirrelled away via the intermediate holding companies and therefore profits quite Intentionally not recorded .

Now under normal circumstances Virgin Group would have a fairly reasonable credit line to provide the necessary parent company, performance bonds and collateral warranties one would think.

I strongly expect Virgin Atlantic to be around in 2021 to be honest.
 
DobboDobbo
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 8:13 am

The press release is below.

Seems pretty clear from this that VS are (or at least intend to if they are around) intending to fly direct to New York, Atlanta, Orlando, Los Angeles and Barbados from Manchester, and Orlando from Belfast and Glasgow.

Leaving frequency and aircraft type aside, the major changes are that they will no longer fly to Delhi and Las Vegas from Manchester as previously planned / proposed.

https://corporate.virginatlantic.com/gb ... edule.html
 
3AWM
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 8:35 am

DobboDobbo wrote:
The press release is below.

Seems pretty clear from this that VS are (or at least intend to if they are around) intending to fly direct to New York, Atlanta, Orlando, Los Angeles and Barbados from Manchester, and Orlando from Belfast and Glasgow.

Leaving frequency and aircraft type aside, the major changes are that they will no longer fly to Delhi and Las Vegas from Manchester as previously planned / proposed.

https://corporate.virginatlantic.com/gb ... edule.html


No mention or use of the word "direct" in the press release, what I see is, connecting, regional and Orlando and Caribbean from LHR.

Virgin are always going to consolidate ops around LHR slots if there is a contraction, same as BA.
 
DobboDobbo
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 8:46 am

3AWM wrote:
No mention or use of the word "direct" in the press release, what I see is, connecting, regional and Orlando and Caribbean from LHR.

Virgin are always going to consolidate ops around LHR slots if there is a contraction, same as BA.


It’s true they would consolidate around Heathrow, but remember the public statement that they would consolidate at Heathrow and Manchester. Also, the words they use in the press release are:

“Flying from Manchester: Atlanta, Barbados, Los Angeles, New York, Orlando”.

“Flying from Glasgow: seasonal services to Orlando”.

“Flying from Belfast: Reduced seasonal service to Orlando”.


If it was all being routed through Heathrow, there would be no distinction between “flying from” Manchester, Glasgow or Belfast - they would just list the Heathrow destinations (which are also described as “flying from”).

They don’t use the word direct, but it’s clear what is meant and intended by the words used (whether that comes to pass is the major question IMO).
 
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F737NG
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 9:13 am

Sao Paulo remains dropped. I feel LATAM partnering with Delta affected that decision.


The new route of LHR - CPT from October seems interesting. VS are going for a 16:20 - 05:55+1 flight, turning the 787 around in 2 hours for a daytime flight back to LHR.

Looking at a few dates around early December, I can find return flights for £735 in economy, £1,270 in premium economy and £2,935 for Upper Class.
All of which is priced ever so slightly cheaper against BA and avoids the aircraft having a long layover in CPT awaiting the usual evening return.
Instead it can be back in time for a late evening flight from LHR, such as VS300 to DEL (dep. 22:05) and would be a more productive use of equipment.

Concerns would be that a day flight arriving LHR at 18:00 is generally not as popular as the overnight flights and the schedule still requires a second aircraft to run the route.

Still, it's the type of positive move that VS needs.

https://corporate.virginatlantic.com/gb/en/media/press-releases/new-service-to-cape-town.html
 
JamesCousins
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 10:26 am

VS11 wrote:
JamesCousins wrote:
VS11 wrote:

When the revenue is 5% of what it used to be and your fixed costs continue to be largely the same because you have hundreds and hundreds of expensive jets to pay for while they are on the ground for 1 to 3 years, how long do you think their reserves are going to last for? For the record, I never claimed BA won’t survive.


Yes but I reiterate my point, it is all relative. 5% of BAs revenue equals a lot more than Virgin's 5%, so BA can "afford" (and by afford I mean manage/survive with the already allocated state aid) their higher fixed costs (which I say again are proportionally lower than BAs). Both BA and Virgin are facing severe financial harship, but just because BA has more aircraft and a higher cash sum of yearly fixed costs doesn't make them in a weaker position. This is not a game of fleet sizes or company size, it's a game of margins and paid off assets - BA are one of the strongest airlines globally in this area.

Furthermore, BA have a large number of assets which they can secure capital loans against over the long term should they require, Virgin don't have that ability - that is why the government has refused a bailout thus far and Virgin is teetering on the edge to a much more severe degree than BA.


No, it is not all relative. BA will retire paid-off assets precisely because they are paid-off. The more assets you have that do not earn to pay off their costs the higher your financial burden.


Rubbish. Paid-off assets are just that - assets which cost you nothing, assets which should they no longer be required can be retired with limited hurdles. VS are tied into leases on much of their fleet, and who knows what arrangement they have made on the 747s, many of which were leased. The point off a paid off asset is that it isn't a burden, because you've paid for it - it's the precise reason Delta hold onto to frames longer than the rest, operating costs might be higher but because the asset has been paid for it costs less overall.
Q400, A320-200, A321-200, 737-500, 737-800, 747-400, 757-200, 787-9 // FCA, TOM, TUI, MON, MT, BA, VS, DL, BE, X9, OLY // Upcoming: W6 A320, W6 A321, EVA 77W, VS 787-9m AS A320, VS A35K, KLM E190, KLM 738, LS 737
 
JamesCousins
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 10:29 am

VS11 wrote:
Polot wrote:
VS11 wrote:

To achieve higher yields, airlines like BA, LH, KL, AF, DL, AA, UA will have to cut frequency and capacity. The money they have in the bank is not to fly empty planes but to keep empty planes parked. I don't really understand what you are arguing about.


You don’t really seem to understand that the airlines are not all shrinking to the same size.

Yes BA has higher fix costs, but they are not shrinking down to 30-whatever planes. Post-covid they will be smaller than before, but still a lot larger than VS. That means they can earn more revenue to cover the higher costs. VS is shrinking to 30 whatever planes because of their current size, not because that is some optimal number that all airlines should be at and all the market will support post-covid.

Owned planes are cheap to park (essentially you are just paying storage fees) and cheap to get rid of if necessary.


Nobody is arguing that BA will be bigger than VS. That's the whole point. BA will retire the planes it owns and it will still be left to pay for the planes it cannot retire nor can profitably fly. In the next 2-3 years, BA and all of the big carriers are going to be stuck with more planes than they can profitably fly. This should be pretty obvious.


So will Virgin Atlantic! This is the whole point! The consistently blind fanboy-ism is crazy, you are literally discarding anything rationale anyone is saying. This is not an A.net vs VS like you think it is - I've flown VS numerous times and had great experiences, I have flights booked with them that I'd quite like them to be around to fly, but suggesting that VS is somehow in a stronger/same position as BA, when it is riddled with debt, hasn't really got any assets (and those which it has are already borrowed against) and is pleading for a government bailout because it has less planes is insane.
Q400, A320-200, A321-200, 737-500, 737-800, 747-400, 757-200, 787-9 // FCA, TOM, TUI, MON, MT, BA, VS, DL, BE, X9, OLY // Upcoming: W6 A320, W6 A321, EVA 77W, VS 787-9m AS A320, VS A35K, KLM E190, KLM 738, LS 737
 
3AWM
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 11:43 am

Yes you are right I am saying what it doesn't say. It doesn't say that direct flying will continue from regional airports, only that connections will be offered.

Only time will tell what happens but I think it would be crazy to rule it out. I can't see how they would consolidate London ops but still run a full schedule at regional airports.

If you don't like what is being said don't try to close it down as it spoils it for everyone else.
 
VS11
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 12:04 pm

Cedar wrote:

No offense - but I'm not quite sure what you've been reading or who you've been listening to: I'll keep this very simple as opposed to delving deep into corporate finance of airlines

It's obvious bigger fleet requires more cash to maintain costs - but that also means you've made more money & have more cash reserves in the case of BA - this alone pretty much cancels out your entire argument. Cash held in reserves is a percentage based on a number of factors such as costs, debt etc.
Also, ownership of planes (BA) vs Leasing planes (VS) = cheaper costs
As someone mentioned above - economies of scale - the bigger you are, the more leverage you have in negotiating down costs
Smaller is not better if you've mismanged your airline, have huge debt, can't get loans due to no assets, have not made profits in years.

Not to mention, VS though small has not been very nimble until very recently - that is usally an advantage for small airlines & they failed to even succeed in that sense.
And in relations to size - VS's costs are higher per flight & per A/C than BA.

It doesn't matter if no flying or reduced pax flying is taking place on both carriers - And let's not forget BA has lots of flexibility, they can easily swap a smaller plane onto a route with little pax, thus reducing fuel & other costs. VS has no choice but to use the larger planes because that's all they have.

Cedar


Sure, size/economies of scale is beneficial in "normal" economic conditions. We are currently not in those. The Bank of England said the UK economy set to enter a recession not seen in 300 hundred years!!!
(FT: BoE warns UK set to enter worst recession for 300 years - https://www.ft.com/content/734e604b-93d ... e8b22dad3c)

Per IAG own results and analysis, they lost 1.3b euro on hedges alone in Q1 2020 and are burning 200 million euro a WEEK in April. How long do you think they can continue to do that, and should they? Their reserves are 6.4b euro in cash and 3.6 b credit line.
https://www.iairgroup.com/~/media/Files ... tation.pdf

Regarding Virgin Atlantic's finances: for whatever reasons the owners took some cash out by mortgaging their slots. The company has been paying the loans off and was in fact ahead of schedule. Plenty of companies enter into periods of negative owners' equity. You should look up dividend recapitalization. This is nothing unusual, nor is an indication of a mismanaged business. Quite frankly, lots of private businesses deliberately do not keep a lot of cash in the business.

You can sugarcoat it as you wish but BA is burning way more cash than VS. BA will be forced to cut frequency and capacity just like any other huge airline and this will be beneficial for all its competitors, not just Virgin. The same story is happening in the US. There is a huge thread here about Delta becoming a smaller carrier.
 
VS11
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 12:12 pm

JamesCousins wrote:
....The point off a paid off asset is that it isn't a burden, because you've paid for it - it's the precise reason Delta hold onto to frames longer than the rest, operating costs might be higher but because the asset has been paid for it costs less overall.


Sure, I agree with you here. The burden is the leased airplanes for which BA has to pay but cannot use them to generate revenue. Those are 235 airplanes. IAG cash burn rate is 200m euro a week in April. BA is about 50% of IAG so that makes about 100m euro a week of cash burn. Good luck with that.
 
User001
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 12:17 pm

3AWM wrote:
Because these are the main itineraries they have already sold from these airports - it means they will not have to refund tickets.


They will have only sold blank bookings via Virgin Holidays, hence them saying 'flights will go on sale this saturday', so not huge numbers of people to refund if your theory stacked up. Plus your theory still doesn't account for MAN-LAS which we know has been pulled, yet has a few of those VS holidays bookings, what about them?


Connect to those flights that VS already operate from LHR, thus enabling them to consolidate supply and continue to utilise LHR slots.


Noo, I meant how are those GLA/MAN/BFS pax supposed to connect to LHR. Only BA serves GLA/MAN-LHR while Aer Lingus and BA offer BHD-LHR. So the point was, unless you jump into bed with your competitor, who is going to transfer these pax from the regions to connect at LHR as you suggest?


Not arguing with anyone until you turned up


You were, but whatever


you are trolling me.


No, I'm debating your posts, to which you've now taken offence at, but again, whatever


I'm just saying what it says and what makes commercial sense. Why have multiple half empty flights running from regional airports when there are spare slots and seats at LHR?


But as pointed out, your not saying 'what it says' at all. No where does it say that these flights will be connections via LHR only. You have interpreted one single word in a 2000 word press release and ran with a crazy theory to which you now seem to be getting all offended that no one is agreeing with you on it.
 
VS11
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 12:19 pm

JamesCousins wrote:
....but suggesting that VS is somehow in a stronger/same position as BA...


I only suggested that BA's necessity to cut capacity and frequency will be beneficial for Virgin. That's all. Everything else is your assumption or imagination.
 
DobboDobbo
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 12:26 pm

3AWM wrote:
Yes you are right I am saying what it doesn't say. It doesn't say that direct flying will continue from regional airports, only that connections will be offered.

Only time will tell what happens but I think it would be crazy to rule it out. I can't see how they would consolidate London ops but still run a full schedule at regional airports.

If you don't like what is being said don't try to close it down as it spoils it for everyone else.


Are we reading the same thing?

The press release says (my emphasis):

“Virgin Atlantic has announced its flying programme for Summer 2021 with services operating from London Heathrow, Manchester, Glasgow and Belfast.”


What part of “operating from” is not clear?!

When setting out the flying programme, it uses the same words for Heathrow, Manchester, Glasgow and Belfast - see below:


“Flying from London Heathrow: Antigua, Cape Town*, Hong Kong, Los Angeles, New York JFK, Shanghai, Atlanta, Delhi, Johannesburg, Miami, Orlando, Tobago, Barbados, Grenada, Lagos, Montego Bay, San Francisco, Tel Aviv, Boston, Havana, Las Vegas, Mumbai, Seattle, Washington”

“Flying from Manchester: Atlanta, Barbados, Los Angeles, New York, Orlando”.

“Flying from Glasgow: seasonal services to Orlando”.

“Flying from Belfast: Reduced seasonal service to Orlando”.


If we take your interpretation it doesn’t say direct flying will continue from London Heathrow either - which would be absurd.

It’s also not correct to state that regional flying is untouched. There is no service from Manchester to Delhi or Las Vegas as previously planned, and we don’t yet know the frequencies. The one bright note might be that MAN-LAX is not identified as seasonal. That may be an omission, but time will tell.

When I’m wrong, I’m happy to admit that (as earlier in this thread). I’m pointing out the obvious factual inaccuracies passed off as opinion - unless you want to live in a fantasy world that is not spoiling anything. If you don’t like what the press release says that’s for you to deal with, but it’s not okay to make things up, or to claim that highlighting errors is somehow “spoiling it” for others.

Having said all that, I agree that in the current climate nothing can be ruled out. This could get deeper, and last longer than expected, so I think further changes are likely.
 
Westerwaelder
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 1:23 pm

VS11 wrote:
JamesCousins wrote:

....but suggesting that VS is somehow in a stronger/same position as BA...


I only suggested that BA's necessity to cut capacity and frequency will be beneficial for Virgin. That's all. Everything else is your assumption or imagination.


It's like being stuck in the twilight zone in this thread. The very same reasons why BA has to cut back will apply to VS. Just on a smaller scale but that is not a competitive advantage but a function of their overall smaller size.

Once more: BA like most airlines will cut back in line with decline in demand. Any more would be wasting opportunity and BA are not known for that. How exactly is this translating into an advantage for VS or any other competitor?

And being larger means that economies of scale come into play on the cost side. You can ignore it and go on about parked aircraft (and also ignore the fact that many at BA are owned and paid off).
 
User001
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 1:24 pm

3AWM wrote:

I know it's been tough stuck in your bedroom for the last few months but schools go back on 1st June so you'll be with your friends again then. In the meantime just chill and have some manners.


Did you feel better after writing that? Do you honestly feel that bolstered your argument? Do you think I or anyone else is suddenly going to take you more seriously thanks to that hugely inciteful input? What are you more angry at? The supposed 'rudeness' or the fact you were shown up in your ridiculous argument? Genuine question there.

The fact that afterwards you state I should get some manners and chill? Ha! Clearly Irony and hypocrisy are not strong points!

But despite your posts content, I'm clearly far more chilled than you are to the point I'm not even going to report your posts for containing far more insults than was ever sent in your direction, instead, I find it rather amusing that you clearly think your the bigger person in this, when you've just royally embarrassed yourself for throwing your toys out of the pram over something so trivial. Bravo!

(but I bet your petty enough to report this, given your toys are already over the floor and this post will likely rile you up again......)
 
VS11
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 1:52 pm

Westerwaelder wrote:
VS11 wrote:
JamesCousins wrote:

....but suggesting that VS is somehow in a stronger/same position as BA...


I only suggested that BA's necessity to cut capacity and frequency will be beneficial for Virgin. That's all. Everything else is your assumption or imagination.


It's like being stuck in the twilight zone in this thread. The very same reasons why BA has to cut back will apply to VS. Just on a smaller scale but that is not a competitive advantage but a function of their overall smaller size.

Once more: BA like most airlines will cut back in line with decline in demand. Any more would be wasting opportunity and BA are not known for that. How exactly is this translating into an advantage for VS or any other competitor?

And being larger means that economies of scale come into play on the cost side. You can ignore it and go on about parked aircraft (and also ignore the fact that many at BA are owned and paid off).


I said this before but here we go again. In the next 3 years:
Is BA going to send 4 huge jets to Boston? NO.
Is BA going to send 6-8 huge jets to NYC? NO.
Is BA going to decrease its flights/capacity to Miami? YES. Same for LAX and SFO.
These are high yielding lucrative markets where BA's cuts give more room to VS.

Additionally, BA is very likely to cut its non-stop flights to Austin, New Orleans, Nashville, Charleston, Baltimore. While VS doesn't serve these, it presents opportunities to serve them via DL. These are all in the American South where Delta rules supreme (and I am saying this as an AA flyer).

So yes, VS is not going to escape the overall market conditions but it will have more opportunities.
 
tobsw
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 2:54 pm

VS11 wrote:
I said this before but here we go again. In the next 3 years:
Is BA going to send 4 huge jets to Boston? NO.
Is BA going to send 6-8 huge jets to NYC? NO.
Is BA going to decrease its flights/capacity to Miami? YES. Same for LAX and SFO.
These are high yielding lucrative markets where BA's cuts give more room to VS.

Additionally, BA is very likely to cut its non-stop flights to Austin, New Orleans, Nashville, Charleston, Baltimore. While VS doesn't serve these, it presents opportunities to serve them via DL. These are all in the American South where Delta rules supreme (and I am saying this as an AA flyer).

So yes, VS is not going to escape the overall market conditions but it will have more opportunities.


Are you aware that demand will also be extremely low?

As things are, VS`s outlook is grim. Extremely grim. VS has put all its eggs on two markets, which have badly managed the COVID-19 situation.
 
Westerwaelder
Posts: 250
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 2:59 pm

VS11 wrote:
Westerwaelder wrote:
VS11 wrote:

I only suggested that BA's necessity to cut capacity and frequency will be beneficial for Virgin. That's all. Everything else is your assumption or imagination.


It's like being stuck in the twilight zone in this thread. The very same reasons why BA has to cut back will apply to VS. Just on a smaller scale but that is not a competitive advantage but a function of their overall smaller size.

Once more: BA like most airlines will cut back in line with decline in demand. Any more would be wasting opportunity and BA are not known for that. How exactly is this translating into an advantage for VS or any other competitor?

And being larger means that economies of scale come into play on the cost side. You can ignore it and go on about parked aircraft (and also ignore the fact that many at BA are owned and paid off).


I said this before but here we go again. In the next 3 years:
Is BA going to send 4 huge jets to Boston? NO.
Is BA going to send 6-8 huge jets to NYC? NO.
Is BA going to decrease its flights/capacity to Miami? YES. Same for LAX and SFO.
These are high yielding lucrative markets where BA's cuts give more room to VS.

Additionally, BA is very likely to cut its non-stop flights to Austin, New Orleans, Nashville, Charleston, Baltimore. While VS doesn't serve these, it presents opportunities to serve them via DL. These are all in the American South where Delta rules supreme (and I am saying this as an AA flyer).

So yes, VS is not going to escape the overall market conditions but it will have more opportunities.


BA cuts are giving more room for VS? Yes, if there was demand beyond what BA is cutting. Demand on LHR - BOS falls by say 50%, BA will reduce capacity by 50%. They even have the fleet flexibility to do this almost by cabin. Where is the additional opportunity again?

BA with four flights can cut 10, 15, 25, 50% of capacity and still offer frequency but using smaller planes or different configurations. How do you suggest VS is responding to a 50% drop in demand on LHR - BOS? By cutting to a less than daily schedule? Use a plane with 50% fewer seats? The fact is their small size limits their flexibility in right sizing. Not much of a competitive advantage if you ask me.
 
tphuang
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 3:12 pm

VS11 wrote:
Westerwaelder wrote:
VS11 wrote:

I only suggested that BA's necessity to cut capacity and frequency will be beneficial for Virgin. That's all. Everything else is your assumption or imagination.


It's like being stuck in the twilight zone in this thread. The very same reasons why BA has to cut back will apply to VS. Just on a smaller scale but that is not a competitive advantage but a function of their overall smaller size.

Once more: BA like most airlines will cut back in line with decline in demand. Any more would be wasting opportunity and BA are not known for that. How exactly is this translating into an advantage for VS or any other competitor?

And being larger means that economies of scale come into play on the cost side. You can ignore it and go on about parked aircraft (and also ignore the fact that many at BA are owned and paid off).


I said this before but here we go again. In the next 3 years:
Is BA going to send 4 huge jets to Boston? NO.
Is BA going to send 6-8 huge jets to NYC? NO.
Is BA going to decrease its flights/capacity to Miami? YES. Same for LAX and SFO.
These are high yielding lucrative markets where BA's cuts give more room to VS.

Additionally, BA is very likely to cut its non-stop flights to Austin, New Orleans, Nashville, Charleston, Baltimore. While VS doesn't serve these, it presents opportunities to serve them via DL. These are all in the American South where Delta rules supreme (and I am saying this as an AA flyer).

So yes, VS is not going to escape the overall market conditions but it will have more opportunities.


BA will return to these smaller markets before anyone else. Your comment about DL adding AUS/MSY/BNA/CHS/BWI is not going to happen in the current climate and they don't have the slots. VS with its weak finances will be dealing with reduced demand at a time it has no money against a much better capitalized and run airline.
 
onwFan
Posts: 468
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 3:20 pm

Are people assuming that BA will give up LHR slots to VS? If VS is to move all their LGW operations to LHR, BA will do the same. If the situation is that BA cannot even use up all its slots, it means demand will be that low. It is not like there is some hidden population that is waiting to suddenly spring up to fly on VS if they take the slots.
 
VS11
Posts: 1661
Joined: Mon Jul 02, 2001 6:34 am

Re: Virgin Atlantic needs government support?

Wed May 13, 2020 3:22 pm

Westerwaelder wrote:
VS11 wrote:
Westerwaelder wrote:

It's like being stuck in the twilight zone in this thread. The very same reasons why BA has to cut back will apply to VS. Just on a smaller scale but that is not a competitive advantage but a function of their overall smaller size.

Once more: BA like most airlines will cut back in line with decline in demand. Any more would be wasting opportunity and BA are not known for that. How exactly is this translating into an advantage for VS or any other competitor?

And being larger means that economies of scale come into play on the cost side. You can ignore it and go on about parked aircraft (and also ignore the fact that many at BA are owned and paid off).


I said this before but here we go again. In the next 3 years:
Is BA going to send 4 huge jets to Boston? NO.
Is BA going to send 6-8 huge jets to NYC? NO.
Is BA going to decrease its flights/capacity to Miami? YES. Same for LAX and SFO.
These are high yielding lucrative markets where BA's cuts give more room to VS.

Additionally, BA is very likely to cut its non-stop flights to Austin, New Orleans, Nashville, Charleston, Baltimore. While VS doesn't serve these, it presents opportunities to serve them via DL. These are all in the American South where Delta rules supreme (and I am saying this as an AA flyer).

So yes, VS is not going to escape the overall market conditions but it will have more opportunities.


BA cuts are giving more room for VS? Yes, if there was demand beyond what BA is cutting. Demand on LHR - BOS falls by say 50%, BA will reduce capacity by 50%. They even have the fleet flexibility to do this almost by cabin. Where is the additional opportunity again?

BA with four flights can cut 10, 15, 25, 50% of capacity and still offer frequency but using smaller planes or different configurations. How do you suggest VS is responding to a 50% drop in demand on LHR - BOS? By cutting to a less than daily schedule? Use a plane with 50% fewer seats? The fact is their small size limits their flexibility in right sizing. Not much of a competitive advantage if you ask me.


I don't see BA going for frequency. They will want to focus on minimizing their operating costs and maximizing yield per flight. That means fewer flights in general. In the case of Boston, one flight per day for the next year. If demand is strong, raise fares and/or use a bigger plane but unlikely to increase frequency. The market for more frequencies will be almost non-existent. The overall market will be certainly much smaller and every player will compete fiercely. But 1 VS flight a day against 1 BA flight a day is better (for VS) than 1 VS flight a day against 4 BA flights a day.
 
tphuang
Posts: 5317
Joined: Tue Mar 14, 2017 2:04 pm

Re: Virgin Atlantic needs government support?

Wed May 13, 2020 3:25 pm

VS11 wrote:
Westerwaelder wrote:
VS11 wrote:

I said this before but here we go again. In the next 3 years:
Is BA going to send 4 huge jets to Boston? NO.
Is BA going to send 6-8 huge jets to NYC? NO.
Is BA going to decrease its flights/capacity to Miami? YES. Same for LAX and SFO.
These are high yielding lucrative markets where BA's cuts give more room to VS.

Additionally, BA is very likely to cut its non-stop flights to Austin, New Orleans, Nashville, Charleston, Baltimore. While VS doesn't serve these, it presents opportunities to serve them via DL. These are all in the American South where Delta rules supreme (and I am saying this as an AA flyer).

So yes, VS is not going to escape the overall market conditions but it will have more opportunities.


BA cuts are giving more room for VS? Yes, if there was demand beyond what BA is cutting. Demand on LHR - BOS falls by say 50%, BA will reduce capacity by 50%. They even have the fleet flexibility to do this almost by cabin. Where is the additional opportunity again?

BA with four flights can cut 10, 15, 25, 50% of capacity and still offer frequency but using smaller planes or different configurations. How do you suggest VS is responding to a 50% drop in demand on LHR - BOS? By cutting to a less than daily schedule? Use a plane with 50% fewer seats? The fact is their small size limits their flexibility in right sizing. Not much of a competitive advantage if you ask me.


I don't see BA going for frequency. They will want to focus on minimizing their operating costs and maximizing yield per flight. That means fewer flights in general. In the case of Boston, one flight per day for the next year. If demand is strong, raise fares and/or use a bigger plane but unlikely to increase frequency. The market for more frequencies will be almost non-existent. The overall market will be certainly much smaller and every player will compete fiercely. But 1 VS flight a day against 1 BA flight a day is better (for VS) than 1 VS flight a day against 4 BA flights a day.


so you are basically dreaming up of a scenario where VS will survive. I don't see why BA would give up on frequency when they have the market dominated.
 
onwFan
Posts: 468
Joined: Wed Feb 03, 2016 4:02 am

Re: Virgin Atlantic needs government support?

Wed May 13, 2020 3:27 pm

VS11 wrote:
Additionally, BA is very likely to cut its non-stop flights to Austin, New Orleans, Nashville, Charleston, Baltimore. While VS doesn't serve these, it presents opportunities to serve them via DL. These are all in the American South where Delta rules supreme (and I am saying this as an AA flyer).

LOL. If you really think that DL/VS can make AUS, MSY, BNA, CHS, BWI, etc. work in a situation where BA cannot, it is clear that you have no freaking clue about what what you are talking!
 
VS11
Posts: 1661
Joined: Mon Jul 02, 2001 6:34 am

Re: Virgin Atlantic needs government support?

Wed May 13, 2020 3:27 pm

tphuang wrote:
VS11 wrote:
Westerwaelder wrote:

It's like being stuck in the twilight zone in this thread. The very same reasons why BA has to cut back will apply to VS. Just on a smaller scale but that is not a competitive advantage but a function of their overall smaller size.

Once more: BA like most airlines will cut back in line with decline in demand. Any more would be wasting opportunity and BA are not known for that. How exactly is this translating into an advantage for VS or any other competitor?

And being larger means that economies of scale come into play on the cost side. You can ignore it and go on about parked aircraft (and also ignore the fact that many at BA are owned and paid off).


I said this before but here we go again. In the next 3 years:
Is BA going to send 4 huge jets to Boston? NO.
Is BA going to send 6-8 huge jets to NYC? NO.
Is BA going to decrease its flights/capacity to Miami? YES. Same for LAX and SFO.
These are high yielding lucrative markets where BA's cuts give more room to VS.

Additionally, BA is very likely to cut its non-stop flights to Austin, New Orleans, Nashville, Charleston, Baltimore. While VS doesn't serve these, it presents opportunities to serve them via DL. These are all in the American South where Delta rules supreme (and I am saying this as an AA flyer).

So yes, VS is not going to escape the overall market conditions but it will have more opportunities.


BA will return to these smaller markets before anyone else. Your comment about DL adding AUS/MSY/BNA/CHS/BWI is not going to happen in the current climate and they don't have the slots. VS with its weak finances will be dealing with reduced demand at a time it has no money against a much better capitalized and run airline.


1. I never claimed that DL will launch non-stop flights to these smaller markets. DL can serve them from ATL.
2. VS will be better financed because Branson is putting more money into it.
3. BA is bleeding 100m euro a week. I don't see them engaging in totally unnecessary capacity and frequency dumps.
 
VS11
Posts: 1661
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 3:30 pm

onwFan wrote:
VS11 wrote:
Additionally, BA is very likely to cut its non-stop flights to Austin, New Orleans, Nashville, Charleston, Baltimore. While VS doesn't serve these, it presents opportunities to serve them via DL. These are all in the American South where Delta rules supreme (and I am saying this as an AA flyer).

LOL. If you really think that DL/VS can make AUS, MSY, BNA, CHS, BWI, etc. work in a situation where BA cannot, it is clear that you have no freaking clue about what what you are talking!


DL can serve them from ATL. Duh!
 
onwFan
Posts: 468
Joined: Wed Feb 03, 2016 4:02 am

Re: Virgin Atlantic needs government support?

Wed May 13, 2020 3:30 pm

tphuang wrote:
VS11 wrote:
Westerwaelder wrote:

BA cuts are giving more room for VS? Yes, if there was demand beyond what BA is cutting. Demand on LHR - BOS falls by say 50%, BA will reduce capacity by 50%. They even have the fleet flexibility to do this almost by cabin. Where is the additional opportunity again?

BA with four flights can cut 10, 15, 25, 50% of capacity and still offer frequency but using smaller planes or different configurations. How do you suggest VS is responding to a 50% drop in demand on LHR - BOS? By cutting to a less than daily schedule? Use a plane with 50% fewer seats? The fact is their small size limits their flexibility in right sizing. Not much of a competitive advantage if you ask me.


I don't see BA going for frequency. They will want to focus on minimizing their operating costs and maximizing yield per flight. That means fewer flights in general. In the case of Boston, one flight per day for the next year. If demand is strong, raise fares and/or use a bigger plane but unlikely to increase frequency. The market for more frequencies will be almost non-existent. The overall market will be certainly much smaller and every player will compete fiercely. But 1 VS flight a day against 1 BA flight a day is better (for VS) than 1 VS flight a day against 4 BA flights a day.


so you are basically dreaming up of a scenario where VS will survive. I don't see why BA would give up on frequency when they have the market dominated.

Exactly. He is just dreaming of an imaginary situation where VS maintains all its capacity (at a time when they have no money to even survive) and BA keeps shrinking its operation on all routes :-P.
 
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Polot
Posts: 10706
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Re: Virgin Atlantic needs government support?

Wed May 13, 2020 3:32 pm

VS11 wrote:
onwFan wrote:
VS11 wrote:
Additionally, BA is very likely to cut its non-stop flights to Austin, New Orleans, Nashville, Charleston, Baltimore. While VS doesn't serve these, it presents opportunities to serve them via DL. These are all in the American South where Delta rules supreme (and I am saying this as an AA flyer).

LOL. If you really think that DL/VS can make AUS, MSY, BNA, CHS, BWI, etc. work in a situation where BA cannot, it is clear that you have no freaking clue about what what you are talking!


DL can serve them from ATL. Duh!

And BA can serve them via AA.
 
onwFan
Posts: 468
Joined: Wed Feb 03, 2016 4:02 am

Re: Virgin Atlantic needs government support?

Wed May 13, 2020 3:33 pm

VS11 wrote:
onwFan wrote:
VS11 wrote:
Additionally, BA is very likely to cut its non-stop flights to Austin, New Orleans, Nashville, Charleston, Baltimore. While VS doesn't serve these, it presents opportunities to serve them via DL. These are all in the American South where Delta rules supreme (and I am saying this as an AA flyer).

LOL. If you really think that DL/VS can make AUS, MSY, BNA, CHS, BWI, etc. work in a situation where BA cannot, it is clear that you have no freaking clue about what what you are talking!


DL can serve them from ATL. Duh!

And AA/BA can't same markets 1-stop through CLT/DFW/PHL?
 
VS11
Posts: 1661
Joined: Mon Jul 02, 2001 6:34 am

Re: Virgin Atlantic needs government support?

Wed May 13, 2020 3:38 pm

Polot wrote:
VS11 wrote:
onwFan wrote:
LOL. If you really think that DL/VS can make AUS, MSY, BNA, CHS, BWI, etc. work in a situation where BA cannot, it is clear that you have no freaking clue about what what you are talking!


DL can serve them from ATL. Duh!

And BA can serve them via AA.


Of course, they can and will. But the lack of non-stop services gives a better chance to go with DL/VS as DL is quite dominant.
 
jomur
Posts: 360
Joined: Sun Jun 19, 2016 6:36 pm

Re: Virgin Atlantic needs government support?

Wed May 13, 2020 3:47 pm

SueD wrote:
3AWM wrote:
I think releasing this schedule is somewhat of a PR exercise and maybe more for investors than for customers. What's the chances that flights from GLA/BFS and MAN are all for hub through LHR intially? There is going to be a lot of spare capacity.

RE: BA in a lot of ways their conundrum is more complicated and difficult than Virgin's. They might own a lot of aircraft but they also still lease a lot. Even paid for frames cost money to park up. The ones they have may not be the right size for the route network. Pre Covid19 they weren't maxing out their slot portfolio so they may have to service a lot of slots with loss making flights for some time and they are still tied5 into the leases. Of course they can swap frames around other IAG airlines but does that help any?

At least VS have an easy way to shed unwanted leases through prepack administration and many unserved destinations to do the odd flight to. They can also reduce the number of flights as they were maxing out their LHR slots as it was.


Zero chance - Manchester is a BASE operation -JFK/Atlanta are explicitly none stop routes providing feed into the Deltas network whilst Los Angeles is a work in progress and Orlando is probably Virgins biggest revenue generator on its entire network - All are supported by the holiday arm.

Similarly the Glasgow - MCO And Belfast- MCO are quasi tour flight Ps again for the Holiday division.

Belfast operates for a very few weeks during the province’s annual summer school term break.

None of these will be routing via Heathrow and certainly not via the competition (BA)


I some how doubt VH carries any touted to be honest. According to the latest ATOL figures VH only carried around 177,000 passengers last year down from 350,000 the year before making it the 20th in size as a travel.company in the UK. Thats only about 480ish a day for all destinations considering on some days VS flew 6 747s to MCO in the summer.

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