Virgin lost 100 million in first quarter 2009/10

I've seen this on FT.

Steve Ridgeway in VS internal comms...

The end result of this, and bad news for us all, is that in the first three months of this financial year we have made a substantial loss of around 100m, making our predicted loss of 100m for this financial year unachievable.

What world was Richard Branson in when he was gloating about the BA losses saying that VS are in excellent shape. When asked the question what are VS doing to keep afloat on BBC News, Branson replied that they're not doing very much, pretty much doing what they've always been doing.

I think the following article sums up the situation pefectly:

http://www.glgroup.com/News/Virgin-Atla ... 41037.html

It's one point of view, and there's no quick fix to any of the current airline problems; and no one denies that VS aren't having problems - but for an article to say that BA has stabilised made me think it's not entirely independent...

I thought that the 100 million loss over 3 months was of far more concern than the content of the article. That is a massive amount for a company as small as Virgin to lose over what is normally the 2nd best performing quarter.

There's not really any point in speculating on something that I can't verify. And while it looks like you just registered here to post rumour, I am sure that's not your intention.

So apart from linking to a BA-friendly article, what do you think?

[Scrooge]

quote:Originally posted by Sealink
There's not really any point in speculating on something that I can't verify. And while it looks like you just registered here to post rumour, I am sure that's not your intention.

So apart from linking to a BA-friendly article, what do you think?



Sorry to say, it is not a rumor.

VS has taken steps in the last couple of weeks to stem the losses.
The only thing I can really say is expect more cuts.

Oh dear that is very worrying I never expected a loss as much as that for VS. However i cant really agree with the way the article is written its very non-virgin.

Does VS even want to enter in to an alliance? I always thought they were against it.

Plus has anyone posted of FT cant see anything about it?

Alex

[Scrooge]

One thing to remember, the 1st quarter is always a money loser for airlines, loads are at their lowest, heavy MXis done, though not going for the T7 has hurt VS you do need to remember that a new more efficent fleet is on the way.

Also the piece linked in the original post is to put it nicely, inaccurate, the 343 and 346 are in no ways fuel guzzlers, until the 787 comes along there are very few planes better at long thin routes than the 343, the 346 is a great aircraft for high pax/ high cargo loads while still not using insane amounts of fuel.

quote:Originally posted by Scrooge
Also the piece linked in the original post is to put it nicely, inaccurate, ......

And the same writer is, to say the least, extremely pro-Boeing.

[Scrooge]

It shows

[Decker]

Don't they have sub-editors?

quote:
British Airways by no means is not fairing any better, however its forward


So they ARE doing better? Just the opposite of what the author intended to convey then? Sheesh double negatives.

Let's not forget that Singapore Airlines confirmed that VS profitability tanked in the the second half of 2008, the profit came in he first half plus some level of tinkering (e.g. how other debtors are recognized).

That said, if a 100m loss in Q1 is close to the truth, it's a lot and a huge worry, if Q2 and Q3 come close to even keel in the peak demand months then with the cuts announced, let's conjecture on the full year ...

[Scrooge]

I figure you can add 50-75% on that for the yearly figure.

quote:Originally posted by Scrooge
I figure you can add 50-75% on that for the yearly figure.

I agree.
But that 150m should be put into context.
With the figures we have, VS had 593m cash in bank in Feb08.
That is before their 68m 08/09 profits.

Yes, some of that is pre-payments for flights, but compare the same figure with the equivalent BA bank balance of 433m - and they could be expected to have many more pre-payments.

All businesses will find it tough this year - many will make a loss - particularly hard for those that do not have cash in hand and are struggling to get loans - but 150m is not going to break the VS bank.

It probably will cut the directors bonus however!

quote:Originally posted by Bill S
quote:Originally posted by Scrooge
I figure you can add 50-75% on that for the yearly figure.

I agree.
But that 150m should be put into context.
With the figures we have, VS had 593m cash in bank in Feb08.
That is before their 68m 08/09 profits.

Yes, some of that is pre-payments for flights, but compare the same figure with the equivalent BA bank balance of 433m - and they could be expected to have many more pre-payments.

All businesses will find it tough this year - many will make a loss - particularly hard for those that do not have cash in hand and are struggling to get loans - but 150m is not going to break the VS bank.

It probably will cut the directors bonus however!


BA have 1.4 billion in the bank, not sure where you got the 433 million figure from???

This is traditionally the 2nd best quarter for airlines, imagine what things will be like come 3rd and 4th quarter.

[Decker]

Not sure where you get the 1.4 Billion?

quote:
The airlines cash balances are dropping, down from 1.8 billion last year to 1.3 billion at the end of March. This could be completely used up by the companys outgoings as currently scheduled 750m of capital spending, debt repayments of about 650m and interest charges of 150m.


Times Online June 21st 2009.

It is however true that BA's figures are more open to scrutiny. Assuming all capital expenditure was able to be out on hold (and some of it will doubtless be contractual) that leaves around 500m. I have no clue how VS figures compare.

[Scrooge]

Ok, hold on, that loss was for the first 1/4, the worst one for airlines, results for the 2nd 1/4 have not been released yet.

quote:Originally posted by Scrooge
Ok, hold on, that loss was for the first 1/4, the worst one for airlines, results for the 2nd 1/4 have not been released yet.


When you say the first quarter is the worst one for airlines, are you referring to the calendar quarter (ie Jan-Mar) or the first quarter of Virgin's financial year (Mar-May)(which is what the loss of 100m is for)? I've always thought it is Jan-Mar.

[Scrooge]

Jan-Mar

let me check the full release again, honestly, I am working my butt off at work right now and need to double check myself.

quote:Originally posted by The Mason
BA have 1.4 billion in the bank, not sure where you got the 433 million figure from???

CAA publish airline balance sheets; the cash in bank as well as total assets & liabilities are shown.

[Scrooge]

Ok, it was the first financial quarter, so let me revise my numbers, figure on around the 200 million mark.

Just remember Singapore had VS actually losing money in 2008 due to the fact they accounted differently for certain items (IFRS as against UK GAAP). Could the real loss figure for Q1 be higher than has been released?

Maybe its time to redeem those miles before they are worth as much as a 10 woolies gift voucher!

[Scrooge]

quote:Originally posted by kingcole1974
Maybe its time to redeem those miles before they are worth as much as a 10 woolies gift voucher!


I wouldn't say so just yet, VS has been a lot more aggressive in shutting down routes where the revenue just wasn't there than say BA, though they are going to take a hit on the airline side this year you have to add in VH and FC to get a clearer overall picture. Also don't forget, they do have a healthy bank balance to fall back on, SRB.

A good point made over on a.net is that VS has a larger dependency on holiday makers (via VH) than some other airlines, and that holidayers book far more in advance than business travellers. Hence, VS is seeing the effects of the recession later than BA for comparison yet perhaps having won some BA custom earlier on.

Sounds logical, doesn't mean a pretty time for any airline still though.