Virgin Australia Financials 2019/20

[jase05]

I have around 300,000 Velocity points. I'm not worried in the slightest.

Likewise.
Whilst the figures aren’t great reading I have confidence that it can be turned around and I’m not going to unload my points or stop booking with them.

 

[pauly7]

Likewise.
Whilst the figures aren’t great reading I have confidence that it can be turned around and I’m not going to unload my points or stop booking with them.

I think regardless and as per our own Matt’s advice time and time again people shouldn’t warehouse points as a rule
Let alone in financially struggling businesses!

 

[jase05]

I think regardless and as per our own Matt’s advice time and time again people shouldn’t warehouse points as a rule
Let alone in financially struggling businesses!

I don’t stockpile huge amounts with any of my FF accounts so no fear of that

 

[jakeseven7]

I don’t stockpile huge amounts with any of my FF accounts so no fear of that

I was actually more worried about EY going belly up... so burned some points there up first.

I think as you say VA CAN be turned around, if PS is given carte blanche to do what he wants. The question is, will the owners let him....

 

[amaroo]

This is a particularly poignant observation @amaroo. And one that sadly - is most likely indicative of the majority of Australian frequent flyers. But I offer a perspective from my laymans view:

The lifespan of VA may well be an exercise in futility, stemmed from a history of mismanagement, but more recently compounded by a dreadful stalemate between the US and China. But it's also tantamount to all those European and Asian car owners in Australia, who stood on the sidelines and said "ouch" as Holden went the way of the dodo. We have the capacity to support 2 major Aussie airlines. We just choose not to.

If you wanted to buy Australian - VA would be last on the list.

Are we fooling ourselves in analyzing why it's going downhill?

I think it all boils down to the decision back in Nov 2008 in select AJ over JB. Turned out to be a golden ticket call.

 

[clipped_wings]

If you wanted to buy Australian - VA would be last on the list.

Arghh! I knew that comment would get me in trouble Cut me some slack - I know VA is not Born & Bred Dinky Di, but you got my drift right?

 

[williamsf1]

To be fair though - I am not sure of all the details, but the Navitaire system that VAd used in the past was extremely unreliable, and I distinctly remember many chaotic scenes in domestic terminals when VA's check-in systems went down, not sure if it was the version or configuration of Navitaire that they used or not? Not that Sabre completely solved the issue, as I also remember a few worldwide Sabre outages hitting VA along with every other Sabre user in the past. I think JQ still use Navitaire and they don't seem to have too many problems with it? Possibly the problem was more to do with VA's own IT department/staff rather than the software itself?

Forgetting about the few outages , Navitaire is a fairly robust system .... Sabre's core system architecture is so 1980 ... As much as many like to bag VA IT, there is only so much lipstick you can put on a pig .....

 

[dough11]

Reading all of this has made me **** myself a little. Is it a good idea to convert all my points over to Krisflyer including the ~280k flybuys points? What are others who have collected a large amount of points doing? Krisflyer would probably be a safe bet considering the strength of the airline however they do expire. Maybe I'm just being a little too nervous? Would suck to wake up one morning to find that Velocity has been massively devalued or wiped out completely in an effort to further cut costs.

I hate to say it Nathan but if anything happened to Virgin Australia/Velocity then your points would be the least of my concern (and my points for that matter). What about the staff and the market they (used to) operate in?

I don't know what happens from here anymore than you but like most CEO's, Paul has made his changes and hopefully has 18-24 months from here to make a point with them.

 

[pauly7]

Any speculation on what routes will be reduced / cut?

Bit of noise around capacity reduction on the golden triangle but I’m sure they aren’t the least profitable routes.

Tassie routes? NZ?

 

[Bell21]

Hmmm, I've been watching with interest and unsure whether to contribute, as clearly some posters have more in-depth knowledge of the business issues / history / ownership structures etc. I've been reminding myself of some of the history of AN's demise, and I think the similarities don't appear to be compelling yet (eg there was about 5 major corporate collapses at the time across industries), although clearly, burning as much cash as VA has been doing clearly isn't going to end well without a major turnaround.

However, maybe I just like the 'under-dog', but I like flying VA and I'm going to continue to support them and keep my VFF points, but in a prudent manner (like others say, warehousing is rarely a good idea), and will probably move some over to KF at irregular intervals, as they're more useful internationally than VA.

I also like the flex of VFF - family pooling etc - I buy all my own flights, and I'd probably struggle to get to gold on QFF. I also constantly feel like I'm getting a bad deal anytime I use QFF reward flights b/c of the taxes. I like that VA tends to get its priority boarding right and the link to KF is unique in the FF world. Obviously, if they start to remove some of these perks, I'm going to change my tune pretty quickly.

Anyway, interesting times and will be interesting to see how this plays out in terms of financial performance and changes to routes / perks etc.

 

[jakeseven7]

Hmmm, I've been watching with interest and unsure whether to contribute, as clearly some posters have more in-depth knowledge of the business issues / history / ownership structures etc. I've been reminding myself of some of the history of AN's demise, and I think the similarities don't appear to be compelling yet (eg there was about 5 major corporate collapses at the time across industries), although clearly, burning as much cash as VA has been doing clearly isn't going to end well without a major turnaround.

However, maybe I just like the 'under-dog', but I like flying VA and I'm going to continue to support them and keep my VFF points, but in a prudent manner (like others say, warehousing is rarely a good idea), and will probably move some over to KF at irregular intervals, as they're more useful internationally than VA.

Such an interesting comment the ‘underdog’ one, I’ve been contemplating my thoughts on this as I sometimes I feel the same but...

1. VA were funded to begin with by a multi multi billionaire and access to capital at minimal cost
2. They were gifted a domestic market by AN overnight didn’t have to do a thing
3. They poached many of QF’s top execs and management including the 2Ic (which would prove a near fatal mistake later of course!)
4. The government helped them out by immediately adding them to the BFOD like policies, pretty much all departments and divisions, ensuring they got a share of the gov $
5. They had an ownership roster of enormous overseas airlines with very ‘loose’ government regulations in the owners home countries (tax and fuel related) meaning the parents were able to funnel cash into VA
6. Their parent airlines gifted them automatically partnership and codeshares to help feed them without any real commercial negotiation that two seperate companies would have to go through
7. Due to their financial structure (that QF by AU law is not allowed to replicate) they have much better access to capital and structure flexibility
8. Not being the ‘national airline’ they skip under the radar when things go wrong and generally get mostly positive PR (eg the latest LAX 777 incident where they disrupted PAX for weeks, barely gets a mention in the media, QF does it for a couple of days, front page news)

So over the years they have had very very cheap access to mountains of cash, capital injections and automatic feeder partnerships with all their owner parents.

So although they have these huge advantages they have through poor strategy and leadership squandered it.

So yes the result in terms of current market share they are technically the underdog, but they wasted a lot to be in this position....

 

[cambriamarsh]

G

Hi All, Long time lurker, first time poster.

Curious timing (perhaps someone from VA has been reading this thread!) but just filled out a survey for Velocity Voice that was specifically focused on airline alliances namely Star, OneWorld and SkyTeam

Questions included:

1. Are you aware of global alliances;
2. The importance of airlines to be part of a global alliance;
3. Likelihood to fly with specific airlines based on their airline alliance
4. Ranking of attributes most important in your selection of alliance airlines
5. Ranking of current airline alliances
6. Ranking of top aspects of airline alliances

Great start, welcome aboard

 

[Bell21]

Such an interesting comment the ‘underdog’ one, I’ve been contemplating my thoughts on this as I sometimes I feel the same but...

1. VA were funded to begin with by a multi multi billionaire and access to capital at minimal cost
2. They were gifted a domestic market by AN overnight didn’t have to do a thing
3. They poached many of QF’s top execs and management including the 2Ic (which would prove a near fatal mistake later of course!)
4. The government helped them out by immediately adding them to the BFOD like policies, pretty much all departments and divisions, ensuring they got a share of the gov $
5. They had an ownership roster of enormous overseas airlines with very ‘loose’ government regulations in the owners home countries (tax and fuel related) meaning the parents were able to funnel cash into VA
6. Their parent airlines gifted them automatically partnership and codeshares to help feed them without any real commercial negotiation that two seperate companies would have to go through
7. Due to their financial structure (that QF by AU law is not allowed to replicate) they have much better access to capital and structure flexibility
8. Not being the ‘national airline’ they skip under the radar when things go wrong and generally get mostly positive PR (eg the latest LAX 777 incident where they disrupted PAX for weeks, barely gets a mention in the media, QF does it for a couple of days, front page news)

So over the years they have had very very cheap access to mountains of cash, capital injections and automatic feeder partnerships with all their owner parents.

So although they have these huge advantages they have through poor strategy and leadership squandered it.

So yes the result in terms of current market share they are technically the underdog, but they wasted a lot to be in this position....

That's really good context - thank you. Probably 'under-dog' in the context of no.2 in the market, which means they offer perks that no.1 in the market doesn't need to offer to be competitive. Don't get me wrong though - I don't feel 'sorry' for them - I like flying with them for various perks that really work for me, so I hope they find a way through this to continue to be viable, esp. as we need a viable competitor to QF!

 

[33kft]

This article from Feb hasn't aged very well: Borghetti leaves on a high as Virgin flies into the black

 

[clipped_wings]

Such an interesting comment the ‘underdog’ one, I’ve been contemplating my thoughts on this as I sometimes I feel the same but...

1. VA were funded to begin with by a multi multi billionaire and access to capital at minimal cost
2. They were gifted a domestic market by AN overnight didn’t have to do a thing
3. They poached many of QF’s top execs and management including the 2Ic (which would prove a near fatal mistake later of course!)
4. The government helped them out by immediately adding them to the BFOD like policies, pretty much all departments and divisions, ensuring they got a share of the gov $
5. They had an ownership roster of enormous overseas airlines with very ‘loose’ government regulations in the owners home countries (tax and fuel related) meaning the parents were able to funnel cash into VA
6. Their parent airlines gifted them automatically partnership and codeshares to help feed them without any real commercial negotiation that two seperate companies would have to go through
7. Due to their financial structure (that QF by AU law is not allowed to replicate) they have much better access to capital and structure flexibility
8. Not being the ‘national airline’ they skip under the radar when things go wrong and generally get mostly positive PR (eg the latest LAX 777 incident where they disrupted PAX for weeks, barely gets a mention in the media, QF does it for a couple of days, front page news)

So over the years they have had very very cheap access to mountains of cash, capital injections and automatic feeder partnerships with all their owner parents.

So although they have these huge advantages they have through poor strategy and leadership squandered it.

So yes the result in terms of current market share they are technically the underdog, but they wasted a lot to be in this position....

Didn't Qantas ask to get bailed out some years back, after crying boo friggedy?

Government reluctant to bail out Qantas: Truss

Deputy Prime Minister Warren Truss has dealt a blow to Qantas saying the federal government is reluctant to support the national carrier, as Moody’s threatened to cut their credit rating.

www.afr.com

Forget the taxpayer bailout, Qantas needs a big tax cut says Alan Joyce

You know Qantas has turned a corner when CEO Alan Joyce pivots from arguing for a tax payer bailout to arguing for a tax cut.

www.smh.com.au

 

[jakeseven7]

Didn't Qantas ask to get bailed out some years back, after crying boo friggedy?

Government reluctant to bail out Qantas: Truss

Deputy Prime Minister Warren Truss has dealt a blow to Qantas saying the federal government is reluctant to support the national carrier, as Moody’s threatened to cut their credit rating.

www.afr.com

Forget the taxpayer bailout, Qantas needs a big tax cut says Alan Joyce

You know Qantas has turned a corner when CEO Alan Joyce pivots from arguing for a tax payer bailout to arguing for a tax cut.

www.smh.com.au

Yeah they sure did and they’ve also been lobbying consistently for the same capital structure and ownership flexibility that VA enjoys but have got absolutely nothing.

(Not saying QF should have got anything, just that VA have a lot and have just wasted it)

 

[moa999]

Yeah they sure did and they’ve also been lobbying consistently for the same capital structure and ownership flexibility that VA enjoys but have got absolutely nothing.

(Not saying QF should have got anything, just that VA have a lot and have just wasted it)

Asked but didn't get.
QF has special provisions applying to it due to the Qantas Sale Act. They did get it amended in 2014 to allow a foreign airline shareholder to acquire 49% (was 25%)

As it is VAi skirts the rules that do apply to them.
The Air Navigation Act ensures that any airline holding the rights to international air routes in and out of the country must be majority Australian-owned with an Australian chairperson, head office and operational base in Australia.
Be interesting to see the size of what I assume is a loan between VAH and the 50% Australian owned VAi given the suspected continuing losses in VAi.

Note Qantas is no saint in this regard and I suspect has a similar issue with Jetstar Asia and possibly Pacific in Singapore and Vietnam.

 

[HS-TQE]

Such an interesting comment the ‘underdog’ one, I’ve been contemplating my thoughts on this as I sometimes I feel the same but...

1. VA were funded to begin with by a multi multi billionaire and access to capital at minimal cost
2. They were gifted a domestic market by AN overnight didn’t have to do a thing
3. They poached many of QF’s top execs and management including the 2Ic (which would prove a near fatal mistake later of course!)
4. The government helped them out by immediately adding them to the BFOD like policies, pretty much all departments and divisions, ensuring they got a share of the gov $
5. They had an ownership roster of enormous overseas airlines with very ‘loose’ government regulations in the owners home countries (tax and fuel related) meaning the parents were able to funnel cash into VA
6. Their parent airlines gifted them automatically partnership and codeshares to help feed them without any real commercial negotiation that two seperate companies would have to go through
7. Due to their financial structure (that QF by AU law is not allowed to replicate) they have much better access to capital and structure flexibility
8. Not being the ‘national airline’ they skip under the radar when things go wrong and generally get mostly positive PR (eg the latest LAX 777 incident where they disrupted PAX for weeks, barely gets a mention in the media, QF does it for a couple of days, front page news)

So over the years they have had very very cheap access to mountains of cash, capital injections and automatic feeder partnerships with all their owner parents.

So although they have these huge advantages they have through poor strategy and leadership squandered it.

So yes the result in terms of current market share they are technically the underdog, but they wasted a lot to be in this position....

5, 6 and 7 came at the expense of partnerships with most of the other airlines (with the exception of the legacy partnerships that were there before SQ/EY/NZ got involved). Considering the allegations that came up on other forums that SQ and EY have been holding the trump cards on whoever VA can and "can't" partner with. With suggestions that SQ was the "real culprit" behind keeping VA at arms length from the major alliances all those years go.

While understandable that SQ and EY wanted to keep the Australian traffic mostly between themselves (at the expense of other potential partners) that decision has came to bite them back on the butt later on when they got involved in the capacity war and VA started to post loss after loss.

Whether if that ended up to be true or not, SQ/EY/HNA et al and the complicated (and bickering) ownership structure are definitely more of a hindrance to a prosperous VA. None of those owners are expected to help VA (not even the "so-called saviour" SQ). The complicated ownership structure is likely to remain the status quo for the foreseeable future unless in the (unlikely) case of an outsider (such as NH or DL) takes a controlling stake (technically a takeover under FIRB rules) to remove the complicated structure.

 

[jakeseven7]

Considering the allegations that came up on other forums that SQ and EY have been holding the trump cards on whoever VA can and "can't" partner with. With suggestions that SQ was the "real culprit" behind keeping VA at arms length from the major alliances all those years go.

Whilst always interesting to read gossip and speculation, haven’t seen anything substantial to back all of those claims up.

None of those owners are expected to help VA (not even the "so-called saviour" SQ).

Many people would argue they have helped enough already by pouring money into VA.

Have clearly decided it was enough and turned to helping to manage JB out of the business and helping install what appears to be someone a lot more pragmatic and business focussed to sharpen up the airline.

But I agree with you - no immediate saviours in that bunch of owners.... but if PS can turn VA around who knows they might loosen the purse strings (if they are still around themselves... they’ve got big problems of their own).

 

[Melburnian1]

While Melbourne Airport in the end couldn't get its AFL predictions correct - the top of the AFL ladder isn't 'full of foreign invaders', as only three of the eight finalists are non-Victorian teams - it impliedly criticises VA and QF below for capacity constraints and fare rises that are reducing demand:'

Melbourne Airport - Melbourne Airport News | Melbourne Airport

Read about Melbourne Airports latest news

www.melbourneairport.com.au