VA joins in with red ink

Virgin Australia rounds out the Australasian Aviation finical reporting week with a statutory after tax loss of $355.6m ($AUD) however their underlying loss before tax was $211.7m ($AUD)

Virgin attributes this loss across the group as follows;
- Virgin Australia International (including VA NZ) loss of $66.8m
- Virgin Australia Domestic (including Skywest) loss of $59.2m
- Virgin Samoa (49% holding) loss of $2.6m 
- TigerAir (60% holding) loss of $46.1m
With restructuring and balance sheet costs, fuel, taxes etc also heavily contributing.

Virgin Australia has now completed its "Game Change Program Strategy" and has introduced Virgin Vision 2017 as its new focus.

Virgin Vision 2017
We can expect to see some change with this new vision which has wide scope throughout the entirety of the Virgin group.

The first change has seen Affinity Equity Partners buy a 35% stake in the Velocity Frequent Flyer program, giving the program an enterprise value of $960m ($AUD)  This will see the program remain under the control of Virgin Australia but with a separate board of directors.  Virgin Australia will maintain 65% voting rights and will appoint the chairman to the board. 

There will be some change in the fleet with the retirement of the two ex Emirates Airbus A330s an increased utilisation of the Boeing 737-800 fleet and the introduction of the new Boeing 737MAX fleet being brought forward from 2018 to 2017.

Virgin's charter operation, which have been built on the base afforded by the acquisition of Skywest has had a successful first year and Virgin are looking to grow it into a $200m ($AUD) operation by 2017.

Virgin will launch a new freight business in FY15 to leverage off their current RPT and Charter operations.

Virgin are looking to make $1b ($AUD) in cumulative productivity gains, this will be achieved through 3 steps;
1. Enhancing procurement
2. Improved productivity (including the above mentioned fleet changes and utilisation)
3. Streamlining of operations (see below)

As part of the streamlining of operations Virgin will reduce its long-haul international bases to two (SYD & BNE - with the already announced end of MEL-LAX flights)  it will  also  integrate Virgin Australia (NZ) operations back into its international division.

Virgin have announced they will also introduce business class onto all flights across the Tasman and to Fiji, which will be seen through the standardisation of the on board offering through the integration of VA(NZ) back into VA.  Currently VA(NZ) aircraft which operate on these routes do not have  business class seating.  

The biggest list of change/improvement is with the TigerAir LCC brand. 
1. Further improve customer satisfaction - something that has plagued TigerAir
2. Drive incremental revenue growth - through new revenue management and initiatives
3. Deliver cost synergies - via network, operational and finical synergies as well as a new Brisbane base and cooperation with VA on procurement of fuel
4. Development of an efficient operating platform and network footprint - new enhancements to drive operational efficiency including the new Brisbane base, new maintenance provider in BAE Systems and reaching agreement with Sydney Airport about infrastructure constraints at SYD

Read the full whack of documents supplied to the ASX including final report, press release, presentation and Velocity announcement HERE

VA Half Year result in the middle ground

After the highs of alliance partner Air New Zealand and the lows of opponent Qantas, Virgin Australia have today announced a "middle ground" position with their Half Year financial results.

While still announcing a statutory after tax loss of $83.7M AUD in comparison with Qantas, Virgin are in no way a loser with this result.

Virgin Australia has progressed with the integration of Skywest, continuing to align resources, systems and processes, and has worked closely with joint venture partner Tiger Airways Holdings Limited (Tigerair) to improve the performance of Tiger Airways Australia Pty Limited (Tigerair Australia). 

The integration of Skywest into the Virgin Australia Regional brand continues with this entity able to charter Virgin Australia jets to operate FIFO and other charter work especially in the WA mining areas.  VA Regional will also take delivery of at least 6 new ATR 72-600 aircraft by the end of the 2015 Calendar year. 

In the six months of the VA/TigerAir venture TigerAir has had an increase in passenger numbers of 3.5%, with a 4.5% increase in Load Factor and aircraft utilisation has increased by 12.7%

Read the Virgin Australia release to the ASX HERE

ACCC approve Virgin's acquisition of Skywest

The Australian Competition and Consumer Commission (ACCC) have given Virgin Australia approval for their take over of regional operator Skywest as mentioned on this blog back in October.

The Australian Competition and Consumer Commission (ACCC) today cleared the deal, saying it was unlikely to lead to a substantial lessening of competition.
"The message that we received from the market was broadly supportive of the proposed acquisition," ACCC chairman Rod Sims said.

The move will see Skywest rebranded as Virgin Australia and take on Qantas' own regional operation, QantasLink, flying secondary routes including the resources sector and charter services.

Skywest are based in Perth with the bulk of their offering in the major mining regions of Western Australia, they also have a link to South Australia, while also operating the Virgin Australia ATR fleet on the east coast.

At the same time Virgin announced they wanted to take a 60% stake in Tiger, the ACCC will report back on this next week (Feb 7th)

This can only be good for the airline as it will expose them to the lucrative mining contracts that Skywest hold in Western Australia with stable financial backing also giving them an edge to challenge for more contracts through out all the resource rich areas of Australia

Read more on the ACCC approval from either Australian Business Traveller HERE or The Daily Telegraph HERE

Big changes in the land of Aus

Virgin Australia have today announced 3 big changes to the face of domestic aviation in Australia, which are set to firmly cement Virgin Australia as a heavy weight in the Australian industry.

Virgin have announced that they have purchased a 60% controlling stake in Tiger Airways, which will see Virgin & Singapore Airlines run basically a joint venture operation, to target Jetstar head on.  The stake believed to be worth $35 million will then see Virgin invest up to $62.5 million to improve the Tiger brand and see its fleet grow from the current 11 Airbus A320's to a fleet of 35 aircraft by 2018.

The Tiger brand won't be going away, however – it will remain "for at least another 20 years."

Tiger Airways Australia said in a statement that the airline will remain low cost with an internet based distribution platform.

Read more by John Walton (@thatjohn) at austbt.com.au HERE

Virgin have also announced that they will purchase regional partner Skywest.  This is likely to see Skywest operating for Virgin the same way QantasLink does for Qantas, Virgin branded but running its own airline.

Skywest already operate like this on the east coast of Australia,  operating the Virgin Australia fleet of ATR aircraft.

Virgin Australia CEO John Borghetti said today that the deal "will enable us to fast-track our advancement in the high growth fly-in-fly out and regional markets, increasing competition in these important segments.

The deal relies on approval from Australian & Singaporean regulators as well as approval from Skywest shareholders.

Read more from John Walton at austbt.com.au HERE

Singapore Airlines will take a $105 million, 10% stake in Virgin Australia.

Virgin and SQ already operate a partnership with sharing of flights, frequent flyer schemes and reciprocal access to lounges, and Virgin Australia today bought a 60 percent controlling interest in Singapore Airlines' subsidiary Tiger Airways Australia.

This investment puts Singapore on an even footing with Etihad who also own 10% of the airline, while Air New Zealand own 19.9% & Sir Richard Branson owns 26%

Read more from David Flynn (@djsflynn) at ausbt.com.au HERE

Skywest positive

Perth based Skywest Airlines are looking at the possibility of growing its FIFO (fly-in, fly-out) charter market, as well as the expected fleet growth associated with the wet-lease deal to fly up to 18 ATR-72s for Virgin Australia.

The airline has announced a 7% growth in net profit and 11% growth in revenue for the financial year ended June 30th.

Skywest this year introduced an A320-200 and are looking at the possibility of adding a second to the fleet.  This places Skywest in a unique position as the A320 is believed to be the biggest of its type operating on FIFO contracts worldwide.

Read more on Skywest from Steve Creedy at theaustralian.com.au HERE

Virgin announce 1st ATR route

Virgin Australia through their blog http://blog.virginaustralia.com/ and twitter account have announced the first routes their new ATR fleet will begin operation on.

The first flights from October will be Brisbane-Gladstone twice daily and a once daily Brisbane-Port Macquarie, plus additional flights on the Sydney-Canberra route, bringing the route up to 60x/wk.

Below is the pic from the blog which shows off the ATR in Virgin colours

from virgin australia blog

Perth's turn for Ash

Perth is the latest Australasian city to fall foul of the ash clouds, with Virgin Australia, Qantas, Jetstar and Tiger announcing cancellation of services to and from the city, with Air New Zealand and Skywest expected to follow suit.

The ash cloud effecting Perth is at a lower altitude 15000ft causing the cancellation of services from Virgin Australia and potentially Air New Zealand.

The latest cancellations cap off a four-day long travel crisis, in which tens of thousands of travellers have been stranded.

 Read  more from theaustralian.com.au HERE

First Glimpse

The first glimpse of the new regional aircraft in Virgin Australia colours.  The ATR 72-500, soon to grace regional Australian skies.

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