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FORMED IN 1999 AND STARTED OPERATIONS IN 2000. "LOW COST" SCHEDULED, DOMESTIC, PASSENGER, JET AIRPLANE SERVICES.
56 EDMONDSTONE ROAD, BOWEN HILL
BRISBANE, QUEENSLAND, QLD 4006, AUSTRALIA
AUSTRALIA (COMMONWEALTH OF AUSTRALIA) WAS ESTABLISHED IN 1901, IT COVERS AN AREA OF 7,686,848 SQ KM, ITS POPULATION IS 17.9 MILLION, ITS CAPITAL CITY IS CANBERRA, AND ITS OFFICIAL LANGUAGE IS ENGLISH.
MAY 2000: PARENT COMPANY IS THE VIRGIN GROUP.
HQ AT BRISBANE, QUEENSLAND.
SERVICES BETWEEN MELBOURNE, SYDNEY, AND BRISBANE.
1 737-43Q (28489), VIRGIN EXPRESS (EBA) LEASED. 1 737-3M8 (25070), VIRGIN EXPRESS (EBA) LEASED.
JUNE 2000: 5 ORDERS 737-200'S, (VAA) LEASED. 1 737-4Q8 HGW (26302, /94 17 09, VH-VGB), EX-TURKISH AIRLINES (THY), (ILF) LEASED. 10 ORDERS (MARCH 2001) 737-700'S, (ILF) LEASED.
JULY 2000: PLANS TO LAUNCH ITS BRISBANE TO SYDNEY ROUTE IN AUGUST 2000 WITH SYDNEY TO MELBOURNE STARTING IN FALL 2000. IN OCTOBER 2000, BRISBANE TO MELBOURNE.
WILL HAVE 5 737'S BY THE END OF 2000, AND DESPITE ITS NAME, THE LIVERY IS A RED FUSELAGE WITH A WHITE TAIL.
AUGUST 2000: VIRGIN BLUE (VOZ) IS HOPING TO LAUNCH PRIOR TO THE SYDNEY OLYMPIC GAMES NEXT MONTH, BUT ITS AIRPLANE OPERATIONS CERTIFICATE (AOC) IS STILL UNDER REVIEW. LATER, GETS OK TO START.
1ST FLIGHT BRISBANE TO SYDNEY (737-400).
1 737-4Q8 (HGW) (2461-25740, /93 19 10), EX-PHARAOH AIR (PHR), (ILF) LEASED.
SEPTEMBER 2000: SIR RICHARD BRANSON IS USING VIRGIN BLUE (VOZ) AS A PROMOTION OF HIS VIRGIN BRAND IN HIS MASSIVE EXPANSION OF HIS EMPIRE IN AUSTRALIA, WITH BANKING, MOBILE TELEPHONES, AND SOFT DRINKS.
IN FEBRUARY 2001 BRISBANE TO ADELAIDE.
OCTOBER 2000: LATER IN 2001 TO EITHER HOBART OR LAUNCESTON.
NOVEMBER 2000: CONTRACT WITH LUFTHANSA TECHNIK (LTK) (DLH) TO SUPPLY COMPONENTS, FOR 3 737-400'S, + POSSIBILITY OF 10 737-700'S.
DECEMBER 2000: STARTS ROUTE TO ADELAIDE (2X-DAILY).
737-4YO (23980, OO-VJO), VIRGIN EXPRESS (EBA) WET-LEASED.
JANUARY 2001: 1 737-43Q (28493, EI-TVB), EX-VIRGIN EXPRESS IRELAND (VEI), BOULLIOUN (BOU) LEASED.
FEBRUARY 2001: IN MARCH 2001, SYDNEY TO ADELAIDE (3X-DAILY). ALSO, BRISBANE TO TOWNSVILLE, PROMISING TO BRING LOW FARES TO NORTH QUEENSLAND FOR THE 1ST TIME.
4 ORDERS (NOVEMBER 2001) 737-800.
MARCH 2001: PLANS TO DOUBLE ITS FLEET TO 20 AIRPLANES IN 18 MONTHS.
WILL ADD 6 737-400'S AND 8 737-700/-800'S.
APRIL 2001: 280 EMPLOYEES.
CONSIDERING TRANS-TASMAN SERVICES AND POSSIBLY NEW ZEALAND DOMESTIC, FOLLOWING COLLAPSE OF QANTAS NEW ZEALAND.
2 ORDERS (NOVEMBER 2001) 737-700'S, & 2 ORDERS 737-800'S, ALL (CIT) AEROSPACE (TCI) LEASED. 1ST 737-7Q8 DELIVERY.
MAY 2001: IN JUNE 2001, SYDNEY TO COOLANGATTA (GOLD COAST).
1 737-7Q8 (28240, VH-VBB "BAROSSA BABE") DELIVERY.
JUNE 2001: IN JULY 2001, TO CANBERRA (DAILY NONSTOP).
SEPTEMBER 2001: VIRGIN BLUE (VOZ) CHAIRMAN SIR RICHARD BRANSON REJECTS $133 MILLION OFFER BY AIR NEW ZEALAND (ANZ) FOR (VOZ).
BRISBANE TO MT ISA (5X-WEEKLY) A MINING COMMUNITY IN QUEENSLAND. IN DECEMBER 2001, MELBOURNE TO LAUNCESTON. IN MARCH 2002, BRISBANE TO DARWIN.
OFFERS TO BUY 10 ANSETT (ANS) 737-300'S, AFTER (ANS) WENT OUT OF BUSINESS.
OCTOBER 2001: TO MACKAY (DAILY). BRISBANE TO MACKAY. IN DECEMBER 2001, MELBOURNE/ADELAIDE TO PERTH.
PLANS TO TRIPLE SIZE OF ITS FLEET WITHIN NEXT 2 YEARS. NEGOTIATING FOR +9 AIRPLANES.
737-7Q8 (VH-VBA, "BRIZZIE LIZZIE") IS A REFERENCE TO BRISBANE, WHEREAS (VH-VBB, "BAROSSA BABE") REFERS TO THE BAROSSA VALLEY IN S AUSTRALIA, JUST OUTSIDE ADELAIDE, THE PREMIER, WINE-PRODUCING DISTRICT IN THE LAND OF "OZ." 737-7Q8 (30707, VH-VBD "SASSY SYDNEY"), DELIVERY.
NOVEMBER 2001: AUSTRALIAN TRANSPORTATION FIRM, LANG CORPORATION STATES IT WILL BUY A MAJORITY STAKE IN VIRGIN BLUE (VOZ) IF THE 2 COMPANIES ARE ALLOWED TO TAKE OVER TROUBLED ANSETT AIRLINES (ANS). BY BUYING >50%, IT WOULD MAKE IT AN AUSTRALIAN OWNED AND CONTROLLED AIRLINE. A WILLINGNESS TO INJECT $155 MILLION WAS EXPRESSED.
MELBOURNE TO BRISBANE TO CAIRNS. MELBOURNE TO CANBERRA.
737-8BK (30620, VH-VOA "BLUE BELLE") DELIVERY.
DECEMBER 2001: MELBOURNE TO COOLANGATTA. BRISBANE TO DARWIN.
1 737-7Q8 (30630, VH-VBF), (ILF) LEASED, 2 737-86Q'S (30272, VH-VOE; 30274, VH-VOF), (BOU) LEASED, & 1 737-86N (28644, VH-VOG), (GECAS) (GEF) LEASED.
JANUARY 2002: 1,580 EMPLOYEES.
PLANS TO HAVE 25 AIRPLANES BY THE END OF 2002.
MARCH 2002: POSSIBLE NETWORK LINK WITH AIR NEW ZEALAND (ANZ). VIRGIN BLUE (VOZ) FLIES TO 17 DESTINATIONS AND HAS 15% SHARE OF DOMESTIC MARKET (QANTAS AIRWAYS (QAN) HAS 75%). (ANZ) HAS 4 AUSTRALIAN GATEWAYS.
(VOZ) OWNER, SIR RICHARD BRANSON HAS SOLD 50% STAKE IN (VOZ) TO THE PATRICK CORPORATION (1 OF AUSTRALIA'S BIGGEST CARGO OPERATORS) FOR $136 MILLION.
MELBOURNE TO CAIRNS (5X-WEEKLY).
(VOZ) HAS EXPANDED ITS SERVICES TAKING ADVANTAGE OF THE GAP IN THE MARKET CREATED BY THE DEMISE OF ANSETT AUSTRALIA (ANS).
APRIL 2002: 1,276 EMPLOYEES (INCLUDING 162 FLIGHT CREW (FC); 400 CABIN ATTENDANTS (CA); & 30 MAINTENANCE TECHNICIANS (MT)).
May 2002: 737-700 (32734), (GECAS) (GEF) leased.
June 2002: 2 737-7Q8'S (30647, VH-VBJ; 30648, VH-VBK), (ILF) leased and 1 737-76N (33005, VH-VBN), (GECAS) (GEF) leased.
July 2002: Adelaide to Gold Coast (Coolangatta), and Sydney to Cairns. Code share with United Airlines (UAL), who earlier had lost its Australian domestic links, through the collapse of its Star Alliance (SAL) partner, Ansett (ANS).
Purchases the (ANS) Melbourne Jet Base at Tullamarine Airport, including 2-level, Integrated Operations Center (IOC), and 2 maintenance hangars.
Royal Australian Air Force (RAAF) (RAA) contract for 737-NG pilot (FC) training, since (RAAF) has 2 737 BBJ's.
4 orders (August 2002) 737-7BX's (30743; 30744; 30745; 30746), ex-Midway (MID), Boullioun (BOU) leased.
August 2002: Melbourne to Hobart.
3 737-7BX's (30743, VH-VBP; 30744, VH-VBQ; 30745, VH-VBR), (BOU) leased, and 737-8BK (30624, VH-VOD), Tyco (TCI) leased.
September 2002: Plans for Initial Public Offering (IPO) in 2nd quarter (2Q) of 2003.
1 737-7BX (30746, VH-VBS) Boullioun (BOU) leased, and 1 737-7Q8 (33418, VH-VBL), (ILF) leased.
Is considering international operations to Hong Kong, Bali-Denpasar, and to New Zealand.
October 2002: To expand its Brisbane base, adding +550 employees to Maintenance & Training departments. Builds a 4,000 sq m, 4-simulator bay training facility, to be operated with Boeing (TBC) Australia, and a 3-bay 737 maintenance hangar, on 2.5 hectares.
Co-owner, Patrick Corporation purchases Jetcare as a 3rd party maintenance provider.
737-7Q8 (20644, VH-VBL "Victoria Vixen"), delivery.
November 2002: Sir Richard Branson Chairman dresses up as Rocky Balboa for launch of service to Rockhampton.
In December 2002, to Perth and Sydney to Launceston.
1 737-76N (33418, VH-VBO "Tropical Temptress") (GEF) leased, and 1 737-81Q (30787, VH-VOJ "Lulu Blue") (TOM) leased.
December 2002: To start up a new maintenance provider, to be called "Virgin Tech" to be headed up by Andrew Lillyman. Ron Salter has been named Manager Heavy Maintenance and will oversee the construction of the new hangar at Brisbane and hire the workforce. Heavy maintenance will be carried out in about 1 year. Now it is being done by Air New Zealand (ANZ), Christchurch. Ron will continue in his present position until a replacement is found.
Ron Langdon Airworthiness Manager (was Maintenance Controller).
In April 2003, Canberra to Sydney (2x-daily). This is Australia's major corporate route and was the only remaining route of Australia's top 20 routes not served by (VOZ).
January 2003: $600 million, 10/40 orders (August 2003) 737-800's. If Virgin Blue (VOZ) exercises its options, the deal would have a list-price value of $3 billion.
Intends to boost staff by +800.
2003 Travel Quality.com Aviation Awards, voted (VOZ) "Best Low-cost Carrier." Southwest Airlines (SWA) took 2nd, and Ryanair (RYR) was 3rd.
737-7BX (30740, VH-VBT "Launee Lass") delivery. 1st commercial airplane in the world to be fitted with a Vertical Situation Display (VSD), which shows the current and predicted flight path of the airplane and indicates potential conflicts with terrain. Line pilots (FC) have heralded the system as a "huge bonus and a valuable safety enhancement."
February 2003: Virgin Blue (VOZ) indicated interest in acquiring Air New Zealand (ANZ)'s low-cost carrier (LCC) subsidiary, Freedom Air (SPT) and taking control of its trans-Tasman operations if they become available.
In April 2003, Sydney to Proserpine (Whitsunday Coast Airport) (Saturdays), and Adelaide to Broome (seasonal, weekly).
737-43Q (28493) returned to Virgin Express (EBA).
March 2003: In June 2003, Sydney to Alice Springs. Sydney to Canberra.
April 2003: In May 2003, Melbourne to Maroochydore (4x-weekly).
May 2003: 2002 Pre-tax = +A$158 million/+$102.7 million (+A$47 million/+$30 million).
Virgin Group (CEO), Sir Richard Branson purchases Makepeace Island, near Noosa on the Sunshine Coast of Queensland for Virgin staff worldwide to share. The island will be developed into an eco-tourism retreat for staff and will be opened within 12 months.
In October 2003, Adelaide to Canberra.
5th 737-76Q (30288, VH-VBU "Darwin Diva"), Boullioun (BOU) leased & 737-82R (30658, VH-VOV "Alluring Alice"), (ILF) leased.
June 2003: After receiving approval from Australia's International Air Services Commission, plans to challenge Qantas's (QAN) position as Australia's sole flag carrier by launching its long-awaited international services to New Zealand, Fiji, and Vanuatu in October 2003, but its offshore foray will carry a different brand.
July 2003: 2,200 employees.
Virgin Blue (VOZ) has captured 28% (18%) of the domestic market, and Qantas Airways (QAN) has warned that it will defend its 68% share vigorously.
2002 Fiscal Year (FY) = +$28.48 million (NET PROFIT) (-$6.27 million): 3.14 billion (RPK) (TRAFFIC) (+370.6%); 79.5% LF load factor; 3.16 million passengers (PAX) (+392.1%).
2 737-705's (29091, VH-VBW "Blue Tongue Lizzie;" 29092, VH-VBX "Sultry Sapphire"), ex-Braathens (BRT), (BBAM) (BBB) Aircraft Holdings 99 leased.
August 2003: Virgin Blue (VOZ) ups the competitive ante in the Australia and New Zealand markets by introducing a de facto business-class (C) service and threatening to cut fares on the Tasman by -40%. Aimed at increasing (VOZ)'s penetration of the premium market, that currently accounts for 20% of passengers. Also, (VOZ) diverted from the traditional low-cost carrier (LCC) model by offering so-called "Blue Room" business (C) lounges at Melbourne and Sydney airports, along with valet parking service, and allowing passengers to buy extra legroom on all its domestic flights in Australia. In what is clearly seen as a differentiated business class (C), passengers will be able to pay an additional A$30/$20 to sit in 9 specially allocated (C) seats in a Blue Zone on each airplane, providing 40-inch pitch compared to the 30-inch available in usual economy (Y) seats. In the last 3 years, the airline's corporate account (C) customers have grown from 2% to 20% and that number is likely to increase. The Trans-Tasman airline is expected to use the brand "Pacific Blue."
In September 2003, Canberra to Gold Coast (Coolangatta) (Saturdays). In October 2003, Brisbane to Hobart (daily).
2 737-8FE's (33758, VH-VOK "Smoochy Maroochy;" 33759, VH-VOL "Goldie Coast") deliveries with winglets fitted in New Zealand.
September 2003: Canberra to Adelaide (6x-weekly). In November 2003, Melbourne to Newcastle.
2002 = +$18.5 million (-$5.8 million): 3.92 billion (RPK) traffic; 80% LF load factor; 2.3 million passengers (PAX).
2002 TOP WORLD AIRLINES PASSENGER TRAFFIC (RPK) (Billion):
114 (BNG) 4.33; 115 (FUA) 4.28L 116 (RJA) 4.21; 117 (CSA) 4.18; 118 (YUN) 3.97; 119 (VOZ) 3.92; 120 (CDF) BERLIN) 3.92; 121 (XIJ) 3.88; 122 (STG) 3.87; 123 (MCR) 3.87; 124 (TAC) 3.85.
Virgin Blue (VOZ) is set for a A$400 million/$264 million float after the partners in the airline, the Virgin Group and Patrick Corporation reached agreement on a capital restructure. The deal effectively clears the way for an Initial Public Offering (IPO) later in 2003 or early 2004, involving 20% or more of (VOZ).
Rockwell Collins to provide avionics and inflight entertainment systems for 10/40 737NGs including GLU-920 multi-mode receiver and the WXR-2100 Multi-Scan weather radar. The airline also will retrofit Multi-Scan into 27 existing 737s. Cabin equipment including the Programmable Audio Video Entertainment System.
New trans-Tasman operation called "Pacific Blue (PBI)" will be based in Christchurch, New Zealand, with 737-800's to its Brisbane hub starting February 2004. Plans to begin a New Zealand domestic operation in 2004. (VOZ) is taking on 200 employees for its New Zealand operations.
Qantas Airways (QAN) formed an unlikely alliance with (VOZ)'s 50% owner, Patrick Corporation to mount a bid for the engine maintenance facility formerly operated by Ansett (ANS) at Melbourne. The joint venture is called Engine Services Company (ESCO), which intends to maintain all of (QAN)'s (GE) & (CFM) engines, while its Sydney engine facility will continue to maintain Rolls Royce (RRC) types. The existing (QAN) facility at Tullamarine Airport, Melbourne, would focus on the maintenance of (APU)'s. (ESCO) would also seek work from 3rd party customers, including (VOZ).
3 737-8FE's (33794, VH-VOM "Little Blue Peep;" 33795, VH-VON "Scarlett Blue;" 33796, VH-VOO "Bonnie Blue") deliveries. Note 737-8FE (33796, VH-VOO "Bonnie Blue") is the first airplane in "Pacific Blue" (PBI) titles instead of "Virgin Blue (VOZ)."
October 2003: Receives 90 minutes Extended Twin-engine Operations (ETOPS) approval from Australia's Civil Aviation Safety Authority (CASA).
Reached agreement with Adelaide Airport for a place at the new terminal. The terminal will house both domestic & international operations, and provide Adelaide with air bridges for the first time, while increasing the number of departure and arrival gates. It will also provide for the integrated connection between domestic and international flights.
737-33A (24461, VH-CZQ) returned to (CIT) (TCI). 737-7BK (33015, VH-VBV "Moulin Blue"), (TCI) leased. 2 737-8FE's (33797, VH-VOP "Whitney Sundays;" 33798, VH-VOQ "Peta Pan"), both in Pacific Blue (PBI) titles.
November 2003: Plans to undertake a float of 25% of the airline before the end of 2003. Patrick Corp will issue A$400 million/$279.5 million in new shares and the Virgin Group will sell A$100 million of its stake. Patrick will invest A$100 million to maintain its shareholding at "not less than 45%," effectively assuming control of (VOZ). Patrick Corporation Head Chris Corrigan, will become (VOZ) Chairman. The Virgin Group is expected to emerge from the sale process with about 30%.
Pacific Blue appoints Tony Marks (CEO), ex-Air New Zealand (ANZ) & (CEO) of Origin Pacific Airways, New Zealand. Will employ 200 in its start up phase and has brought its launch forward to January 2004, with Christchurch - Brisbane, followed by Melbourne - Christchurch in March 2004. Has rights to fly to Fiji and Vanuatu. Applies to International Air Services Commission (IASC) for service to New Caledonia.
Will exercise purchase rights for +5 737-800's starting August 2004, expanding the fleet to >50 airplanes.
December 2003: The threat posed by new Qantas Airways (QAN) low-cost carrier (LCC) subsidiary JetStar (IMU) did nothing to deter investors in Virgin Blue (VOZ) as its A$612 million/$450 million float closed >10x oversubscribed. Lists on the Australian stock exchange with a market capitalization of A$2.25 billion following the highly successful offering to retail buyers and institutions. The strong support for the 3-year old airline's shares means the final price for the float will be at the top end of the A$1.80 to A$2.25/share range indicated in the prospectus. 94% of (VOZ)'s employees also applied for allocation of shares. Virgin Group's holding reduced to a maximum 29.1% but it recently indicated it may offload a further 4% to make more shares available for public consumption.
(VOZ) is listed on the Australian Stock Exchange.
Perth - Gold Coast (Coolangatta) (5/week). In March 2004, Sydney - Townsville. In April 2004, Melbourne - Darwin. In May 2004, Brisbane - Newcastle.
January 2004: Last 9 months = +57.2% passengers (PAX); 83.1% LF load factor (+5.2).
Pacific Blue (PBI), Wellington and Christchurch to Sydney.
Transfers 737-8FE (33796) to Pacific Blue (PBI) operations.
February 2004: In August 2004, Sydney - Ballina (daily). Pacific Blue (PBI), Australia - Nadi (Fiji) (6/week).
March 2004: +2 orders (March 2005) 737-800's to replace 2 leased 737-800's.
737-8FE (1462-33799, VH-VOR "Territory Tinkerbell") & 737-8Q8 (1470-32798, VH-VOW "Jillaroo Blue"), (ILF) leased deliveries.
April 2004: In preparation for Pacific Blue (PBI) transTasman flights, will use Runway from (SITA) Information Networking Computing to connect to Australian Government systems.
Extends its code share and frequent-flier partnership with United Airlines (UAL) to cover Adelaide, Perth, Cairns, & Queensland's Gold Coast.
May 2004: In September 2004, Sydney - Hobart (daily). Pacific Blue (PBI), Australia - Vanuatu (2/week).
Fiscal Year (FY) 2003 = # A$159 Million/+$109.1 Million (+47%): +61% (RPK) traffic; +55% (ASK) capacity; 82.6% LF (+3.4); >10 Million PAX (+53%). Added 15 737's in last 12 months. In 2004, will add +5 737-800's raising its fleet to 49 airplanes and capacity by +44% (ASK).
OK by Australian federal government to begin major development of a new airplane maintenance base at Brisbane Airport. The new hangar will facilitate maintenance for (VOZ)'s 737's, and will complement the carrier's Melbourne maintenance center, which handles airplanes operating out of southern Australian ports.
2 737-8FE's (33800; 33801 "Butterfly Blue") deliveries.
June 2004: In September 2004, Pacific Blue (PBI), Brisbane - Nadi (3/week); - Port Vila (weekly). Melbourne - Nadi (3/week); - Port Vila (weekly). Has applied for service to Raratonga.
July 2004: Is undertaking a feasibility study into establishing a long-haul international airline out of Australia to the USA West Coast, London and other destinations in direct competition with Qantas Airways (QAN).
August 2004: At Virgin Blue (VOZ)'s Annual General Meeting (AGM) in Sydney, it was stated that Virgin Blue (VOZ)'s star has begun to fade with high fuel prices, the entry of low-cost rival Jetstar (IMU) and a massive build-up of capacity in the Australian market, reducing earnings -22% in the 1st 4 months of its financial year despite a +29% improvement in revenue.
737-8FE (1559-33997, VH-VUA) delivery. 737-8FE (33996, ZK-PBD) delivery for Pacific Blue (PBI).
September 2004: In October 2004, Adelaide - Alice Springs (4/week). In November 2004, Adelaide - Hobart (daily). In June 2005, Sydney - Hervey Bay (4/week). Perth - Broome (3/week).
Pacific Blue (PBI) receives OK for flights, Brisbane to Noumea.
October 2004: Newcastle - Gold Coast (daily).
737-8FE (1582-34014, VH-VUC "Foxy Rock'sy"), delivery.
November 2004: Coffs Harbour - Melbourne (weekly).
Air Macau (MCU) will take a 51% shareholding in a low-cost subsidiary formed with Virgin Blue (VOZ) (49%).
6 months ending September 2004 = +# A$63 Million/+$49.4 Million (-1.8%) (+# A$64.2 Million/$498.9 Million): +44% (RPK), +58% (ASK); 77% LF (-7.3).
Andrew David (COO) replaces David Huttner. Stefan Pichler, 46, Deputy (CEO), ex-(CEO), Thomas Cook group (JMA) & ex-Lufthansa (DLH).
Secured a deal to become the 1st airline outside of North America to introduce live satellite television with LiveTV owned by JetBlue (JBL). Plans to start phasing in this (IFE) in mid 2005.
737-8FE (1594-34015, VH-VUD "Bewitching Broome"), delivery.
December 2004: Virgin Atlantic (VAA), Hong Kong - Sydney (A340-600, 45F, 28C, 233Y, daily). In April 2005, (VAA) code share with Virgin Blue (VOZ) on this Sydney service as well as beyond sectors to Brisbane, Melbourne, & Coolangatta.
Samoan government has chosen Virgin Blue (VOZ) over Qantas Airways (QAN) & Air New Zealand (ANZ) to be its joint venture partner with Polynesian Airlines (PLY) to form "Polynesian Blue." It is expected to be flying as Samoa's international carrier in the first half of 2005.
January 2005: Patrick Corporation made a #A$1.1 Billion/$849.7 Million for Virgin Blue (VOZ). If successful, the move would see the departure of (VOZ) head, Sir Richard Branson, 4 years after the airline's launch in the Australian domestic market. Patrick Corporation, a listed company that operates ports, rail interests & freight, already owns 45.4% of (VOZ) has an offer of #A$1.90/share for the outstanding 54.6%, 25% of which is held by Branson's Virgin Group. If the bid is successful, Virgin Blue (VOZ) would become a wholly owned subsidiary of Patrick.
This move comes as (VOZ) is close to securing a joint-venture (JV) deal to launch low-cost operations into the mainland China Market from Macau and is negotiating to establish a Pacific-based carrier out of Samoa.
Although (VOZ) is under pressure from Qantas Airways (QAN) low-cost carrier (LCC) arm JetStar (IMU), it still holds >30% of the local market and maintains strong cash flow.
February 2005: Is considering commercial freighter service, Australia - New Zealand & Pacific Islands. May be based in Auckland, New Zealand.
March 2005: Rob Sherrard Deputy (CEO) & (COO) resigned, replaced by Andrew David (COO).
Transort Group Patrick Corporation has increased its shareholding in Virgin Blue (VOZ) from 45.4% to 50.3%.
737-8FE (34167, VH-VUE), delivery.
April 2005: Air New Zealand (ANZ) Engineering Services has 3-year maintenance contract with Virgin Blue (VOZ) to perform heavy maintenance support for 48 737NG's.
Will equip its airplanes with in-flight satellite television supplied by LiveTV, a subsidiary of JetBlue Airways (JBL). LiveTV will outfit and maintain 51 (VOZ) 737's in the 3rd Q with satellite receiving and distribution equipment, enabling passengers to have access to 24 FOXTEL & AUSTAR channels of programming at every seat.
May 2005: Fiscal Year ending March 2005 = +# A$138.1 Million/+$104.8 Million) (-13.2%) (+# A$159 Million): +40% (ASK); +27% passengers (PAX) on its 300 daily flights to 23 destinations; 77.7% LF (-4.9); +60% fuel costs; +40% airport charges.
July 2005: International Finance Corp (IFC), the private-sector arm of the World Bank, said the government of Samoa signed an agreement with Virgin Blue (VOZ) to set upan new joint venture airline, Polynesian Blue. According to (IFC), who acted as the lead adviser to the Samoan government on the transaction, the new airline will operate the long-haul services of Polynesian Airlines (PLY) beginning in late October. (IFC) also confirmed that Virgin Blue (VOZ) and the government will each own 49% of the carrier with the remaining 2% held by a Samoan investor.
3,446 employees (including 522 Flight Crew (FC), 1,313 Cabin Attendants (CA), & 82 Maintenance Technicians (MT)).
August 2005: 3,888 employees (+13%).
Virgin Blue (VOZ) is at the center of a hostile takeover bid involving its major shareholder that could see Richard Branson's Virgin Group re-emerge as the controlling influence in the low-fare airline. Transport conglomerate, Toll Holdings has launched a A$4.6 billion ($3.5 billion) offer for Patrick Corp, holder of a majority 62.4% stake in Virgin Blue (VOZ). If Tolls succeeds, Patrick's shareholding will be cut to 27% with Virgin Group agreeing to lift its own holding from 25% to 40.6%.
The deal would see Virgin Group recapture management control of Virgin Blue (VOZ) <3 years after selling 50% of the airline to Patrick for A$260 million. (VOZ) currently is under significant pressure as rising fuel prices continue to eat into its profitability. It has issued 3 warnings about earnings deterioration this year and expects a sharply lower result for the fiscal year.
Branson blamed Patrick head, Chris Corrigan for Virgin Blue (VOZ)'s failure to put fuel hedging into place, saying this has "cost shareholders dearly." He intends to institute other initiatives to reinvigorate the airline, including establishing a frequent-flier program.
Patrick Corp has rejected the Toll bid, which provides for Patrick shareholders to receive 0.4 Toll shares for each Patrick share, A$0.75 per share in cash and a special dividend in relation to Patrick's Virgin Blue (VOZ) stake. The Virgin Group would acquire 15% of Virgin Blue (VOZ) for A$1.40 a share, well below the A$2.25 a share paid to Branson's group through the float of the airline in December 2003.
A further 20% of Patrick's Virgin Blue (VOZ) holding would be held "in specie" by Patrick shareholders, with an additional 15% sold through a book-build process underwritten by Virgin Group. At the completion of this, Patrick would have reduced its shareholding by 35.4% to 27%, and there is flexibility within the deal for this to be cut to 10%.
737-8FE (1777-34322, VH-VBZ "Maliblue;" & 50th (VOZ) airplane, 737-8FE (1751-34323, VH-VBY "Virgin-ia Blue") delivery painted in special "true blue" livery.
October 2005: Virgin Blue (VOZ) delivered a more upbeat earnings forecast for the recently completed financial year as it prepares to introduce a fresh strategy aimed at attracting more business-oriented premium traffic. In a brief statement to the Australian Stock Exchange, the budget airline said it is expecting a net profit of +A$105 million/+$78.5 million for the year to last September 30. While that is still A$54 million short of the previous year, it is considerably better than the August forecast of a fuel-based decline of A$90 - A$100 million. "We're projecting a significant improvement in Virgin Blue (VOZ)'s results," Patrick Corp Managing Director, Chris Corrigan told a presentation in Sydney. He said the introduction of a loyalty scheme for frequent fliers by year end will help strengthen yields and he remains confident that the airline can come to grips with the fuel price problems. (VOZ) currently is un-hedged and recently held off implementing an increased fuel surcharge because of concerns about the impact on passenger numbers. Corrigan also attacked the bid by Toll Holdings for Patrick, which would see Patrick's 62.4% Virgin Blue (VOZ) holding reduced to a small minority share and Richard Branson's Virgin Group buying back another +15% of the carrier to resume its place as the major shareholder. Patrick has formally rejected the offer.
November 2005: Virgin Blue (VOZ) reported a net profit of +A$105.2 million/+$77.2 million for the fiscal year ended September 30, down -33.1% compared to income of +A$157 million in the previous year. The company also declared a A$0.25 per share dividend, or A$262 million, which will provide controlling shareholder Patrick Corporation with A$164 million in cash with which to fight a hostile takeover by Toll Holdings that is supported by Virgin (VAA) Group's Richard Branson, Bloomberg reported.
Annual revenues rose +14.5% to A$1.76 billion, while operating costs climbed +22.% to $1.6 billion, propelled by a +68% surge in fuel costs and a +22.1% jump in airport and air navigation charges. Profit for the second half of the year declined to +A$30 million from last year's +A$63 million, Bloomberg said.
Virgin Blue (VOZ), coming off a quarter in which profits fell -33.1%, will raise fares in an effort to capture a bigger share of the business class market. According to Australian Financial Review, the carrier said it lost more leisure traffic to Qantas (QAN) Low Cost Carrier (LCC) Jetstar (IMU) than anticipated, and would be offering sufficient product enhancements to justify the price hikes.
Virgin Blue (VOZ) unveiled its newest loyalty program named "Velocity." Program partners include National Australia Bank, Emirates (EAD), Virgin Atlantic Airways (VAA), and Europcar. Velocity will not have any blackout periods and seats will be available for redemption on Virgin Blue (VOZ) and Pacific Blue (PBI) on "every flight, every route, every day." The program also will offer co-branded credit cards.
OzJet (OZJ), Australia's 1st all-business (C)-class airline, entered the domestic market amid signs that the price war of recent years is set to shift to the premium sector. The startup's launch was greeted by business (C) fare discounts by Qantas (QAN) and a more aggressive campaign by Virgin Blue (VOZ) for the corporate market, underpinned by the introduction of its Velocity frequent-flier scheme. Former racing team head Paul Stoddart's OzJet (OZJ) is offering 8x-daily between Sydney and Melbourne, using 2 737-200s configured with just 60 seats each. Its introductory fare of A$200/$147 each way and regular fare of A$325 compare to the online rate of A$565 being offered by Qantas (QAN). OzJet (OZJ) plans to expand to Brisbane, Adelaide, Perth and Canberra next year as it increases its fleet to 10 airplanes.
December 2005: The Australian Competition Tribunal ruled that the federal government will retake control of airport pricing after 3 years of deregulation. The decision stemmed from a dispute brought last year by Virgin Blue (VOZ) against Sydney Airport in which the airline said Sydney favored full-service carriers by basing fees on weight rather than passengers, a policy favored by Qantas (QAN). Price negotiations between airports and airlines now must be approved by an arbitrator.
January 2006: Hitit Computer Services' Crane Frequent Flyer software was chosen by Carlson Marketing Group for Virgin Blue (VOZ)'s new loyalty program Velocity. Turkish Airlines (THY), Icelandair (ICE) and Kuwait Airways (KUW) also use Crane.
Parent Organization/shareholders: Patrick Corporation Ltd (62.4%); Virgin Group (VAA) (25.6%).
Efforts by Richard Branson's Virgin Group (VAA) to regain control of Virgin Blue (VOZ) may have suffered a fatal setback when Australia's Competition and Consumer Commission said it was opposed to Toll Holdings' proposed takeover of Patrick Corporation, which holds 62.4% of the Australian low-fare airline. Toll launched a A$4.6 billion/ $3.5 billion hostile takeover of Patrick last August. Assuming the takeover had been successful, Toll would have sold enough Virgin Blue (VOZ) shares to raise Virgin Group's holding from 25% to 40.6%, making it the largest shareholder in the carrier. According to the Associated Press, Toll said it was "considering its options," following the ruling.
The Australian government, as expected, rejected Singapore Airlines (SIA)'s plans to offer service on the transpacific route to the USA, bowing to a concerted campaign by Qantas (QAN) to limit competition on its most profitable route and ruling that there would be minimal benefits to Australia. The route accounts for 20% of Qantas (QAN)'s profits, according to the "Sydney Morning Herald." It wasn't all good news for Qantas (QAN), however, as the government blocked its effort to lift foreign ownership beyond 49%. In addition, the way now is clear for Virgin Blue (VOZ) to establish long-haul services to the USA in competition with Qantas (QAN), United Airlines (UAL) and Air Canada (ACN). The latter enters the market next year.
"Liberalization of market access is essential and must continue. However, this requires equal opportunity for Australian carriers, which is not now available in many instances," Qantas (QAN) (CEO), Geoff Dixon said.
Anticipating the decision, (SIA) issued a statement saying that "consumers will continue to pay high fares and suffer a lack of service enhancements that competition would bring" by the government's opting to "continue an outdated legacy of protecting Qantas (QAN)." (SIA)'s Australian head, Paul Tran insisted Australians are "getting a raw deal on the Pacific route."
(SIA) had argued that its entry would generate A$114 million/$84.4 million in additional tourism revenue by bringing +48,000 extra USA visitors to Australia. However, the emergence of Virgin Blue (VOZ) and Air Canada (ACN) swayed the debate in Qantas (QAN)'s favor. The government had assured Singapore in 2003 that talks would resume on an "open skies" pact between the countries once stability returned to the international aviation industry. It suggested a regional alliance between (SIA), a Star Alliance member, and Oneworld (ONW)'s Qantas (QAN) but (QAN) Chairman Margaret Jackson said (QAN) was not interested.
Regarding foreign ownership, Dixon said raising the limit would have helped the airline lower its capital costs "as well as provided parity with other Australian international carriers, allowing us to operate competitively while not in any way endangering our role as a major Australian company."
Australian Competition and Consumer Commission (ACCC) has found that major airlines have been hit by increases of up to +11% in annual charges from the country's biggest airports. The (ACCC) said the biggest increase came from Canberra International Airport (+11%), while the smallest increase was at Melbourne Airport (+2.6%). It found that total aeronautical revenue generated by price-monitored airports rose to A$656.8 million/$485.3 million in 2004/2005, a +68% increase over 2001/2002. Costs also had risen, mostly due to extra security requirements since 9/11.
Aeronautical charges in Australia once were subject to price caps and price surveillance, but now are subject to price "monitoring" from the (ACCC). Airlines such as Qantas (QAN) and Virgin Blue (VOZ) have complained about rising aeronautical charges, which no longer are subject to (ACCC) approval. The (ACCC) said in its report, the third since the new system was introduced, that increased passenger numbers meant airport costs on a per-passenger basis generally had decreased only slightly increase in recent years, while airport profits had risen substantially.
April 2006: The Australian airline landscape is set for some dramatic changes after the country's dominant port operator, Patrick Corporation, which has a 62.4% stake in Virgin Blue (VOZ), accepted a A$6.20 billion/$4.52 billion takeover bid from Australia's Toll Holdings. The deal ends an 18-month battle and could lead to a reshaping of the major operators' ownership structure and strategies. Richard Branson's Virgin Group (VAA) founded Virgin Blue (VOZ) in 1999 and has a 25.6% stake in the airline, with the balance in public hands. It sold a 50% stake to Patrick in 2002 for $260 million, but the relationship soured after the airline floated in December 2003.
Branson has expressed a strong desire to buy back a controlling stake, while Virgin Blue (VOZ)'s management plans to launch services to the USA under its international Pacific Blue (PBI) brand. That brand name is a legacy of Singapore Airlines (SIA)'s £600 million/$1.05 billion 49% equity buy of Virgin Atlantic (VAA) in December 1999, which stipulated that the Virgin name was not to be used by any Australia-based operation in the international arena.
Toll is interested in selling down the Virgin Blue (VOZ) stake and discussions are expected shortly between Toll and Branson, while the Singapore government investment arm and biggest (SIA) stakeholder, Temasek is rumored to be interested in taking a stake in Virgin Blue (PBI). Temasek recently dumped its 3% share in Qantas (QAN) after the Australian government rejected (SIA)'s annual bid to gain access to the Australia - USA market. Analysts suggest that Temasek may team up with Branson to gain a controlling stake in Virgin Blue (VOZ), with the Virgin Group (VAA) holding 40% and Temasek 49%.
Then, the scenario becomes fascinating, with analysts in Singapore and Australia hinting that the Virgin Blue (VOZ) product could be realigned by adding a business class, with (SIA) codesharing on domestic routes. (SIA) also would codeshare on Pacific routes if Pacific Blue (PBI) is successful, as expected, in getting permission to serve the USA. Under that arrangement, it is anticipated that (SIA) would drop the clause preventing use of the "Virgin" name, thus simplifying the branding.
The international arm of Virgin Blue (VOZ), however, would be subject to Australia's foreign ownership restrictions. No more than 25% of a carrier can be owned by an individual foreign airline and no more than 35% by all foreign airlines, while foreign ownership is capped at 49%.
Services to the USA probably would be launched with 747s leased from (SIA), swapping to 777s once operational experience allowed Extended Range Twin-engine Operations (ETOPS) benefits.
May 2006: Employees = 3,818.
Virgin Blue (VOZ)'s unhedged exposure to escalating jet fuel prices undermined its net earnings for the first half of the financial year, with the carrier reporting a -8.5% fall in profit to +A$68.2 million/+$52.4 million, reflecting a +33.7% rise in the cost of fuel over the 6-month period to March 31. (CEO) Brett Godfrey said the A$49 million in additional fuel expense was offset partially by the benefits of (VOZ)'s new corporate business strategy and improved productivity, which contributed to a +6.1% increase in revenue to A$935.9 million. Yields remained relatively steady despite continuing competition from Jetstar (IMU) on domestic and transTasman routes.
Passenger numbers climbed +9.2% over the year-ago period to 7.1 million and load factor rose +2 points to 78.4% LF on a +6.5% increase in (RPK)s and a +4% lift in capacity. Unit costs grew +3.1% to A7.96 cents but fell -2.6% to A5.93 cents excluding fuel. The decline in earnings also reflected a A$10 million one-off cost associated with the introduction of Velocity and the fact that the high-volume Easter period fell in April this year.
(VOZ) still is in some limbo, as Toll Holdings completes its acquisition of port operator Patrick Corporation, which holds 62.4% of the airline. The transaction is expected to be finalized in the coming days. Toll has ruled out a sale of its share in the short term, according to "Reuters."
(VOZ) has confirmed an order for 9 737-700/800s. It is valued at $634.5 million at list prices and the airplanes will begin delivering in 2008, replacing leased airplanes in (VOZ)'s fleet of 52 737NGs. Delivery of the airplanes are due from fiscal 2008 through fiscal 2010. The airline is also expecting 4 previously ordered 737-800s for delivery this year.
737-8FE (34438, VH-VUG "Jasman Tasman"), delivery.
July 2006: (IBS) Software Services said Virgin Blue (VOZ) will use its next-generation passenger services system aiRes under an agreement with Cendant Travel Distribution Services.
737-8FE (34440, VH-VUH "Tickled Blue"), delivery.
August 2006: Australia-based Virgin Blue (VOZ) announced a +12% lift in net profit to +A$84.5 million/+$64.4 million for the nine-month fiscal year ended June 30, despite a +35% surge in fuel costs. The carrier changed its year-end accounting period to June 30 from September 30 after Toll Holdings, Australia's largest transport group, acquired the airline's majority owner, Patrick Corp.
Virgin Blue's revenue rose +8.5% to A$1.39 billion as (RPK)s climbed +6.1% to 12.09 billion against a +3.9% increase in (ASK)s to 15.7 billion. It carried 10.4 million passengers, up +7.5% on the previous year.
(CEO) Brett Godfrey attributed the result partly to a focus on the corporate market and suggested the best is yet to come. "It takes time for the full impact of these new initiatives to be felt. So far it has been trickling through," he said.
That trickle is gaining momentum, with yield up +2.6% and load factor ahead +1.9 points to 77.9% LF. Unit revenues rose +3.4% to A8.02 cents while (CASK), excluding fuel, fell -3.4% to just A5.92 cents. The result was impacted by the +35% hike in fuel costs to A$70 million and A$7 million in one-off costs associated with the setup of the Velocity frequent-flier program. (VOZ) also introduced Web check-in and lounges and restructured its schedules to focus on frequency during peak business periods.
WestJet (WJI) named (VOZ) (CEO) Brett Godfrey to its board of directors.
737-8FE (34441, VH-VUI "Brandi Blue"), delivery.
September 2006: 737-8FE (34443, VH-VUJ), delivery.
November 2006: Australia's Toll Holdings, which acquired a 62% interest in Virgin Blue (VOZ) last spring, when it bought former stakeholder Patrick Corporation that a review of the acquisition "confirmed that the investment offered further value enhancement for Toll shareholders, and that this would remain the company's focus." Toll Managing Director Paul Little said that an active fuel hedging program and customer-focused improvements, as well as the recent E170/E190 order, signal "some exciting prospects" at the carrier, including possible transpacific services. Toll also will give Virgin Blue (VOZ) a "pivotal" role in its airfreight business.
In a significant departure from the Low Cost Carrier (LCC) one-plane-fits-all strategy, Australia's Virgin Blue (VOZ) ordered three Embraer E170s and 11 E190s, plus 6 options.
(VOZ), 62.4% owned by logistics group Toll Holdings Ltd and the remainder by the UK billionare Richard Branson's Virgin Group, said deliveries of the airplanes are expected to commence in 2007, giving the company significant additional operating flexibility, while increasing efficiency through lower fuel usage.
The airplanes will replace 737-800s on some thinner routes, while adding frequency at off-peak times on others. (VOZ) said they will be used to expand domestic and regional markets. (VOZ), which currently operates a fleet of 53 737s, is Embraer's 1st customer in Australia.
"(VOZ) will have the ability to complement and right-size operations. We are currently considering a range of operating possibilities, yet to be confirmed," (CEO) Brett Godfrey said, adding that the order signaled "a key step-change." Delivery dates were not disclosed.
The move may flag a push by the Low Cost Carrier (LCC) to tap into the lucrative "fly-in, fly-out" market in western Australia and Queensland, that is dominated by a number of operators using B Ae 146 and F 100 equipment.
February 2007: Just 1 day after reporting a thumping profit, Qantas (QAN) was brought back to earth when Singapore's Tiger Airways (TGR) unveiled plans to launch Australian domestic services by year end with 5 new A320s.
During the announcement, Tiger (TGR) President & (CEO) Tony Davis took a cheeky swipe at Qantas (QAN), saying (TGR) is ready to "deliver Australians genuine low fares, competing in a market which has returned to a cozy duopoly and seen fares increase."
Australians actually enjoy some of the world's cheapest airfares, with transcontinental fares from A$189/$147 on Jetstar Airways (IMU) or A$219 on Qantas (QAN) with full service. But there is a twist. While Qantas (QAN) and Virgin Blue (VOZ) serve all major trunk routes, JetStar (IMU) connects secondary airports with major cities. Tiger (TGR) intends to bring its fares, which are similar to or lower than Jetstar (IMU)'s, to major trunk routes.
Davis claimed that "Unlike others in this market, we won't be a low-cost carrier (LCC) selling high fares. We'll be low cost and very low fare." Tiger (TGR) will launch Singapore to Perth service next month, and has been flying to Darwin for some time. Davis outlined his carrier's plans to federal ministers last week, started the process to obtain an Australian Air Operator's Certificate (AOC) and has filed with Australia's Foreign Investment Review Board. Contrary to most countries, Australia allows 100% foreign-owned airlines to operate domestically if it is in the national interest.
The move by Tiger (TGR) has been expected, as Qantas (QAN) is the largest shareholder in Singapore-based Jetstar Asia Airways (JSA), Tiger (TGR)'s biggest rival. Tiger (TGR)'s major stakeholder is Singapore Airlines (SIA). Centre for Asia Pacific Aviation, Executive Chairman, Peter Harbison said he "sees Tiger (TGR) more focused on a direct attack on the local market, rather than providing support to the Singapore flag carrier. But (SIA) would not weep over any adverse economic impact on one of its major rivals."
Davis is on the board of Perth-based, regional Skywest Airlines (SKD), but it is not clear what cooperation will evolve between the two airlines.
Virgin Blue (VOZ) lashed out at growing support in the Australian government for Singapore Airlines (SIA)'s bid to operate flights from Australia to the USA.
Co-founder & (CEO) Brett Godfrey was quick to point out that 12 months ago, the government denied access to (SIA). "Based squarely on that cabinet review and resolution, (VOZ) took a decision to invest more than A$1 billion/$775.7 million to equip and launch a new international airline for Australia," he said. "We will launch that airline next year ("V Australia (VAZ)"). It is expected to announce its airplane selection, tipped to be either 777-300ERs or A340-600s, within 4 weeks.
Since Airline Partners Australia (APA) launched its takeover bid for Qantas (QAN), calls for increased competition have grown from both sides of government. Godfrey claimed some politicians "disregarded Virgin Blue (VOZ), one of aviation's success stories and an airline that has already raised its hand to compete in this market and proved it can do so."
(VOZ) entered the market 6 years ago with 2 airplanes. It now operates 315 daily flights to 22 Australian destinations and cities in New Zealand and the Pacific islands. Godfrey said fares in Australia have dropped -40% during that time.
Just three airlines - - United Airlines (UAL), Hawaiian Airlines (HWI), and Qantas (QAN) - - operate the transpacific nonstop, but up to 20 are eligible. Godfrey said those carriers that failed, tried to compete with Qantas (QAN). "What is needed is a new model. Virgin Blue (VOZ) will start with a clean sheet, differentiated," he said.
Virgin Blue (VOZ) could be a target for an equity buyout by Singapore Airlines (SIA), according to the Centre for Asia Pacific Aviation (CAPA). (CAPA) Executive Chairman Peter Harbison said, "(VOZ)'s 62% owner, Australia's transport giant Toll Holdings, has again refused to rule out the possibility of liquidating its interest in (VOZ) beyond the end of the current financial year to June 2007." He added that "this is near to an effective signal to the equity markets that (VOZ) is up for bids." Some analysts believe Toll indeed is ready to sell down. The deal would be complex, but Harbison suggested it could be done. He floated the following factors and influences: Toll appears to be a willing seller; Tiger Airways (TGR), 49% owned by (SIA), has announced plans to enter the Australian market; (SIA) continues to be interested in the higher-yield end of the Australian domestic market, and Richard Branson has expressed interest in increasing his 25% stake in (VOZ). (VOZ) recently hinted at its own plans to counter Tiger (TGR)'s entry with an ultra-low-cost spinoff. Harbison suggested the equity buyers well may be crunching the numbers. One obstacle is that "despite the apparent common interest between Virgin Group (VAA) and Singapore Airlines (SIA), there is not always harmony between the Singapore flag carrier and Branson."
Lufthansa (DLH) Technik (LTK) will overhaul landing gear on 53 Virgin Blue (VOZ) 737NGs over the next eight years.
Australia's Virgin Blue (VOZ) reported an +80.9% year-over-year increase in net earnings to +A$124.3 million/+$97.8 million for the six months ended December 31 on a +16.7% lift in revenue to A$1.12 billion, results that have it primed for expansion including considering an order for 777-300ERs to be deployed on planned long-haul operations.
The carrier is forecasting fiscal full-year earnings of approximately +A$179 million compared to the +A$112 million earned last year. (CEO), Brett Godfrey suggested the "great result" was a reflection of the New World Carrier strategy implemented 18 months ago, that increased focus on the business market with major upgrades of airport lounges, continued installation of the "live2air" inflight entertainment product, and corporate traveler fares. Half-year traffic climbed +6.4% to 9.03 billion (RPK)s, as capacity increased +3.4% to 10.98 billion (ASM)s, lifting load factor +2.3 points to 82.2% LF.
Virgin Blue (VOZ) is considering establishing its own ultra-low cost carrier (LCC). Godfrey revealed that management has "been working the details for over 12 months" but a firm proposal is yet to be put to the airline's board. He said Virgin Blue (VOZ) was "more than likely" to go ahead later this year with what he described as an "airline within an airline." It is expected that up to 12 737-800s would be dedicated to the (LCC) concept.
Godfrey said that a long-haul airplane order is near, with the choice down to the 777-300ER and A340-600. Boeing (TBC) said that "negotiations are underway with Virgin Blue (VOZ) Holdings concerning a potential 777-300ER order." The 1st long-haul airplane is expected to be delivered in the 2008 3rd quarter.
March 2007: Boeing (TBC) added 46 orders to its backlog including 27 airplanes for unidentified customers: 6 747-8s (understood to be 747-8F freighters), 6 777s (understood to be 777-300ERs for Virgin Blue (VOZ)) and 15 787s. There is informed opinion from London sources that the 787 order came from Virgin Atlantic Airways (VAA), which has been moving rapidly toward a green platform. The carrier recently deferred its remaining 6 A340-600s and those slots have been taken by Lufthansa (DLH). Virgin (VAA) also deferred its order for 6 A380s with 1st delivery slated for 2013. 2 analysts in London said they would be surprised if the airline took either deferred commitment. "Branson's going all green and for twin engines," one claimed.
Later, Virgin Blue (VOZ) Holdings confirmed its order for 6 777-300ERs with options for +6 more, and will lease 1 additional 777-300ER from (ILFC) (ILF). The order for the 6 is worth $1.5 billion at list prices. The airplane will be used to establish a new long-haul airline next year, "V Australia (VAZ)," providing service from Australia to the USA "and other destinations." (VOZ)'s order takes total orders for 777s to 924 from 49 carriers. It also exercised options on 5 737-800s worth $350 million at list prices. (VOZ) currently operates 53 737NGs.
April 2007: Virgin Blue (VOZ) converted options for 3 E170s to firm orders and took purchase rights on 3 additional E190s, Embraer announced. The transaction adds to last fall's order for 14 airplanes. "This added flexibility initially provides a range of new operating opportunities in Australia and, potentially, for short-haul routes to New Zealand and the South Pacific islands," (VOZ) (CEO) Brett Godfrey said. (VOZ) will begin taking delivery of its 78-seat E170s in the 2nd half of this year and its 104-seat E190s, which will be Extended Twin-engine OPerationS (ETOPS) certified, in the 1st half of 2008.
May 2007: New entrants in Australia and New Zealand, including Tiger Airways (TGR)'s foray into the market, are triggering a wave of deep discounting, according to the Sydney-based, Centre for Asia Pacific Aviation (CAPA). Qantas (QAN) subsidiary, Jetstar Airways (IMU), which celebrated its 3rd anniversary, had 130,000 seats for sale with companion fares as low as A$2.50/$2.06 on many domestic, transTasman and international routes. The sale was designed to head off Tiger (TGR)'s announcement of its choice of Melbourne Airport as its base. (VOZ) retaliated with a -25% cut of its discount fares, while (QAN) also launched a 5-day domestic sale. (CAPA) said the frenzy will cross the Tasman to New Zealand with confirmation that "Kiwijet," a new Low Cost Carrier (LCC) based on Southwest Airlines (SWA)'s business model, plans to take to the skies late this year.
(VOZ) is moving to set up a lower-fare offshoot to combat both Jetstar International (IMU) and the entry of Singapore-based Tiger Airways (TGR) into the Australian domestic market. Unlike most countries, Australia allows foreign-owned and foreign-based airlines to operate domestically if they pass a public interest test. According to Virgin Blue (VOZ) (CEO) Brett Godfrey, the ultra-low-cost operation could be established within a few months. Godfrey told media in Brisbane that "the Virgin Blue (VOZ) brand is heading up-market" and a clear separation of brands is on the table. He likened the split to that of Lexus and Toyota, and said the company shortly will launch a public competition to choose a name for the new long-range operation. It cannot use the "Virgin" name, a prohibition established when Singapore Airlines (SIA) took a 49% stake in Virgin Atlantic Airways (VAA). It uses the name Pacific Blue (PBI) for flights to New Zealand and the Pacific islands. Virgin Blue (VOZ) takes delivery of the 1st of 7 777-300ERs in September 2008 (for V Australia (VAZ)).
July 2007: Virgin Blue (VOZ) announced the A$61 million/$53.1 million purchase of a "campus-style" development in Brisbane to serve as its new national headquarters. The development is scheduled to be completed next March.
Virgin Blue (VOZ) filed an application with the USA Department of Transportation to operate 10 weekly Australia to USA flights beginning in November 2008, which would put it in direct competition with rival Qantas (QAN) on lucrative transpacific routes. The Australian carrier applied for the traffic rights under the name "Virgin Blue International Airlines (VAZ)," a subsidiary of the Virgin Blue (VOZ) group of companies, but said it will choose a new name ("V Australia (VAZ)") for its future transpacific operations prior to launch. It also is seeking an Australian operating certificate for (VAZ), which is expected to be granted. It plans to operate the service aboard 777-300ERs. "(VAZ) will bring to the USA a sophisticated business model, which will provide a service offering, capable of stimulating demand across the whole market, an aspiration fully consistent with the aspirations of both governments," Virgin Blue (VOZ) said in its application. It estimated that demand for Australia to USA flights exceeds 1.8 million passengers annually with +5.1% average growth per year expected. Currently, only (QAN) and United Airlines (UAL) operate flights between the nations. Singapore Airlines (SIA) repeatedly has asked the Australian government for permission to operate from Melbourne and/or Sydney to Los Angeles, but has been rejected.
Virgin Blue (VOZ) exercised options on 10 737-800 purchase rights worth $678.5 million at list prices. The new airplanes will replace existing leased airplanes and are scheduled for delivery in the December 2011 to February 2013 period.
August 2007: Australia's Virgin Blue (VOZ) Holdings cited a significant improvement in revenue and yield for a +92.9% surge in net profit to +A$216 million/+$172.6 million for the fiscal year ended June 30. Revenue rose +16.3% to A$2.16 billion, and yield lifted +8.1% to A11.57 cents. Expenses climbed +9.3% year-over-year to A$1.84 billion, reflecting an increase in flying and a +7.9% rise in fuel price. Operating income soared +41.2% to +A$548 million, with A$16 million in one-off expenses dragging on a bottom line that otherwise would have been even more impressive. "This result is the strong performance we were aiming for and progress at the rate planned under our "New World Carrier" strategy," (CEO) Brett Godfrey said. That strategy has shifted the airline's focus from "low cost to great value," he said, targeting the business (C) market with new lounges, launch of the Velocity frequent-flier program and the rollout of in-seat satellite TV. The carrier credited the shift for a +14.2% profit margin that it claimed was more than double that of (QAN).
(VOZ) flew 17.6 billion (RPK)s passenger traffic during the year, a +7.3% increase, against a +2.9% lift in (ASK)s to 21.6 billion, that boosted load factor +3.3 points to 81.2% LF. Passenger numbers rose +7.7% to 15.3 million. Unit cost grew +6.1% to A8.52 cents.
Godfrey told media that the next 2 years will be marked by steady expansion including entrance into the New Zealand domestic market, introduction of the E170/E190 and addition of the 777-300ER on (VAZ) transpacific services. The group's fleet will grow from the current 53 737NGs to 58 737NGs, 20 E170s/E190s and 3 777-300ERs by June 2009. It also is planning to introduce new seating to enable quick configuration changes to match Jetstar (IMU)'s and new entrant Tiger Airways (TGR)'s higher density cabins on some routes.
2 737-8FEs (36602, VH-VUK; 36603, VH-VUL) deliveries.
September 2007: 1st Embraer E170 (00180, VH-ZHA) delivery.
October 2007: Qantas (QAN) is matching Air New Zealand (ANZ)'s recent product initiatives, turning up the competitive heat in the NZ domestic market. Next month, (QAN) will introduce its successful Australian domestic "Cityflyer" product across the Tasman. Cityflyer provides passengers free beer and wine from 4 pm (noon in Australia), free newspapers, and an enhanced food offering. (QAN) also announced the addition of online check-in, "QuickCheck" self-serve kiosks, and a A$3 million/$2.7 million upgrade to its lounges in Auckland, Christchurch, and Wellington.
Virgin Blue (VOZ) added another element to its New World Carrier strategy with the introduction of a premium economy product. It will install 3 rows of 2x2 seats set at 34 to 35-inch pitch into its 50-strong fleet of 737-800s and Embraer regional jets. (CEO) Brett Godfrey said Virgin Blue (VOZ) "has evolved into a highly desirable business (C) travel option" over the past 2 years, thanks to the introduction of its Velocity loyalty program, lounges, flexible fares "and other business-friendly initiatives." The seats are convertible back to a standard 3x3 configuration as required.
Premium economy passengers will receive 24 Live2air entertainment channels, priority check-in, an increased checked baggage allowance of 32 kg and access to lounge facilities at Adelaide, Brisbane, Canberra, Melbourne and Sydney. Installation will begin this year, with the entire fleet fitted out in time for the official launch the new seats in 2008. The airline's move to tap the corporate (C) market, resulted in its posting a +92.9% surge in profit to +A$216 million/+$192.5 million for the fiscal year ended June 30.
Meanwhile, Qantas (QAN) is adding a 5th 737 to its New Zealand operation. In August, Pacific Blue (PBI), the international arm of Australia's Virgin Blue (VOZ), said it will launch domestic services in NZ on November 15. Pacific Blue (PBI) initially will use 2 737-800s between Auckland, Wellington and Christchurch. New Zealanders enjoy consistently low fares, often starting from NZ$59/$45 on major trunk flights between Christchurch and Wellington, and (ANZ) has a daily "Grabaseat" product, that sells off spare seats from NZ$6.
737-8BK (29675, VH-VUM), (CIT) Group (TCI) leased for Pacific Blue (PBI) operations. E170-100LR (00187, VH-ZHB), delivery.
November 2007: Etihad Airways (EHD) and Virgin Blue (VOZ) announced a comprehensive interline deal, that will provide passengers connectivity to 22 Australian cities, including Brisbane and Sydney, to Abu Dhabi and beyond, to Etihad (EHD)'s 45 international destinations. The deal is effective immediately. Etihad (EHD)launched daily flights to Sydney in March (becoming 11x-weekly in March 2008), and 3x-weekly service to Brisbane in September.
737-8BK (29676, VH-VUN), delivery for Pacific Blue (PBI) operations. E170 (0191, VH-ZHC "Irresisto Blue"), delivery.
December 2007: Amadeus will provide Virgin Blue (VOZ) with distribution, e-ticketing and interline solutions, that work alongside the carrier's existing passenger services system, "Navitaire's OpenSkies," while in addition, "V Australia (VAZ)" Virgin Blue (VOZ)'s new long-haul airline, will adopt the Amadeus Altea Customer Management System. The standalone solutions for the company's short-haul operations, will manage connectivity on behalf of Virgin Blue (VOZ)'s interline and Global Distribution System (GDS) partners. They also will process incoming e-ticket coupons from interline partners, enabling Virgin Blue (VOZ) to receive passengers from full-service carriers such as Etihad (EHD) and Virgin Atlantic (VAA). The connectivity will serve as a "distribution hub" for Virgin Blue (VOZ); Pacific Blue (PBI), its New Zealand-based subsidiary airline, that serves several points in the South Pacific, and Polynesian Blue (PLY), a joint venture with the Samoan government, that links Samoa to New Zealand and Australia.
"V Australia" (VAZ), which expects to receive approval from the USA and Australian governments to launch flights between the east coast of Australia and the west coast of the USA in 2008, will use the full Altea suite for sales and reservations, inventory and departure control operations. The airline (VAZ) will also use Amadeus e-Retail and e-Merchandise solutions for online sales.
In May 2006, Virgin Blue (VOZ) signed an agreement with Cendant Travel Distribution Services, the predecessor company to Travelport Limited, to be among the launch customers of aiRES, a new passenger services system, that would replace "OpenSkies." The migration has yet to occur, however, and Virgin Blue (VOZ) continues to use "OpenSkies."
Amadeus said the solutions it is providing to Virgin Blue (VOZ) will complement, not replace, (VOZ)'s passenger services system.
Air New Zealand (ANZ) has signed a $NZ45 million/$A39.86 million contract with (VOZ) to carry out heavy maintenance on 50 737s. The 5-year contract renews a contract due to expire at the end of the year, and follows a 5-year heavy maintenance contract signed this year for Hawaiian Airlines (HWI) in Auckland. Air NZ (ANZ) has carried out heavy maintenance checks on (VOZ)'s 737-700 and 737-800NGs at its Christchurch base for the last 3 years. The (VOZ) contract, provided appropriate scale at the Christchurch base and complemented the maintenance of Air NZ (ANZ)'s own 737 fleet there, (VOZ) said.
January 2008: Virgin Blue (VUS) will start daily, Canberra to Gold Coast flights on March 4, aboard an E170.
February 2008: Virgin Blue (VOZ) reported a -8.8% decline in profit for the fiscal semester ended December 31 to +A$113.3 million fuel/$104.1 million from +A$124.3 million in the year-ago period, as competition and heavy investment in future expansion took their toll.
During the six-month period, (VOZ) took one-off charges of A$21.8 million related to the introduction of E170s, its "New World Carrier" program and the launch of its New Zealand and V Australia operations. It firmed purchase rights on four more E-190s at the Singapore Airshow (see story above). It now is operating or has committed to six E170s and 18 E190s.
Excluding those expenses it enjoyed a 7.6% gain in earnings to A$135.1 million. Six-month revenue rose 8.1% to A$1.21 billion and operating profit fell 5.6% to A$176.1 million from the A$186.6 million earned in the semester ended December 31, 2006. It flew 9.42 billion (RPK)s during the period, up 4.4% year-over-year, and load factor rose +1 point to 83.2% LF.
Yield climbed 3.9% to A12.14 cents and unit revenue grew 5.2% to A10.10 cents. (CASK) excluding the above-mentioned one-off investments increased +5.6% to A8.98 cents.
Admitting that its share performance does not "currently reflect the true underlying value of the business," (VOZ) said it has retained Goldman Sachs JBWere to assist the board in "assessing a number of expressions of interest designed to increase shareholder value."
Its first E190 will enter service in April and V Australia (VAZ), its long-haul subsidiary, is "progressing on target and on budget" for a December launch. It plans to operate 10 weekly transpacific flights, with pricing and routes to be announced next month. Its premium economy product that will feature on both its 737 and Embraer (EMB) airplanes went on sale and will be available, beginning March 15 on Sydney - Canberra flights, with the rest of the network to follow.
But the market will be inhospitable in the meantime, the airline said. "The estimated capacity outlook for the market over the next 6 to 12 months is expected to outstrip long-term annual industry growth rates," it warned, adding that it expects the "yield environment to be challenging for the remainder of this financial year." It also plans an additional +A$20 million in one-off costs related to its New Zealand service.
Virgin Blue (VOZ) announced an interline agreement with Thai Airways (THI) that will feature e-ticketing, a first for (VOZ).
The USA and Australia announced an "open skies" agreement in Washington at the conclusion of three days of negotiations. Australia becomes the USA's 90th "open skies" partner. The deal was not signed formally and no schedule was announced. The number of airlines from either country that can serve the other, once the agreement becomes effective, will be unlimited, as will the number of flights permitted. Restrictions on pricing, codesharing and charters also were removed. Limitations on cargo services were removed in 1999, the USA Department of Transportation said. Australian carriers were quick to laud the accord. Qantas (QAN) (CEO), Geoff Dixon said (QAN) had supported the Australian government's efforts to secure "open skies" with the USA and the agreement "brings new opportunities for growth and competition. Importantly, it will assist the further development of Australia's aviation industry, as well as help increase trade and tourism with a major economic partner." (QAN) operates 48 weekly flights on the transpacific route, increasing to 51 next month. (VOZ) (CEO), Brett Godfrey, whose carrier is preparing to launch its V Australia (VAZ) long-haul subsidiary, and will take delivery of the first of 14 777-300ERs this fall, called the deal "a great achievement, and a significant change after almost twenty years of restrictive bilaterals." He would not reveal V Australia (VOZ)'s USA destinations.
The prospect of a link-up between AirAsia (ASW) and Australia's Virgin Blue (VOZ) appears to be gathering momentum, with the world's lowest-cost operator flagging the launch of a joint venture (JV) with Virgin Blue (VOZ) to establish an "ultra-low-cost" carrier in Australia. (VOZ) has been searching for ways to counter low-cost carrier (LCC) entrants Jetstar Airways (IMU) and Tiger Airways (TGR), as it focuses more on the corporate market. Speaking to "News Ltd" in Australia, Toll Holdings, which owns 62% of Virgin Blue (VOZ), said it has received expressions of interest for its majority stake. "In the last three months, the Virgin Blue (VOZ) board has initiated a detailed review to maximize shareholder value," Toll Managing Director, Paul Little told "News." "It is clear that the level of liquidity in the listed stock is not supportive of shareholder value. A number of expressions of interest have been received, designed to unlock value and these are currently being assessed.''
(VOZ)'s shares have slumped from a high of A$2.44/$2.24 in early 2007 to close at A$1.25. The airline reported a +8.8% profit drop in the fiscal semester ended December 31 to +A$113.3 million.
AirAsia X (ASX) (CEO), Azran Osman-Rani told media that while AirAsia (ASW) is keen on the (JV), "a lot of that hinges on what happens with Toll Holdings and who is going to take control of Virgin Blue (VOZ)." AirAsia (ASW) will enter into the (JV) only if Toll sells down its 62.7% stake and Virgin (VAA) Group chief, Richard Branson, who holds 16% of AirAsia X (ASX) and 25.5% of Virgin Blue (VOZ), regains management control of the carrier he launched in 2000. Both Branson and AirAsia (ASW) founder, Tony Fernandes will be in Australia next month for talks. Toll has been considering reducing its stake for some time, with various suitors, including Singapore Airlines (SIA) touted.
For details on Virgin Blue (VOZ)'s plans, see attached - - "VOZ-PLANS-FEB08."
737-8FE (36601, VH-VUO) and E190 (0162, VH-ZPB), deliveries.
April 2008: Virgin Blue (VOZ) said it expects its profit for the fiscal year ending June 30 to fall >-50% to approximately +A$100 million/+$93.2 million. It posted a +A$216 million profit in the year ended June 30, 2007.
May 2008: 2 E190s (170, VH-ZPC; 0176, VH-ZPD "Tickled Blue"), deliveries.
June 2008: Virgin Blue (VOZ) (CEO) Brett Godfrey expressed "profound disappointment" with an Australian JP Morgan report that claimed in one of its scenarios that (VOZ) "could collapse under the weight of higher fuel prices." The gloomy forecast was reported widely in Australia by most major papers with alarmist headlines. Godfrey pointed out "The doomsday scenario was only 1 of 3 in the JP Morgan report and the report actually forecast that (VOZ)'s share price would rise and its profit would be +600% higher than the 2008 to 2009 profit." He said the "collapse" would occur only if (VOZ) was unable to raise fares by +10% over the next 10 years and noted that Qantas (QAN) hiked its fares +6.5% in 2 months. His condemnation of the coverage, was echoed by one of Australia's leading financial commentators, Nine Networks' Ross Greenwood, who dismissed the report as a "great headline catcher" but one that "raises more questions than it answers." Greenwood stressed that the Organization for Economic Co-operation and Development does not expect oil prices to rise much more in the near future, while the President of (OPEC) has said the current spike is a bubble.
Greenwood also pointed out that Virgin Blue (VOZ) reported around A$704 million/$675.5 million in cash reserves on its latest balance sheet, total assets of A$2.3 billion, and a debt of A$1.5 billion.
In early April, Virgin Blue (VOZ) said it expected its profit for the fiscal year ending June 30 to fall >-50% to approximately A$100 million. It posted a +A$216 million profit in the year ended June 30, 2007.
One aspect possibly overlooked by many analysts, is that the December launch of the airline's international arm, V Australia (VAZ), will boost (VOZ)'s domestic operation, giving travelers more incentive to join its loyalty program.
Virgin Blue (VOZ) (CEO) Brett Godfrey decided that the best form of defense is attack and warned that some airlines face imminent shutdown because of soaring fuel prices. 3 weeks ago, Godfrey was forced to defend (VOZ) from reports that it risked bankruptcy. JP Morgan, author of the possible scenarios that prompted the press speculation, later clarified that it did not believe (VOZ) faced bankruptcy. However, Godfrey told ABC television's "Lateline Business " program that the impact of record fuel prices on airlines has been worse than expected, and that closure of some major carriers is inevitable. "I think this surpasses (SARS) and "September 11" by some magnitude," he told viewers. "I am convinced you will see one of the major USA airlines, which form five of the top ten airlines in the world, not being with us by Christmas time, if fuel stays where it is." Godfrey said (VOZ) will not cut staff unless oil prices continue to rise. "Our competitors [Qantas (QAN) and Jetstar Airways (IMU)] in this market have already made statements to the effect that they're going to have to place planes and people out of work. We've been able to prevent that to date. But no one is going to be unaffected, not one single airline, not one single company in Australia that uses fuel as an input, is going to be unaffected if fuel hits $200 a barrel."
737-8FE (36604, VH-VUP), E170 (0227, VH-ZHD), and E190 (0187, ZH-ZPE "Bluephoria"), deliveries.
July 2008: Virgin Blue (VOZ) shares climbed after majority shareholder Toll Holdings, an Australian logistics company, announced its long-awaited disposal of its 62.7% majority stake in (VOZ) Holdings. Toll will distribute 98.3% of its stake in Blue (VOZ) to Toll shareholders by way of a special dividend, while Blue (VOZ) shareholders will benefit from the significantly increased liquidity in Virgin Blue (VOZ) shares.
Virgin Blue (VOZ) (CEO) Brett Godfrey said, "We see Toll's exit as an opportunity to introduce long-term investors to the company. Despite the difficult trading environment that we are facing at the present, the longer-term outlook for the Group is very strong, and we have a number of new products that will be launched in the coming months, including Virgin Australia" (VOZ).
At the announcement, Virgin Blue (VOZ) also confirmed its guidance provided 2 months ago that its underlying net profit for the financial year ended June 30 likely will be +A$132 to +A$137 million exclusive of approximately A$40 million of development costs associated with new initiatives scheduled for launch in 2008. It stated further that the company's balance sheet and cash reserves remained strong and, based on current trading conditions, the board sees no requirement for additional equity raisings in the foreseeable future.
The dual announcements should see the recovery of (VOZ)'s share price, which has suffered because of ownership uncertainty and widespread negative media based on extremely unlikely "doomsday scenarios" from some analysts. It unveiled a A$50 million cost-savings package last month.
Virgin Blue (VOZ) will remove 2 737s from its domestic network by October, reducing capacity by an additional -3%, introduce new baggage fees and adjust certain fares in an effort to combat rising fuel costs. There will be no layoffs associated with the new initiatives. (VOZ) unveiled a -A$50 million/-$48.8 million cost-savings package in June that included a -6% capacity cut. This 2nd round of initiatives also includes "significant" fare reductions on "baggage-heavy leisure routes" and a +5% increase in its Flexible Fares. "The necessary introduction of baggage fees and the reduction of our lowest fares for our price sensitive Guests is anticipated to yield both improved demand levels and revenue," (CEO) Brett Godfrey said. "In addition, (VOZ) continues to see encouraging support from the business sector and expects the increase in Flexible Fares to be revenue accretive." Withdrawn airplanes will operate as maintenance spares and to support disruption recovery. No destinations will be removed from the network. It will realize an additional +3% in 2008 through 2009, by the deferral of 5 E190 deliveries in 2009, lifting the overall capacity cut to -12%.
The new baggage policy will apply to Virgin Blue (VOZ) and Pacific Blue (PBI) passengers buying Discount Fares on domestic flights beginning September 1. A fee of A$8 will be charged for the first 23 kg of luggage when pre-purchased online, and will rise to A$20 at airport check-in. Certain passengers and types of baggage are exempt. Each extra kg will cost A$8. A new "Go Fare" will be introduced on August 18, reducing lowest lead-in fares by up to A$20 and allowing "price-sensitive travelers to offset the new baggage fees and to stimulate support for leisure markets."
August 2008: Virgin Blue (VOZ) Holdings blamed soaring fuel prices and one-off product enhancement costs for its -54.7% drop in net profit to +A$97.7 million/+$85.1 million (+$206 million) for the fiscal year ended June 30. The result was slightly ahead of market expectations, but management advised that the year ahead will be tough, although it still expects a positive result. The underlying net profit was +A$140.5 million, but the costs associated with the launch of V Australia (VAZ), domestic services in New Zealand, the introduction of Embraer jet airplanes, expansion of "The Lounge" product and launch of Premium Economy in Australia absorbed A$42.8 million.
Revenue increased +8.4% year-over-year to A$2.35 billion, with yield rising +0.2% to 11.59 cents. Capacity was ahead +7.9% to 23.3 billion (ASK)s, while (RPK)s grew +6.8% to 18.8 billion. Load factor slipped -0.7 point to 80.5% LF, and passenger numbers climbed +9.2% to 16.7 million. Operating costs jumped +18.5% to A$2.18 billion, reflecting the surge in fuel prices, with Blue (VOZ)'s average price per barrel rising +17%. Unit cost subsequently climbed +6.1% to 9.05 cents.
(CEO), Brett Godfrey told media in Sydney: "With fuel costs at never before seen record highs for much of the year, and airlines around the world struggling to cope, this result is a testament to our team and business model." He added that Blue (VOZ) has "implemented a range of measures in recent months to mitigate the impact of increased fuel costs and we will continue to closely monitor the operating environment, and take whatever actions are necessary to see our way through what is expected to be a challenging period." In light of the difficult trading condition, the company scrapped its final dividend payment for Fiscal Year (FY) 2008 and (FY) 2009 dividends are in doubt. Godfrey said V Australia (VAZ) remains on track for a December launch. Virgin Blue (VOZ) plans to invest a further A$55 to A$65 million in the operation, in line with previous guidance.
Virgin Blue (VOZ) is expanding closer to home. (VOZ) will begin flying the busy Sydney to Auckland route as well as the
tourist-heavy, Sydney to Vanuatu route.
(VOZ) is now charging for all checked bags brought by non-frequent fliers paying discounted fares.
(GE) Aviation (GEC) won a 6-year OnPoint solution contract from Virgin Blue (VOZ) covering Maintenance Repair & Overhaul (MRO) services on (CFM56-7B)s operated by Blue (VOZ) and its Pacific Blue (PBI) subsidiary. The contract is valued at $300 million.
737-8FE (36605) wet-leased to Pacific Blue (PBI) as (ZK-PBL).
September 2008: Brisbane airport, where traffic was growing +7% (RPK) grew just +1% in August.
Flights to Port Moresby in Papua New Guinea will begin in November with 737-800s.
Virgin Blue (VOZ) will expand its Sydney training center and build a maintenance base in a move that is expected to create almost +1,000 jobs. It will add 737-800 and E170 simulators to its recently opened V Australia (VAZ) training facility at Botany Bay, which already has a 777-300ER. (VOZ) also announced that the 1st V Australia (VAZ) 777-300ER due for delivery in November, will feature lie-flat beds and 2 bars.
October 2008: 1st 6 months net loss = -$5 million, ex-special items versus +$123 million last year.
Virgin Blue (VOZ) is a new world carrier operating scheduled domestic trunk routes between Australia's capital and regional cities, and internationally between Australia, New Zealand, and the Pacific Islands.
Employees = 4,138.
(IATA) Code: DJ - 856. (ICAO) Code: VOZ (Callsign - VIRGIN).
Parent organization/shareholders: Toll Holdings (62.42%); Virgin Group (25.26%); & private investors (12.32%).
Owns: Pacific Blue (PBI) (100%); & Polynesian Blue (PLY) (49%).
Alliances: Virgin Atlantic Airways (VAA).
Main Base: Brisbane International airport (BNE); & Melbourne Tullamarine International airport (MEL).
Hubs: Hobart (HBA); Sydney Kingsford Smith International airport (SYD); Canberra International airport (CBR); Adelaide airport (ADL); Darwin International airport (DRW); & Perth airport (PER).
Domestic, Scheduled Destinations: Adelaide; Ballina; Brisbane; Broome; Cairns; Canberra; Coffs Harbour; Coolangatta; Darwin; Hamilton Island; Hervey Bay; Hobart; Launceston; Mackay; Melbourne; Newcastle; Perth; Proserpine; Rockhampton; Sunshine Coast; Sydney; & Townsville.
International, scheduled destinations: Apia; Auckland; Christchurch; Nadi; Nuku'alofa; Port Vila; Raratonga; & Wellington.
The ongoing Boeing (TBC) machinists strike has forced Australia's Virgin Blue (VOZ) to postpone the launch of its V Australia (VAZ) transpacific service between Sydney (SYD) and Los Angeles (LAX) planned for December 15. Boeing (TBC) has informed customers that it cannot predict the duration of the nearly month-old strike by 27,000 members of the International Association of Machinists (IAM) and Aerospace Workers and therefore cannot guarantee delivery of (VAZ)'s first 777-300ER. Three 777-300ERs destined for the startup are close to completion with one already painted. That airplane cannot be delivered, however, because its galleys are running late and need to be fitted, which only can be done by machinists (MT).
(VOZ) advised the Australian Stock Exchange that the only responsible course of action was to introduce a revised launch date for (VAZ)'s (SYD) - (LAX) service of February 28, 2009. The March 1 start of Brisbane - (LAX) flights will not be affected, it said. V Australia (VAZ) will be contacting all passengers booked to travel over the Christmas/New Year period to offer alternative arrangements and has suspended sales for the December 15 - February 28 period. It is offering three options: Rebooking after March 1 with a A$200 travel credit on Virgin Blue (VOZ)'s domestic network, a full refund or an alternative flight on a competing carrier at (VOZ)'s expense. Booking on another airline will be costly, as the return promotional fares started at just A$999, well under the published one-way fare on Qantas (QAN) of A$2,321/$1,844 for travel on December 15.
Jetstar Airways (IMU)'s new (CEO), Bruce Buchanan, downplayed the impact of Tiger Airways (TGR) in the Australasian market (as Tiger Australia (TAU)), saying that his focus is on "bigger [low-cost] competitors with large fleets, that have a significant impact on the market. There is only one or two in the Asian region and I don't put Tiger (TGR)/(TAU) in that category."
Virgin Blue (VOZ) operates more than >50 airplanes and has local market presence, while Kuala Lumpur-based AirAsia (ASW) has 70 airplanes and has been frank about its ambitions.
Tiger Australia (TAU) currently operates just five airplanes in Australia, but last year, (TGR) ordered 50 A320s for Asian operations. It has been coy on where they will be deployed, but short-term Australian plans indicate a fleet of eight airplanes. "We do take them seriously and we welcome competition. It's good for the economy and it's healthy for us - - keeps us nimble," Buchanan said.
Jetstar (IMU)'s fleet comprises 31 A320 family airplanes with 68 more deliveries planned through 2013. It now serves 20 Australian destinations and 29 internationally from Australia, and hubs in Singapore and Hanoi. Buchanan said it is "well placed to sustainably put more low fares into the marketplace." Passenger numbers in the year ended June 30 rose +32.3% year-over-year to 5.8 million, while (RPK)s traffic soared +47.5% to 6.41 billion, with load factor at 71% LF.
November 2008: Virgin Blue (VOZ) announced an upgrade of its premium economy product designed to lure more passengers from Qantas (QAN). Launched in March, premium economy now will feature free meals, drinks (including alcohol), and seat back In-Flight Entertainment (IFE).
December 2008: Qantas (QAN) and Virgin Blue (VOZ) welcomed the Australian government's draft National Aviation Policy Statement or "Green Paper" as "forward-looking and balanced." The new policy allows a single overseas interest to take up to a 49% stake in Qantas (QAN), up from 25%. The government also said it will relaunch its effort to select a site for a new Sydney airport, well away from the so-called "Sydney basin." Australian Minister for Infrastructure, Transport, Regional Development & Local Government, Anthony Albanese said the possible changes would allow (QAN) to pursue consolidation and alliances. The carrier revealed that it is in merger discussions with British Airways (BAB).
(QAN) (CEO), Alan Joyce said the government's proposed initiatives were "broad-ranging, forward-looking and would play an important role in providing a coordinated framework for the Australian aviation industry over the long term." He also lauded the government's recognition that "perhaps more than any other country, Australia's economic prosperity is closely tied to the viability and competitiveness of its aviation sector."
Virgin Blue (VOZ) (CEO), Brett Godfrey called the Green Paper "a responsible approach," noting his approval that the government "openly and frankly acknowledged Australian airlines are often required to operate on a playing field heavily slanted by foreign government ownership, subsidies and other forms of industry assistance."
The Green Paper is the second of three steps in development of Australia's first comprehensive national aviation policy. Submissions or comments are due February 27. The government released an Issues Paper last April and, after industry consultation, will present the final White Paper in late 2009.
E170-100LR (00255, VH-ZHF "Little Miss Sunshine Coast") delivery.
January 2009: Domestic airfares in Australia have plummeted -30% in a year to the lowest point in 17 years, according to data released by the government's Bureau of Infrastructure, Transport and Regional Economics (BITRE). While the lowest fares fell dramatically, domestic business class (C) fares eased just -1% but are expected to decline more significantly in the coming months as the economy continues to slow and business confidence sinks to its lowest level since surveys were launched in 1998. An Australian Chamber of Commerce and Industry (ACCI) investor confidence survey found that expectations for early 2009 were even worse than 2008. (ACCI) said business conditions and sales were at their lowest levels since 1998 when the survey began and profitability was at its lowest level in seven years. The (BITRE) Domestic Air Fare Index is not expressed in actual fares but as an index. The January 2008 index of 56.1 is almost half that of January 1993.
Fares also are expected to nosedive on international routes from February, with some Australia-based airline executives describing forward bookings as "extremely weak." On the Pacific, V Australia (VAZ) is due to launch 777-300ER service on February 27 with fares starting at A$1,199/$827.65 return. Delta Air Lines (DAL) will launch Atlanta - Los Angeles - Sydney flights on July 1. On shorter-range routes, both Tiger Airways (TGR)/(TAU) and AirAsia X (ASX) are offering significant discounts, with a A$206 one-way Melbourne - Singapore fare and a A$199 one-way ticket to Kuala Lumpur from Melbourne and Perth.
February 2009: Virgin Blue Holdings blamed a one-off charge associated with establishment of its V Australia (VAZ) subsidiary and its fuel hedges for a net loss of -A$101.4 million/-$65.3 million in the six months ended December 31 compared to a +A$113.3 million profit in the year-ago semester. The loss was in line with market expectations and due almost entirely to -A$80.8 million in hedging losses and a nonrecurring A$60 million charge related to (VAZ). It occurred despite a +11.5% year-over-year increase in revenue to A$1.35 billion and a +13.2% rise in passenger numbers to 9.2 million. Operating costs jumped +30% to $1.35 billion due mainly to a +50% surge in fuel expense to A$400 million.
(CEO), Brett Godfrey was upbeat on the airline's operations, highlighting an operating profit of +A$60 million. "Our underlying business is robust and we have identified savings of -A$90 million and we expect Virgin Blue (VOZ) itself to break even this year," he said. (VOZ) also announced a salary cut of -30% for executives, a hiring freeze and a -10% pay cut for board members. It unveiled a -8% capacity reduction. Godfrey emphasized that it had cleared its books, faced no refinancing obligations or covenant issues of its existing facilities and that its fleet of six 777-300ERs that will fly for (VAZ) is financed. He also noted that (VAZ)/(VOZ) is cashed up with "reserves of over >A$500 million" and has identified A$150 million in possible asset sales.
(VOZ)'s six-month traffic rose +12% to 10.5 billion (RPK)s against a +16.1% climb in (ASK)s to 13.1 billion. Load factor fell -3 points to 80.2% LF. Yield was down -4% to A10.27 cents but underlying unit costs excluding fuel fell -1.2% to A6.55 cents.
Earlier this month, Virgin Group President, Richard Branson said that (VOZ) "didn't need to go to the markets for cash" like Qantas (QAN) did. Its exposure to currency hedges will decline significantly from 74% cover to 35% for the 2009 to 2010 fiscal year. Godfrey expects domestic operations to break even this financial year.
Virgin Blue (VOZ) watered down speculation that 400 employees will lose their jobs but announced a capacity cut flagging an end to some of the heavily discounted airfares being seen in the region. (VOZ) plans to reduce capacity by -8% over the next 12 months by withdrawing five of its 76 airplanes from service. A spokesperson said that "some of the 400 staff affected" will be transferred to its new long-haul airline V Australia (VAZ). Like many carriers, (VOZ) also is looking at options such as job sharing, part-time work and leave without pay to minimize the job losses.
Withdrawing airplanes from service, however, indicates an end to any further price discounting, with airlines preferring not to fly than to sell seats at unsustainable prices. (CEO), Brett Godfrey said that "discount fares were difficult to sustain with the current level of capacity" in the market and that (VOZ) would do everything it could to lift fares by removing some capacity.
V Australia (VAZ), which launches service with a Sydney - Los Angeles flight on February 27, has reduced fares to the USA by up to -60%. Australian carriers have responded to the economic downturn by lowering average fares by -30% over the past year, offering the lowest fares seen in the country for 17 years.
(VOZ) is expected to announce further details of its restructuring plans at its half-year results announcement.
(VOZ) will launch daily service from Townsville to Canberra, Gold Coast, Rockhampton and Cairns, as well as a Canberra - Hobart flight, on April 6 aboard E170s/E190s.
Australia and New Zealand authorities are moving toward scrapping customs checks for trans-Tasman flights, which could reduce return fares by approximately -A$100/-$64.44 and provide a travel stimulus, airline executives said. Flights between the countries would be reclassified as domestic. Passengers would either partially clear customs before boarding via automated border processing gates or customs checks would be eliminated entirely. Officials have been in discussions for more than >18 months, but the sticking point has been Australian Customs Service concerns that New Zealand's screening was not as robust. The issues have been addressed and working groups are closing on the fine detail of the scheme.
Virgin Blue (VOZ) (CEO), Brett Godfrey said that removal of the Australia Passenger Service Charge of A$48.42 on one-way fares would be "a great boost to travel" across the Tasman Sea. A Jetstar Airways (IMU) spokesperson said that the Qantas Group airline supports the concept and highlighted that even a 1% change in fares resulted in a 2% change in behavior in passenger movement. "Without doubt this would be a great stimulus to travel between Australia and New Zealand," the spokesperson said, adding, "We are now working with the various parties to refine a secure and seamless system."
March 2009: The Australian government will conduct an inquiry into security at the nation's airports amid allegations that it is well below recommended standards. Federal Home Affairs Minister, Bob Debus said the inquiry will be independent of the Australian Federal Police, who are responsible for airport security, and initially will focus on the events surrounding the brutal killing of a man at Sydney Airport on March 22 in what appears to have been part of a feud between two biker gangs. The Police Federation of Australia union said that according to the Australian Federal Police annual report, staffing numbers at airports are up to -35% fewer than recommended.
(BOC) Aviation (SIL) finalized a sale-and-leaseback deal with Virgin Blue (VOZ) for one 737-800 delivered late last year and 737-800s scheduled for delivery in the 2009 fourth quarter. The airplanes will be leased for an average of 10 years each. (SIL) has a portfolio of 104 airplanes and has +70 more on firm order for delivery through 2013.
Nav Canada and Sensis Corporation were selected by Airservices Australia to participate in Airservices' National Tower Program Technology Project, intended to "provide controllers with immediate access to flight data and voice communications and to monitor the airfield and surrounding airspace." Under the agreement, Nav Canada and Sensis technology will be used to upgrade Air Traffic Control (ATC) towers at Melbourne, Adelaide and Rockhampton, "with the potential for additional towers." The solution also will be installed at the Airservices Melbourne Air Traffic Centre and Learning Academy.
(VOZ) grounded five 180-seat 737-800s and cancelled 28 daily flights from its schedule of 300. The moves affect 400 workers, who will be offered leave without pay, job sharing and shorter hour options. (VOZ) emphasized that it has not withdrawn from any destinations but only consolidated flights. (CEO), Brett Godfrey said in a statement that the reductions are a prudent interim capacity management plan necessitated by the continued and forecast deterioration in domestic demand. "We have been very open with our team, outlining in a realistic manner the current operating environment and what we have to do to keep our business sustainable during the economic downturn," he said.
April 2009: Virgin Blue (VOZ) launched daily flights from Townsville to Cairns, Canberra, Gold Coast and Rockhampton and daily, Canberra - Hobart service, all aboard E170/E190s. (VOZ) will operate seasonal service to Denpasar from Sydney (2x-weekly, June 1 - October 2) and Melbourne (3x-weekly, June 2 - October 2) and a 3x-weekly, Adelaide - Denpasar frequency June 3 - October 2.
(VOZ) delayed the delivery of two 361-seat 777-300ERs for its V Australia (VAZ) operation because of the slowdown in air travel. The fifth and sixth 777-300ERs have been rescheduled from 2010 to 2011 and 2012. In a statement to the Australian Stock Exchange, (VOZ) said it still planned to take the "seventh" 777 in the second half of 2010. (VAZ) has three 777-300ERs in service operating from Brisbane and Sydney to Los Angeles and it expects to start Sydney - Perth - Johannesburg service this year. (VOZ) advised that "the extension of the delivery schedule for (VAZ)'s new airplanes was a prudent action in the current operating environment." At the same time, it ordered five more 180-seat 737-800s to replace leased airplanes.
E190-100 IGW (00262, VH-ZPM "Emma-Braer"), delivery for Pacific Blue (PBI) operations.
June 2009: Virgin Blue (VOZ) (CEO), Brett Godfrey revealed that (VOZ) will make further cuts to its domestic flying schedule in the fiscal year starting July 1. He said it plans to cut capacity -2.4% but warned that further cuts of up to -5.5% may be needed later. (VOZ) cut -8% of its capacity and up to -400 jobs in March by grounding five 737s.
(VOZ) will migrate to Navitaire's "New Skies" platform later this year. (VOZ) has been using Navitaire's "Open Skies" system since its launch. The move will provide (VOZ) with a number of new capabilities and services, such as flexible ancillary service offerings for car rental, travel insurance and other products integrated directly into the booking flows; code sharing and other interline options; comprehensive day-of-departure passenger services through advanced guest recognition capabilities, and the provision of customer-centric data throughout the entire passenger life cycle. It also will include New Skies' proprietary Intelligent Seating capabilities, which allow passengers more control over their seating choices.
(VOZ) had been slated to be one of the launch customers for (IBS) Software Services' next-generation reservations system, aiRES. But in early 2007, Brett Godfrey, (VOZ)'s (CEO), startled the aviation community during a press conference on company earnings by blurting uncharacteristically that "we have written off $9 million spent on a new reservations system that may never see the light of day." Both Godfrey and (VOZ) then clammed up on the topic for the next two years.
July 2009: Virgin Group Chairman, Richard Branson will sink another A$80 million/$65.3 million into Brisbane-based Virgin Blue (VOZ) as part of a deeply discounted (31%) A$231 million capital raising designed to bolster a balance sheet buffeted by one-off costs and souring hedges. The unveiling of the fully underwritten increase, which ended weeks of speculation and careful denials, coincided with (VOZ)'s revelation that it expects to record a first-ever loss of -A$165 million for the fiscal year ended June 30 despite projecting a breakeven operating result. Last year it made +A$95 million.
Meanwhile, (CEO), Brett Godfrey announced that he will step down next year after 10 years at the helm.
The Virgin Group's investment will ensure that it retains its 25.5% stake in (VOZ), but its 20% underwriting of the retail offer may result in its stake increasing to 30.2% depending upon shareholder interest. Underwriters are Credit Suisse (Australia) and J P Morgan Australia. The Virgin Group will participate in the institutional placement and rights offer and sub-underwrite a portion of the retail offer.
Godfrey was quick to assure the markets and industry that the Virgin Blue group of airlines is trading at a breakeven position, a considerable accomplishment under current economic conditions. "Virgin Blue (VOZ) and Pacific Blue (PBI) have contributed a +A$35 million profit, but that has been offset by a -A$30 million loss from V Australia (VAZ), the group's new long-range international airline," he explained. The company's balance sheet loss includes A$60 million in one-off establishment costs for V Australia and yet-to-be-realized fuel and currency hedging losses.
Godfrey said (VOZ) will break even next year and insisted that the capital raising was not to fund losses. "We are cash flow positive overall and after the capital raising our cash balances will increase to A$700 million," he said.
According to the Centre for Asia Pacific Aviation (CAPA) (COO), Derek Sabudin, Branson's move offers an insight into his intentions. "I think Sir Richard had to do something to assist in the equity raising and this sends a strong sign to the market," he said. "We [CAPA] still think they will need a strong airline partner in the longer term, but this capital raising certainly takes the pressure off in the short term."
Delta Air Lines (DAL) and Virgin Blue (VOZ) announced, subject to regulatory approval, a joint venture (JV) that will expand both carriers' reach in the USA, Australia and the South Pacific through an alliance involving route and product planning, code sharing and loyalty program linkage. According to Delta Executive VP Network & Revenue Management, Glen Hauenstein, the airlines will be stronger and more effective competitors as a result. "For (DAL), this agreement is a significant milestone in the expansion of our global network in the Australia and South Pacific region," he said. (VOZ) (CEO), Brett Godfrey said the carriers "make a tremendously exciting fit."
In advance of the (JV), the two are moving to implement code shares, frequent-flyer program reciprocity and lounge exchange privileges. They are filing antitrust immunity applications with the USA Department of Transportation and the Australian Competition and Consumer Commission (ACCC). That application will face stiff opposition in Australia. In January, Air Canada (ACN)'s and Air New Zealand (ANZ)'s application to code share on Vancouver - Sydney (SYD) and Vancouver - Auckland services was rejected by the (ACCC) following protests from Qantas (QAN).
(DAL) launched a daily, Los Angeles (LAX) - (SYD) service on July 1 with a 777-200LR while V Australia (VAZ), a Virgin Blue (VOZ)subsidiary, began daily (LAX) - (SYD) flights aboard a 777-300ER in February. (VAZ) since has launched a Brisbane - (LAX) service and plans to operate Melbourne - (LAX) from September 1.
The partnership builds on the relationship between (VOZ) and Northwest Airlines (NWA) prior to (NWA)'s acquisition by (DAL).
August 2009: Virgin Blue Holdings blamed the tough operating environment, one-off charges and nonrecurring costs for a -A$160 million/-$133.2 million loss in the fiscal year ended June 30, Virgin Blue Airlines' worst-ever result and a reversal from the +A$97.7 million surplus reported the prior year. The loss occurred despite a +12.8% lift in revenue to A$2.63 billion. Last month, (VOZ) announced a A$231 million capital raising and said it expected a full-year loss of approximately -A$165 million. At that time, (VOZ) highlighted the one-time costs associated with the launch of its V Australia (VAZ) subsidiary.
(VOZ) said the long-haul arm (VAZ) suffered an operating loss of -A$64 million through its first four months and the segment contributed a -A$124 million loss when one-time costs were added.
Group airlines flew 21.8 billion (RPK)s traffic during the year, up +16%, against a +19.3% rise in capacity to 27.8 billion (ASK)s. Load factor fell -0.6 point to 79.1% LF. Yield was down -5.3% to 10.84 Australian cents and unit cost excluding fuel eased 4% to 6.53 Australian cents. It expects a breakeven result in the current fiscal year.
Australia and New Zealand are expected to move toward common air travel borders this month, cutting red tape and airfares.
New Zealand Prime Minister, John Keys and Australian Prime Minister, Kevin Rudd are expected to announce the streamlining of arrivals and departures that may see trans-Tasman flights operating from domestic terminals and elimination of departure taxes and duplication of quarantine, customs and security checks.
The changes are expected to boost tourism between the two countries, which already see approximately 1 million visitors cross the Tasman each year in both directions. Under the proposals, passengers leaving Australia for New Zealand would not pay the A$47/$39.10 passenger movement charge and the countries would recognize each other's security, immigration and quarantine checks in a similar way to members of the European Union (EU).
Jetstar Airways (IMU) (CEO), Bruce Buchanan said previously that common border arrangements could reduce fares by at least -30% on services from the east coast of Australia to New Zealand, where taxes and charges make up a large part of the fare. Tourism Australia, however, suggests a -20% reduction is more likely.
It is understood that passports still will be required and passengers will make a one-stop customs and immigration check at the departing airport in a similar way to the USA/Canada arrangement implemented six years ago.
Virgin Blue (VOZ) will launch 2x-weekly, Perth - Phuket service from November 14.
Lufthansa Systems (LHS) signed a long-term deal with Virgin Blue (VOZ) for implementation of its (LHS) LoadControl System.
September 2009: Virgin Blue (VOZ) is hoping to take advantage of the global downturn to order up to 50 new 737s at "bargain prices," (CEO), Brett Godfrey said. "Now is a great time to buy. We are in the market because the market is right and we don't want to miss the opportunity," he said. (VOZ) operates 65 airplanes comprising 50 737-700s/-800s and 15 EMB-Jets. It now is considering the 737-900ER, which can seat up to 215 passengers, 26 more than its largest current airplane.
Godfrey said he is not satisfied with (VOZ)'s 30% share of the Australian domestic market and hopes to boost it to 50% in the long term. That goal is one of the objectives of (VOZ)'s "Airline of the Future" project, which he said may include subdividing the cabin into more classes.
The 737s would feature premium economy (PY) and classic economy (Y) seats up to the over-wing exit rows and lower-cost seating with reduced pitch toward the back of the airplanes. "This would give us virtually a three-class configuration," he said. "Just putting an extra row of seats in the back lowers costs by -3%."
(VOZ) had been looking at starting a new airline to combat Jetstar Airways (IMU), but Godfrey said that option is fading and the airline favors introducing a third class onto its existing fleet. It also is planning more premium features offering greater differentiation from its standard economy (Y) product. He said that the premium economy product also will be rolled out across the regional international fleet, which operates under the Pacific Blue (PBI) brand.
(VOZ) suffered a company-record -A$160 million/-$138.7 million loss in its fiscal year ended June 30.
Australia's airlines were thrown into chaos as unprecedented dust storms in Sydney (SYD) and Brisbane (BNE) and wild weather in Melbourne (MEL) closed and restricted runway operations at the country's three largest airports. The disruption was caused by an intense low-pressure frontal system with winds up to 100 miles per hour that blew 75,000 tonnes of dust per hour over New South Wales and southern Queensland. Pollution levels were 1,500 times normal, the highest on record, and visibility fell to as low as 100 ft. Hundreds of flights were diverted, disrupted or canceled.
Sydney was closed to virtually all traffic for several hours from 6 am to 9.30 am and then was restricted to operations from the single cross runway instead of the normal two parallel runways because of the westerly wind responsible for blowing the dust from inland (NSW). Problems were compounded as airplanes diverted to (MEL) and (BNE) and crews timed out. (MEL) and (BNE) also experienced significant delays as high winds closed runways and effectively cut airport capacity in half. When (SYD) reopened, movements were reduced from 50 per hour to 16.
"We planned for a lower air traffic rate because of the weather pattern that was emerging, but the winds and the dust were much worse than forecast," an Airservices Australia spokesperson said. "There was an 80-minutes hold to land in (SYD), aborted landings everywhere and at one stage the alternate for (BNE) was Canberra."
E190 (00312, VH-ZPN "Kanga Blue"), delivery.
October 2009: Virgin Blue Airlines (VOZ) is increasing capacity on its new Perth - Port Hedland route, which is popular with mining companies.
737-8FE (36606, VH-VUR), delivery.
November 2009: Virgin Blue (VOZ)’s lower-cost Pacific Blue (PBI) unit is now flying 737-800s from Perth to Phuket, Thailand, twice weekly, joining existing Perth flights to Bali in Indonesia. Next month, (VOZ)'’s long haul unit V Australia (VAZ) will launch Phuket service from Brisbane and Melbourne.
737-8FE (36607, VH-VUS), delivery.
December 2009: Virgin Blue (VOZ) (CEO), Brett Godfrey told shareholders that (VOZ) is back in the black after a difficult period at the beginning of 2009 and now is forecasting a profit for the fiscal year ending June 30, 2010. "We are currently profitable again," he told the airline's annual general meeting in Brisbane. "We expect that if the market continues as it is at the moment we'll be able to maintain that guidance through to June 30 ."
Godfrey said (VOZ) has enjoyed a +20% growth in higher-yield corporate and government business, and that despite initial setbacks its V Australia (VAZ) long-haul subsidiary is recording loads of 75% LF. He added that the group sees no reason to alter its original prediction that (VAZ) would be profitable within 18 months of its February 2009 launch.
In August, Virgin Blue Holdings blamed the tough operating environment, one-off charges and nonrecurring costs for a -A$160 million/-$144 million loss in the 2008 to 2009 fiscal year, the company's worst-ever result and a reversal from the +A$97.7 million surplus reported the prior year.
(VOZ) has started recruiting its next (CEO), with Godfrey set to retire in December 2010. He did not elaborate on configuration changes expected for (VOZ)'s domestic fleet or the imminent order for up to 70 737s and six 777-200LRs.
Delta Air Lines (DAL) and Virgin Blue (VOZ)/V Australia (VAZ) will commence code share flights next month as part of the partnership that gained approval from Australian competition authorities. (VOZ)/(VAZ) will place its code on (DAL) flights from Los Angeles to Cincinnati, New York (JFK), Orlando International and Salt Lake City beginning January 18, and (DAL) will code share on (VOZ) service from Sydney to Brisbane and Melbourne from February 15. The airlines also will offer reciprocal airport lounge and loyalty program benefits. The USA Department of Transportation has approved the code share and is reviewing the application for antitrust immunity.
737-8FE (36608, VH-VUT "Yabba Dabba Blue"), delivery.
January 2010: SEE ATTACHED FLIGHT INTERNATIONAL ARTICLE ON (ADS-B) IN AUSTRALIA - - "VOZ-2010-01 ADS-B."
February 2010: Virgin Blue (VOZ) estimated that its profit before tax and exceptional items for the fiscal year ending June 30 will be +A$80 to +A$110 million/+$69.2 to +$95.2 million, compared to a loss of -A$93 million in the prior year. (CEO), Brett Godfrey told shareholders in November that (VOZ) expected to return to the black this year. It said the new forecast reflects better operating conditions in the first half of the fiscal year, including a -27.6% year-over-year drop in average fuel price to $92 per barrel and a recovery in domestic yields from the lows seen in early 2009. However, it warned that the unpredictable pace of the economic recovery and competition from Jetstar Airways (IMU) and Tiger Airways (TGA) could put pressure on yields for the remainder of the year.
(VOZ) (CEO), Brett Godfrey watered down speculation raised in Australia that (VOZ) may join the SkyTeam (STM) alliance. In a USA Department of Transportation filing related to the proposed transpacific code share between (VOZ) subsidiary V Australia (VAZ) and Delta Air Lines (DAL), there is mention that "it is possible that Australian-origin passengers might benefit if (VAZ) were to join the (STM) alliance." Through a spokesperson, Godfrey said, "I've never been in favor of joining alliances. In terms of joining that alliance (STM), I wouldn't be pushing that barrow." He is retiring from the airline this year and did concede that his successor may have a different view. However, the Virgin group of airlines has steered well clear of alliances, although Singapore Airlines (SIA), which holds 49% of Virgin Atlantic Airways (VAA), belongs to the (STM) alliance.
Lufthansa Technik (DLH) (LTK) and Virgin Blue (VOZ) signed a three-year exclusive agreement "on an innovative repair procedure" for (CFM56-7B) engines powering 737NGs operated by the carrier and its Pacific Blue (PBI) and Polynesian Blue (PLY) entities. All repair work will be carried out by (LTK)'s Airline Support Teams based at its Melbourne subsidiary (LTQ) Engineering, a joint venture (JV) between (LTK) and Qantas (QAN). According to (LTK), the agreement covers inspection and replacement of variable stator vane bushings.
The Virgin Blue Airlines Group, which comprises Virgin Blue (VOZ), Pacific Blue (PBI) and V Australia (VAZ), signed an in-principle agreement to buy 50 737s after recording a net profit of +A$62.5 million/+$56.1 million in the fiscal first half ended December 31, 2009, reversed from a -A$101.4 million loss in the year-ago period.
(CEO), Brett Godfrey said that the company also will upgrade its premium economy product and introduce a new "economy Lite" class on its 737s with less legroom in an effort to compete with Jetstar Airways (IMU) and Tiger Airways (TGR).
According to (VOZ), deliveries of the 737s start from 2011 and run for seven years, but Boeing (TBC) said only that "we look forward to working with Virgin Blue (VOZ) to finalize the order."
Godfrey told media that while favorable fuel prices certainly contributed to the result, the company posted a -4.5% decrease in (CASK) excluding fuel through cost-saving initiatives and enhanced productivity across the network. "Any way you cut it, to continue to achieve cost reductions while we continue to grow our business and position it to rapidly and fully exploit any improvement in economic conditions demonstrates . . . the resilience of our model," he said. But he cautioned that the operating environment is "still uncertain" and concerns remain around the pace of the global economic recovery. Still, the company plans to expand.
Virgin Blue (VOZ)'s half-year revenue rose +12% to A$1.51 billion. Operating expenses were up +4.5% to A$1.41 billion and yield improved +11.4% to A11.72 cents. The short-haul operation's pre-tax profit was A$108 million, up +126% year-over-year, while V Australia (VAZ) delivered a pre-tax loss of -A$39 million, reflecting the difficult long-haul environment and start-up costs. On short-haul operations, traffic (RPK)s lifted +5.7% to 11.2 billion and capacity increased +6.1% to 14 billion (ASK)s, reducing load factor -0.1 point to 80.1% LF. V Australia posted 2 billion RPKs, 2.4 billion ASKs and a load factor of 81.1% LF.
Going forward, (VOZ) said V Australia (VAZ) will be profitable later this year in line with original guidance. The group estimates pre-tax profit (excluding ineffective cash flow hedges and non-designated derivatives) for the full fiscal year will be +A$80 to +A$110 million.
March 2010: In a clear sign that it is moving its product offering up-market, Virgin Blue (VOZ) confirmed widespread speculation and appointed former Qantas (QAN) Executive General Manager, John Borghetti, 54, to take the reins from retiring founder & (CEO), Brett Godfrey.
Borghetti, who will take over in May, would not discuss his plans, but it is widely believed he will endorse a plan to buy 777-200LRs for the group's V Australia (VAZ) subsidiary in order to launch nonstop, Perth - London Heathrow (LHR), and Sydney - (SYD) New York (JFK) service. (LHR) - (SYD) also is a possibility.
Qantas (QAN) examined the concept in 2005 but decided against it since the airplane would have been a new model in its fleet. (VAZ), however, is a 777-300ER operator, has six options to exercise and could take delivery of a 777-200LR next year.
One analyst said that the ultra-long-range concept would be a "perfect fit" for Borghetti and Virgin Blue (VOZ). "Non-stops are what Australian business (C) traffic wants and Qantas (QAN) will not be able to match V Australia (VAZ). It will give them a clear point of difference going forward," the Sydney-based analyst said.
Virgin Group Chairman, Richard Branson, who is (VOZ)'s largest shareholder, has said that he has "serious interest" in operating non-stop between (LHR) and Perth, and that the service almost certainly would be a joint V Australia (VAZ)/Virgin Atlantic Airways (VAA) flight.
At Qantas (QAN), Borghetti developed one of the world's best domestic economy (Y) products and it is expected that he will reshape (VOZ)'s domestic offering with an upgraded and dedicated premium economy aimed at the corporate market as the airline strives to capture more high-yield traffic. He resigned from (QAN) last May.
According to the Centre for Asia Pacific Aviation Chairman, Peter Harbison, "Yield management is an art and [Borghetti] is an artist. Borghetti is a positive for Virgin Blue (VOZ)."
Godfrey said that (VOZ) will start taking delivery of 50 737NGs next year. The airplanes will feature three economy cabins - - premium economy, economy, and economy lite. The latter option will feature less legroom and is designed to compete with budget carriers.
Air New Zealand (ANZ), Virgin Blue (VOZ), and Qantas (QAN), together with Boeing (TBC) and Australia's Defence Science & Technology Organization, commissioned a world-first study aiming to accelerate the development and commercialization of sustainable aviation fuel in the region. The initiative, which commences in Sydney, is being convened by the Australian and New Zealand group of the Sustainable Aviation Fuel Users Group and will be carried out by the Commonwealth Scientific Industrial Research Organization, Australia's peak scientific body. The study will build on international developments but focus on the unique advantages and challenges. In particular it will look at barriers to a commercial and scalable sustainable aviation fuels industry.
April 2010: Air New Zealand (ANZ) confirmed it is in discussions with Australia's Virgin Blue (VOZ) regarding a transTasman alliance. (ANZ) said that the airlines "have been in ongoing discussions for several months but no agreement has been reached." The Tasman covers all routes between Australia and New Zealand and currently is served by 11 airlines operating everything from A380s to 737s. The potential alliance is similar to an attempt by Qantas (QAN) and (ANZ) to create a joint transTasman airline in 2003, which failed after competition regulators killed the deal. A potential (ANZ) - Virgin Blue (VOZ) alliance likely would not be as far-reaching, stopping short of creating a new airline. According to the Centre for Asia Pacific Aviation (CAPA), (ANZ) has a 38% market share on Tasman routes, followed by (QAN) with 21%, Virgin Blue regional international arm, Pacific Blue (PBI) with 18%, Jetstar (IMU) with 11%, Emirates (EAD) with 9%, and other airlines sharing 3%.
Later, (ANZ) and the Virgin Blue Airlines (VOZ) Group announced their intention to seek regulatory approval to create an alliance on transTasman routes. Both airlines, which have had legal teams working on the alliance proposal for some months, said applications will be filed with the Australian Competition and Consumer Commission and the New Zealand Ministry of Transport shortly. Regulators are expected to take six months to review the applications.
(VOZ) (CEO), Brett Godfrey and (ANZ) (CEO), Rob Fyfe told media that the alliance would deliver transTasman passengers cheaper airfares, increased frequency, better connections, loyalty scheme reciprocity and expanded lounge access. "We believe we are well matched and the timing is good and incoming (CEO), John Borghetti thoroughly supports this strategy,” he added. Borghetti will take the reins from founding (CEO), Godfrey this month.
The proposed alliance will connect regional centers in Australia and New Zealand but only as part of a Tasman journey and does not include domestic-only travel in either Australia or New Zealand. Fyfe added that "the agreement is not a signal of intention by (ANZ) or (VOZ) to take a shareholding in the other." He said the number of seats flown on the Tasman by the alliance carriers would grow more quickly than without the alliance. "By combining our New Zealand customer base with the strong market presence that Virgin Blue (VOZ) has in Australia, additional flights and new routes will make sense much more quickly," he explained.
The Virgin Blue Group finalized a contract with Boeing (TBC) for up to 105 737NGs, confirming and adding to a February Memo of Understanding (MOU) in a deal that is the biggest in the Australian company's 10-year history and the largest Boeing (TBC) has landed in 18 months.
The agreement includes 50 firm 737-800s with options to convert orders to either the 737-700 or 737-900, plus 25 options and 30 purchase rights. Deliveries are scheduled to run from June 2011 through 2017.
(VOZ) said that a "significant percentage" of the airplanes are intended for replacement of its existing narrow body fleet, which numbers approximately 52 737s, while the remainder will be deployed on new routes and to boost frequency where demand dictates.
(CEO), Brett Godfrey noted that "securing this agreement now places Virgin Blue (VOZ) in a strong position to prepare for steady future growth as domestic and short-haul markets recover. It will also ensure a turnover of airplanes to maintain the youngest fleet of modern airplanes which is crucial for maintaining our commitment to on time performance and the lowest cost base possible."
He added that the company "was fortunate to see the opportunity, and be in a position to take advantage of the downturn in the market as we did back in 2001, to secure a long-term future supply of airplanes on attractive commercial terms." He said (VOZ) "expect[s] to finalize our funding arrangements for these airplanes shortly."
The 737s will be delivered with (TBC)'s new "Sky" interior and a three-class economy layout featuring premium economy, standard economy and economy "lite" with a reduced seat pitch.
Virgin America (VUS), Virgin Blue (VOZ) and its V Australia (VAZ) subsidiary announced the linkage of their loyalty programs. (VUS) and (VOZ) also announced a cabin crew (CA) exchange program set to start in October.
2 737-8FEs (36609, VH-VUU "Lady Blue-Tiful;" 3288-37821, VH-VUV "Ruby Blue"), deliveries.
June 2010: The Virgin Blue Group advised the Australian Stock Exchange of sharply lowered earnings expectations for its fiscal year ending June 30, blaming in part fares that have fallen by -10% in the past month.
The airline group is forecasting a 2009 to 2010 net profit before taxes and exceptional items in the range of A$20 million/$16.9 million to A$40 million. In February, it estimated a pre-tax profit for the full fiscal year of A$80 million to A$110 million. The new notice came as the Australian Bureau of Infrastructure, Transport and Regional Economics issued a report stating that Australian domestic airfares have fallen by -55% since 1992.
In a statement, Virgin Blue (VOZ) said: "We have continued to see rapid deterioration and increased volatility in the operating environment, particularly in respect of the leisure segment both domestically and internationally." (VOZ) added that there had been an "unexpected and sudden decline in consumer confidence" in the last month and the "decline in demand has coincided with a period of increased industry capacity." It said short-haul domestic business was expected to make net profit before taxes and exceptional items "in the order of $100 million" in fiscal 2009 to 2010.
The group, which comprises Virgin Blue (VOZ), Pacific Blue (PBI), and V Australia (VAZ), recorded a net profit of +A$62.5 million in its fiscal first half ended December 31, 2009. That result was a significant reversal from the -A$101.4 million loss in the year-ago period that included the start-up costs for V Australia (VAZ).
Virgin Blue Group (CEO), John Borghetti launched a radical shakeup of Virgin Blue (VOZ), including plans to cut routes where it faces stiff competition from Jetstar (IMU) and Tiger Airways (TGR), while chasing a +15% increase in corporate business on key routes from Perth.
Borghetti, a former Qantas (QAN) executive, who took over the company last month, outlined the restructuring of (VOZ) and its international offshoot V Australia (VAZ), revealing that the airlines will abandon routes such as Phuket and Fiji, and possibly decrease domestic New Zealand services, to stem losses. The news followed the company's stunning revelation to financial markets in Australia that its profit for its fiscal year ending June 30 will be just +A$20 million/+$16.9 million, -A$40 million, down from the A$80 million to A$110 million previously forecast.
Virgin Blue (VOZ), which pioneered low-cost travel in Australia in 2001, has found itself squeezed over the past two years between Qantas (QAN) at the top end of the market, and Jetstar (IMU) and Tiger (TGR) at the lower end. Borghetti said that he wants to reposition the carrier as a business-focused airline with a revamp of its premium economy product.
He said it plans to offer more rewards to loyal customers, although no details are yet available. However, to alter its rewards program it needs to upgrade its reservations system, and a new res system will not be in place until December. He said high-yield routes such as Perth to Melbourne and Sydney would come in for special attention, with dedicated premium cabins and enhanced in-flight services.
Borghetti also is keen to bring all of the group's airlines under one brand. Until now, an agreement between Virgin Atlantic Airways (VAA) and its 49% stakeholder Singapore Airlines (SIA) has prevented the Virgin Blue (VOZ) name being used outside Australia. This necessitated the formation of Pacific Blue (PBI) for regional overseas routes and V Australia (VAZ) for long-haul routes. It is believed that if (VOZ) no longer is positioned as a low-cost airline, (SIA) may be more amenable to allowing the brand to go international.
Borghetti hinted the airline could cut back on growth and not renew leases on nine airplanes in the next year.
Virgin Blue (VOZ) is planning to change its name, introduce a business class (C) and operate domestic routes with larger airplanes in a bid to become a more potent, direct competitor to Qantas (QAN).
The proposed revamp will be presented to the airline's board. New (CEO), John Borghetti envisions taking Virgin Blue (VOZ) from a low-fares-only airline to one that offers all seating classes, the sources said. The shakeup is designed to position it for a head-to-head battle with (QAN) for a significant stake in the Australian business passenger market.
The major changes being contemplated go well beyond the restructuring Borghetti unveiled earlier this month. (VOZ) had planned to offer an enhanced premium economy product, but Borghetti apparently dumped that concept and now is committed to what company officials are calling a "business class (C) for today." The move coincides with an upgrade in the reservation system that will allow the airline to reward its frequent flyers better and work with major carriers such as Singapore Airlines (SIA).
Centre for Asia Pacific Aviation Chairman, Peter Harbison commented that (VOZ)'s premium economy "hasn't worked" because there is no clear distinction between it and the rest of the cabin. "They have to do something to lift yield." "Fundamentally, (VOZ)'s premium economy is failing to wrest corporate and business travel away from the Qantas Group, leaving (VOZ) at the bloody low end of the market."
Borghetti's preferred new name for the carrier is believed to be "Virgin Australia," which would bring Virgin Blue (VOZ), V Australia (VAZ), and Pacific Blue (PBI) under one brand. Until now, an agreement between Virgin Atlantic Airways (VAA) and its 49% stakeholder (SIA) has prevented the Virgin Blue name from being used outside Australia. Sources in Brisbane confirm that several Virgin Blue airplanes already are scheduled for repainting.
The Virgin Blue (VOZ) group will direct its Pacific Blue (PBI) offshoot toward international service, abandoning its domestic New Zealand business, in the first phase of a network review. Another airline in the group, V Australia (VAZ), will focus on long-haul, dropping its service to Fiji, which Pacific Blue (PBI) will pick up.
Jetstar (IMU), a budget airline operated by Virgin Blue (VOZ) rival Qantas (QAN), will take advantage of (VOZ)’s retreat by increasing its New Zealand business, adding two A320s to the eight it already operates in the country.
New (VOZ) (CEO), John Borghetti is reorganizing the complex Virgin Blue (VOZ) group, which, despite its modest size, has four operating brands but no consistent market position as either a full-service or budget carrier. Another decision, not yet announced, is to adopt a single name for the group, which also includes Polynesian Blue (PLY), connecting Samoa with Australia and New Zealand.
In New Zealand, a country with 4.4 million people, Pacific Blue (PBI) has competed against Jetstar (IMU) and Air New Zealand (ANZ). The Qantas (QAN) group has pulled its Qantas-brand operation out of New Zealand, leaving Jetstar (IMU) to handle the market. Redeploying capacity from the New Zealand domestic market, Pacific Blue (PBI) will increase frequencies between Brisbane and Hamilton, New Zealand; Denpasar, Indonesia, and Melbourne; Phuket, Thailand, and Perth; Brisbane and Dunedin, New Zealand, and between Christchurch and Melbourne.
V Australia (VAZ) will boost its 777-300ER services between Sydney and Los Angeles and from Melbourne to Los Angeles, Johannesburg and Phuket. The changes will be introduced by December. New Zealand
domestic services end in October.
August 2010: The Virgin Blue Group has announced a tie-up with Etihad Airways (EHD) to reach travelers in Europe and the Middle East, and has also decided to add A330s and sell its Embraer EMB-170s. Two A330-200s will be coming in May 2011 on lease from BOC Aviation (SIL) and will be deployed on the Sydney - Perth route. (VOZ) plans to add more A330s in the future, says Virgin Blue (VOZ) (CEO), John Borghetti.
The company’s strategy is “simple and logical,” says Borghetti,
adding, “We have to move away from depending so much on the leisure
market” and do more to attract the corporate market.
(VOZ)’s E170s are being sold, although it will keep its Embraer (EMB) E190s. “Our customers love the E170 but the airplane is just not suitable for the type of missions that we do.” (VOZ) has six E170s and 15 E190s. No more E170s are on order, but (VOZ) has three E190s on order.
Borghetti outlined the group’s new strategy the same day as it disclosed to the Australian stock exchange a profit before tax of +A$34.3 million/+$30 million for the fiscal year ending June 30. This compares to a loss of -A$226 million the year before. Revenue rose +13% to A$2.98 billion. Borghetti attributes the profit to the strength of its Australian domestic business. Its long-haul subsidiary V Australia (VAZ) lost -A$42.8 million before interest and tax. He says (VAZ) is withdrawing from Johannesburg, South Africa;
Phuket, Thailand, and Nadi, Fiji. Instead, it will only serve two international destinations — - Abu Dhabi and Los Angeles. It already serves Los Angeles and plans to launch a 3x-weekly Sydney - Abu Dhabi service in February followed by a 3x-weekly Brisbane - Abu Dhabi service in February 2012. Borghetti says (VAZ) only has a small fleet so it makes sense to focus on two key destinations where it gets passenger feed from airline partners. (VAZ) has a tie-up with Delta Air Lines (DAL) and Virgin America (VUS), and Borghetti says it will start code sharing with Etihad (EHD) on October 1, subject to regulatory approval. The deal involves code sharing on routes to Europe and the Middle East, linking the airlines’ frequent flyer programs and pitching together to win corporate accounts, says Borghetti. (EHD), meanwhile, will place its code on Virgin Blue (VOZ) flights. As a consequence, the Virgin Blue Group will sever its ties with Emirates (EAD), while (EHD) will end its relationship with Qantas Airways (QAN), confirms Borghetti and (EHD) (CEO), James Hogan.
Hogan says (EHD) is siding with the Virgin Blue Group because the Qantas Group’s Jetstar (IMU) plans to serve Middle East destinations.
Borghetti says even though the Virgin Blue Group will have bilateral relationships with (DAL) and (EHD), there is no reason why it could not also join a major international alliance. “I would never rule anything out,” he says when asked about the prospect of the Virgin Blue Group joining the Star (SAL) Alliance or SkyTeam (STM) Alliance.
Borghetti also raised the issue of the group’s four disparate brands: Virgin Blue (VOZ), for domestic; Pacific Blue (PBI), for short-haul international; Polynesian Blue (PLY), for its Samoan joint-venture; and V Australia (VAZ), for its long-haul operation. He said the group has yet to resolve this issue but, ideally, he would like to see just one brand across the group.
September 2010: Australia’s main competition watchdog says it intends to deny a joint venture (JV) application by Virgin Blue (VOZ) and Air New Zealand (ANZ). The planned (JV) would have covered routes between New Zealand and Australia. The draft ruling by the Australian Competition and Consumer Commission (ACCC) is the second regulatory blow in as many days for Virgin Blue (VOZ), after the USA Transportation Department issued a preliminary ruling denying antitrust immunity (ATI) for a joint venture (JV) with Delta Air Lines (DAL) on USA - Australia flights. “The (ACCC) considers that the [(ANZ) - (VOZ)] alliance is likely to reduce competition in the market for trans-Tasman air passenger services,” (ACCC) Chairman, Graeme Samuel said. The application had been strenuously opposed by airports, which argued it would result in higher prices. (ANZ) said it is reviewing the draft decision, and expected to respond to the (ACCC)’s concerns “once they are identified.” The (ACCC) is accepting submissions through September 24.
(ANZ) has for many years been looking for ways to make its operations more viable in the hotly contested trans-Tasman market. In 2003, it tried to form an alliance with Qantas (QAN), but this was disallowed by New Zealand and Australian authorities. In its latest decision, the (ACCC) says Virgin Blue (VOZ) is “a significant competitor” to (ANZ) in this market. There are “a number of trans-Tasman routes where the alliance raises competition concerns.” These routes account for about a quarter of passenger traffic between the two countries, representing more than one million passengers a year. The two airlines argued that a joint venture (JV) would allow them to compete more effectively against the (QAN) - Jetstar (IMU) combination. The (ACCC) admits that a (JV) would provide Virgin Blue (VOZ) and (ANZ) with “a broader and more integrated network.” However, it also notes it is “not convinced that this necessarily creates a dynamic in the trans-Tasman market that is fundamentally more competitive than a scenario where (VOZ) and (ANZ) continue to operate independently and pursue their publicly stated aims to develop their business models.”
Last year, the (ACCC) gave its blessing to the (JV) proposed by the Virgin Blue Group and (DAL), which are both new entrants in the USA - Australia market and have much smaller operations than the incumbents (QAN) and United Airlines (UAL). The (ACCC) says the (ANZ) proposal warranted different treatment because it involves the number one and three competitors on trans-Tasman routes, and offers “substantially less significant connectivity benefits for consumers.”
Virgin Group Chairman, Richard Branson hinted on Australian radio that Virgin Blue (VOZ) might terminate all flights to New Zealand following the (ACCC)’s draft ruling rejecting the planned Virgin Blue (VOZ) - Air New Zealand (ANZ) alliance. "If we can't have an arrangement like that, there is a possibility that we would pull out of the transTasman," Branson said. The Virgin Group is (VOZ)'s largest shareholder. The (ACCC) said that a (VOZ) - (ANZ) alliance would lead to reduced competition on transTasman routes.
(VOZ) has already withdrawn from New Zealand domestic routes with its Pacific Blue (PBI) because of steep losses and Branson told Australia's ABC radio that flights from Australia to New Zealand under the (PBI)'s brand “were losing money.”
“We think if we can work together with (ANZ), we can offer a proper competitor to Qantas (QAN)," Branson argued. "If we're a strong competitor, we can keep fares low and we can keep (QAN) honest and we believe that's in the interest of the traveling public.” He warned that flights between the countries could become more expensive if (QAN) and Jetstar (IMU) are left to dominate.
Branson told ABC he is baffled by the (ACCC)'s decision: "They have said in the past that (QAN) and (ANZ) can form an alliance if they so wished. And (QAN) has alliances with British Airways (BAB); they have alliances with numerous airlines around the world. All we ask the (ACCC) to do, is to treat Virgin Blue (VOZ), which is a much smaller airline, in an equal way and allow us to create a level playing field."
After two rejections from regulators, the Virgin Blue Group scored a much-needed win when the Australian Competition & Consumer Commission (ACCC) gave temporary approval for its alliance with Etihad Airways (EHD). That approval follows a green light for the tie-up from the United Arab Emirates (UAE).
Virgin Blue Group (CEO), John Borghetti said the (ACCC) approval means the airlines can begin selling airfares between Australia and Abu Dhabi with connections on Etihad (EHD)'s extensive network from October 1. Passengers can earn and burn points on each other’s respective networks from this date. “This is an important milestone as we create a global international network, greater competition on the international landscape and benefit our guests with great value fares, better scheduling and more choice,” Borghetti said.
Together, Etihad (EHD) and Virgin Blue (VOZ) long-haul subsidiary, V Australia (VAZ) will move toward a total of 27 weekly flights between Abu Dhabi and Australia (including 2x-daily, Abu Dhabi – Sydney service; daily, Melbourne – Abu Dhabi flights; and 6x-weekly, Abu Dhabi – Brisbane service).
Subject to final approval, V Australia (VAZ) will operate 3x-weekly, Sydney – Abu Dhabi services from February 2011, and 3x-weekly, Brisbane – Abu Dhabi services from February 2012, aboard 777-300ERs.
Earlier this month, the (ACCC) issued a draft ruling rejecting Virgin Blue Group’s bid to forge an alliance with Air New Zealand (ANZ).
737-8FE (37823, VH-VUX "Sydney Sirem"), ex-(N1786B), and 737-8KG (39449, VH-VUW "Bellina Ballerina"), (DAE) leased, deliveries.
October 2010: Virgin Blue (VOZ) estimated an 11-day disruption caused by a computer system failure cost up to A$20 million/US$19.7 million, and (VOZ) is signaling it would seek compensation from its information technology (IT) providers. The outage of its Navitaire/Accenture-hosted reservations and check-in system resulted in “severe interruption to (VOZ)’s business,” (VOZ) said, adding it would be “actively pursuing all avenues" to recover this cost.
The shutdown occurred September 26, but “normal production environment” was not restored until October 6. (VOZ) was forced to cancel dozens of flights during this period, as well as accommodating stranded passengers. Before the computer setback occurred, (VOZ) says it had seen an improvement in general trading conditions
when compared to the previous year.
The Virgin Blue Group appointed United Airlines (UAL) veteran, Sean
Donohue as its new Head of Operations, effective October 25. The areas he will oversee include Flight Operations; Engineering; Safety; and Ground Operations. Donohue worked at United (UAL) for 24 years.
December 2010: Qantas (QAN)’s market stranglehold in Australia is set for the most dramatic shakeup since the demise of Ansett (ANS) in 2001, after the Australian competition regulator, the Australian Consumer and Competition Commission (ACCC) gave approval for Virgin Blue (VOZ)’s comprehensive alliance with Air New Zealand (ANZ), reversing a draft decision rejecting the partnership and a draft OK tick for its tie-up with Etihad Airways (EHD). The two alliances underpin a (VOZ) makeover set to be unveiled next month.
Starting in January, (VOZ) will roll out a series of innovations that will reshape the airline with business class (C), new branding, larger airplanes, color scheme, uniforms and on board offering intended to reshape and reposition the airline.
The alliance with (ANZ), which was previously initially rejected by the (ACCC), involves a coordinated approach to a range of issues including pricing, revenue management, schedules, capacity, and routes flown.
However, Samuel warned that the (ACCC) is still worried that the alliance may negatively affect competition on a number of routes between Australia and New Zealand. To counter this, it "imposed a number of conditions on authorization which are designed to address these competition concerns."
The (ACCC) says there is a narrow margin between public benefits and public detriments in this case. Because of this, it has opted for a shorter authorization period. It usually grants approval for five years, but has limited the (ANZ) - (VOZ) authorization until December 31, 2013. This is the major point of difference between the airlines’ application and the (ACCC) ruling. If there are no applications for review, the alliance may begin January 7, the (ACCC) says. While this is too soon for the two carriers to launch their partnership, it should be operational sometime in the first quarter of 2011, an (ANZ) spokesman says. The airlines intend to coordinate their approach to pricing, revenue management, capacity, schedules and routes. The routes subject to capacity guarantees include flights between Wellington and Sydney, Brisbane and Melbourne, as well as Auckland - Brisbane, Dunedin - Brisbane, and Queenstown - Sydney services. On these routes, the airlines must increase capacity in line with the rate of economic growth or the increase in passenger demand between the two countries. Irrespective of these indicators, current capacity must at least be maintained in these markets.
(VOZ) is awaiting a final determination from USA regulators on its proposed alliance with Delta Air Lines (DAL). The (DOT) tentatively disapproved the deal; however, the Australian government is now lobbying for approval on (VOZ)'s behalf. The (ACCC) has approved that tie up.
The New Zealand Ministry of Transport followed the (ACCC), giving the green light to the alliance between Virgin Blue (VOZ) and Air New Zealand (ANZ).
Rockwell Collins said Virgin Blue Airlines (VOZ) selected its suite of scaleable avionics for its order of 50 firm 737NGs, 25 options and 25 purchase rights. (VOZ) is the first airline to select the Rockwell Collins (SAT-2200) (SATCOM) system.
Virgin Australia is part of the Virgin Blue Group. The company is accepting flight crew (FC) applications. The company requires any pilot (FC) to hold a current Australian passport or a current overseas passport with an unrestricted right to work in Australia and hold an Australian (ATPL) or Australian (CPL) with examination passes for all Australian (ATPL) Academic requirements.
737-8KG (39450, VH-VUY "Byron Beauty"), delivery.
January 2010: Virgin Blue (VOZ) operates low-cost carrier (LCC), scheduled domestic trunk routes between Australia's capital and regional cities, and internationally between Australia, New Zealand, and the Pacific Islands.
Employees = 4,693.
(IATA) Code: DJ - 856. (ICAO) Code: VOZ (Callsign - VIRGIN).
Parent organization/shareholders: Toll Holdings (62.42%); The Virgin Group (25.26%); & private investors (12.32%).
Owns: Pacific Blue Airlines (PBI) (100%); Polynesian Blue Airlines (PLY) (49%), and V Australia (VAZ) (100%).
Alliances: Air Austral (AUX); Airlines of Papua New Guinea; Skywest Airlines (SKD); V Australia (VAZ); and Virgin Atlantic Airways (VAA).
Main Base: Brisbane International airport (BNE); & Melbourne Tullamarine International airport (MEL).
Hubs: Adelaide airport (ADL); Canberra International airport (CBR); Darwin International airport (DRW); Hobart International airport (HBA); Perth airport (PER); & Sydney Kingsford Smith International airport (SYD).
Domestic, Scheduled Destinations: Adelaide; Albury; Ballina Byron; Brisbane; Broome; Cairns; Canberra; Coffs HCoast; Coolangatta; Darwin; Frazer Coast; Gold Coast; Hamilton Island; Hervey Bay; Hobart; Kalgoorlie; Karratha; Kununurra; Launceston; Mackay; Melbourne; Mildura; Newcastle; Newman; Perth; Port Hedland; Port Macquarie; Proserpine; Rockhampton; Sunshine Coast; Sydney; Townsville; & Whitsunday Coast.
International, scheduled destinations: (New Zealand): Auckland; Christchurch; Dunedin; Hamilton; Queenstown; & Wellington; (Orient): (Indonesia): Denpasar; (Thailand): Phuket; (Pacific Islands): (Cook Islands): Raratonga; (Fiji): Nadi; (Samoa): Apia; (Solomon Islands): Honiara; (Tonga): Nuku'alofa; (Vanuatu): Port Vila; (Papua New Guinea): Port Moresby.
Virgin Blue Holdings said it expects its first-half net profit to be down more than -50% owing to the Queensland floods, a slowdown in consumer spending and disruptions to the airline's check-in system last September. (VOZ) said it expects to post a net profit of between +A$23/+$22.9 million and +A$26 million for the six months ending December 31, 2010. It earned a +A$62.5 million profit in the prior period. In addition, (VOZ) said the outage of its Navitaire reservations, check-in and operating systems in late September cost (VOZ) approximately A$15 million to A$20 million.
"The slowdown in consumer spending experienced across the discretionary retail and leisure sector, together with the recent floods in the eastern states, could have a significant impact on trading conditions over the coming months," (VOZ) said. "The extent of this impact on revenue cannot be accurately estimated at this time but could be up to A$40 million."
(VOZ) is continuing to assess the impact of the flooding in Queensland, including disruption to operational and administrative activities. "Operations to all ports are returning to normal, including the corporate headquarters in Brisbane, which were evacuated during the floods," (VOZ) said.
With more than >31% of the domestic market and a modern fleet of 68 Next Generation 737-700 and 737-800 series jet airplanes plus Embraer E190 and E170 airplanes, Virgin Blue Airlines (VOZ) currently operates over >2,100 flights a week to 24 Australian cities and centers and eight international destinations incorporating ports in New Zealand, Fiji, Vanuatu, Tonga, Samoa, and the Cook Islands. (VOZ)’s total annual passenger numbers exceeds >15-million travellers.
Air New Zealand (ANZ) said it will acquire a substantial shareholding in Virgin Blue (VOZ), a strategic move that has been long-anticipated. (ANZ) notified the Australian and New Zealand stock exchanges that it plans to acquire between 10% and 14.99% of (VOZ), but (ANZ) (CEO), Rob Fyfe emphasized it has no intention of making a takeover bid for (VOZ).
(ANZ) has received Australian Foreign Investment Review Board approval to purchase up to 14.99% of (VOZ), a shareholding level that will keep total foreign ownership within the statutory limit of 49%. The UK-based Virgin Group holds 26% of (VOZ).
"The investment in (VOZ) is part of (ANZ)'s strategy to develop scale and reach in this region," Fyfe explained. "The Tasman alliance with (VOZ) was the first step in this strategy. This investment cements the emerging relationship between our two airlines."
Last month, New Zealand regulators gave the final green light to an (ANZ)/(VOZ) alliance that covers three areas of cooperation: A broad code share arrangement covering all Tasman sectors and domestic sectors forming part of a connecting Tasman journey; a revenue allocation agreement supported by a joint TransTasman Network Planning and Revenue Management Team; and a reciprocal frequent flier and lounge access agreement.
737-8FE (39921, VH-VUZ), delivery. 2 A330-243s (365, VH-FZA; 372, VH-FXB), delivery for V Australia (VAZ) operations.
February 2011: The Australian Competition and Consumer Commission (ACCC) formally approved the alliance between the Virgin Blue Group and Etihad Airways (EHD). It follows the interim approval granted on September 23. Together, (EHD) and Virgin Blue (VOZ)’s long-haul subsidiary, V Australia (VAZ), will move toward a total of 27x-weekly flights between Abu Dhabi and Australia — including 2x-daily, Abu Dhabi – Sydney service; daily, Melbourne – Abu Dhabi flights; and 6x-weekly, Abu Dhabi – Brisbane service.
(VOZ) CEO, John Borghetti said the decision was excellent news for Australian travelers and for the tourism industry. “We are very pleased to receive final (ACCC) approval for our exciting new partnership with (EHD), which will see us establishing an international hub in Abu Dhabi,” said Borghetti. “This will allow us to offer corporate and leisure travelers a very attractive one-stop service to more than >14 destinations in Europe, as well as the United Kingdom, the Middle East, and Africa.”
The alliance is a key part of our strategy of building an international network with global coverage that complements our core domestic business. It will also provide guests with more opportunities to earn frequent flier points and have more extensive lounge access.”
The Virgin Blue (VOZ) Group launched its inaugural V Australia (VAZ) flight to Abu Dhabi, becoming the first Australian airline to operate to the Middle East in more than >20 years. Qantas (QAN) has used the Middle East only as a refueling stop prior to the introduction of the 747-400 and no Australian airlines have ever used that region as a hub to Europe and Africa.
The new service is a key plank in the group’s alliance with Etihad Airways (EHD); together the carriers will move toward 27x-weekly services between Abu Dhabi and Australia.
V Australia (VAZ) will operate three Sydney - Abu Dhabi services per week from this month and three Brisbane - Abu Dhabi services per week by February 2012, using 777-300ERs.
Virgin Blue (VOZ) announced it will build its first wide body hangar for 777s and A330s and associated infrastructure at Sydney airport as part of a new Engineering Maintenance base to support growing operations.
Virgin Blue Holdings reported a net profit of +A$23.8 million for the fiscal first half ended December 31, 2010, down -62% from +A$62.5 million in the year-ago period as a series of one-time events ravaged the bottom line. Underlying net profit before interest and tax declined -8.5% to +A$97 million/+$97.3 million, while pre-tax profit plunged -62.6% to +A$36.8 million. (VOZ) recorded a +11.8% increase in revenue to A$1.70 billion, but operating expenses lifted +14.6% to A$1.61 billion.
(VOZ) also committed to 18 ATR 72s to expand its regional network and replace its small fleet of Embraer E170s. The first four ATR 72s will arrive in the middle of this year with a further four to arrive next year. They will be wet-leased from code share partner, Perth-based, Skywest Airlines (SKD) under a previously-announced agreement to cooperate on a regional network.
Virgin Blue Group (CEO) & Managing Director, John Borghetti said the result demonstrated that the core business is sound. “This is a very solid result considering the impact of a number of significant one-off factors, including the Navitaire Information Technology (IT) system outage, restructuring costs, and unusually severe environmental events in Australia and New Zealand. Given the adversity we have faced, to have achieved these outcomes reflects the outstanding efforts and focus of our employees over the last half.” (ASK)s increased +14% to 18.7 billion, and (RPK)s lifted +14.4% to 15.1 billion. Load factor declined -0.6 points to 80.3% LF.
Commenting on the decision to introduce the ATR 72, Borghetti said it "is the best airplane to operate on regional routes throughout Australia. It provides the greatest fuel efficiency and passenger comfort for this category of airplanes." Separately, he announced that (VAZ)’s two new A330s will feature a business class (C) product to be deployed on the lucrative Sydney - Perth route from May and will operate a triple-daily return service.
(VOZ) is accepting flight crew (FC) applications. (VOZ) requires the pilot (FC) to hold a current Australian passport or a current overseas passport with an unrestricted right to work in Australia and hold an Australian (ATPL) or Australian (CPL) with examination passes for all Australian (ATPL) Academic requirements.
737-8FE (39921, VH-VUZ), (RBS) leased ex-(N1786B), and A330-243 (365, VH-XFA), ex-(A6-EAB), plus E190-100AR (412, VH-ZPQ), ex-(PT-TBK).
March 2011: Virgin Blue (VOZ) will drop the “Blue” from its brand name (to "Virgin Airlines") opting instead for a streamlined brand more in line with its push to lure business (C) customers. But the airline's boss, former Qantas (QAN) Executive General Manager, John Borghetti, has stopped short of dumping the Virgin brand completely as the airline tries to re-define its place in the local market.
The airline’s brand consultant, Hans Hulsbosch, told "The Australian" that while the Virgin brand would continue to anchor the airline, "Blue" would no longer be part of it. The re-branding strategy is also expected to bring to an end, several Virgin brand extensions in the region, including Pacific Blue (PBI), Polynesian Blue (PLY) and V Australia (VAZ).
Research has found that as Virgin moved to capture the business-class (C) market dominated by Qantas (QAN), its brand was being held back by perceptions among business (C) travelers that it was purely a budget airline. The fragmentation of the brand is due to a 2000 agreement between Virgin Atlantic (VAA) and Singapore Airlines (SIA), which prevents the Virgin brand being used outside Australia by Virgin Blue (VOZ). However, the new branding may get around this issue.
Virgin Airlines (VOZ) warned that it will post a -A$30 million/-$30.3 million to -A$80 million net loss for its full fiscal year ending June 30, owing to natural disasters and soaring fuel prices. (VOZ) cautioned it was likely to have "a challenging second half" when it announced a modest +A$23.8 million net profit for its fiscal first half ended December 31.
(VOZ) said that its annual fuel bill has risen by +A$50 million in just the past six weeks. It added that the Christchurch earthquake in late February is expected to have a -A$15 million impact on the bottom line, while the Queensland floods and Cyclone Yasi will have a combined impact of approximately -A$50 million.
(CEO), John Borghetti said: "We have witnessed an unprecedented number of significant events in an extraordinarily short period of time, including natural disasters and a sharp spike in fuel prices. These events have severely impacted consumer confidence, resulting in a slower than usual recovery in tourism."
(VOZ) is in the process of re-branding and will drop the “Blue” from its name.
May 2011: Virgin Blue (VOZ) and its associate airlines: — V Australia (VAZ) and Pacific Blue (PBI) — have been re-branded as "Virgin Australia" (VOZ)/(VAZ)/(PBI) after Singapore Airlines (SIA), 49% owner of Virgin Atlantic Airways (VAA), reached an agreement with Virgin Group Chairman, Richard Branson regarding the use of the Virgin name on international services to/from Australia. SEE ATTACHED PHOTO - - "(VOZ)-2011-05-VIRGIN AUSTRALIA A330."
At the re-branding announcement in Sydney, Branson promised to revolutionize air travel in Australia with the new look, just as he did 10 years ago when Virgin Blue (VOZ) effectively put Ansett (ANS) out of business with its low fares. But this time his sights, and those of Virgin Australia (VOZ)/(VAZ)/(PBI) (CEO), John Borghetti, are squarely set on Qantas (QAN) and its corporate clients. Virgin Australia (VOZ)/(VAZ)/(PBI) is being pitched as an upmarket product.
"I'm absolutely thrilled with the new look and feel of Virgin Australia (VOZ)/(VAZ)/(PBI)'s domestic product and I know it will shake up the Australian travel market on an even larger scale than it did 10 years ago," Branson said. The new makeover, both exterior and interior, is styled after Virgin America (VUS), which has won a string of awards for its zany approach and product, including the Air Transport World (ATW) 2011 "Passenger Service" award.
Branson said that the new "brand, livery, product and service offering will help to transform Virgin Australia (VOZ)/(VAZ)/(PBI) into a contemporary dynamic airline with a product to compete with the best."
Cornerstone of the revamp will be using the A330 for transcontinental routes fitted with 27C business-class seats. Additionally, 8C business-class seats will be installed on the airline's fleet of 737-700s/800s.
The first two airplanes sporting the new livery — a 737-800 and an A330 — touched down in Sydney. Borghetti said the consolidation of the brand into one was a pivotal point in the airline’s "game change program." "Virgin Australia (VOZ)/(VAZ)/(PBI) will be the airline of choice for all market segments. We will do this by bringing the magic back to flying," said Borghetti. "We have kept all the great attributes for which Virgin Blue (VOZ) is renowned: The 'can-do' attitude, the competitive pricing and the genuine friendly service. And we have elevated it to a new level."
As part of the deal to buy 49% of Virgin Atlantic (VAA) in 2000, (SIA) was given a veto on the use of the "Virgin" brand in the Asia/Pacific region outside of Australia, forcing Virgin Blue (VOZ) to brand its international operations Pacific Blue (PBI) for regional services and V Australia (VAZ) for long-haul operations. Analysts are speculating that Virgin Australia (VOZ)/(VAZ)/(PBI) will now form an alliance with Singapore Airlines (SIA) to fast track Southeast Asia services.
The Virgin Blue Group will expand its code share agreement with Delta Air Lines (DAL) to include more destinations in the USA and within Australia and New Zealand. This will allow Virgin Australia (VOZ)/(VAZ)/(PBI) passengers to connect from Los Angeles to San Francisco, Las Vegas, Atlanta, and Detroit, as well as the current New York and Orlando. (DAL) will code share on flights from Sydney to Perth, Adelaide, Canberra, Auckland, and Christchurch.
Reversing its previous stance, the USA Department of Transportation (DOT) tentatively approved antitrust immunity (ATI) for Delta Air Lines (DAL) and Virgin Australia (VOZ)/(VAZ)/(PBI) to coordinate services between the USA and Australia.
The proposed transpacific alliance between (DAL) and (VOZ)/(VAZ)/(PBI), formerly the Virgin Blue Group, received approval from the Australia Competition and Consumer Commission (ACCC) in December 2009 but the (DOT) tentatively rejected (ATI) last September. The (DOT) said that "(DAL) and its partners had made substantial changes from their previous application, addressing concerns that immunity would provide only limited benefit to consumers."
The tentative ruling is open to formal objections for two weeks, after which the (DOT) can finalize (ATI). The Australian government had pushed the (DOT) to reverse its tentative rejection. "Antitrust immunity (ATI) will enable (DAL) and Virgin Australia Airlines (VOZ)/(VAZ)/(PBI) to provide a seamless product to customers and more options for travel between the USA and the South Pacific," (DAL) said in a statement. "The airlines will collaborate through code sharing, coordinating route and product planning and extending frequent flyer program benefits and lounge access to customers of both carriers."
It added, "The alliance will create a comprehensive, fully integrated network able to serve thousands of city-pairs in North America and the South Pacific. (DAL) alone serves a single point in Australia, Sydney, and Virgin Australia's international airline, V Australia (VAZ), flies only to Los Angeles. The antitrust immunized (ATI) alliance will allow the airlines to fully cooperate on network planning and distribution."
(VOZ)/(VAZ)/(PBI) (CEO), John Borghetti stated, "The (DAL) alliance is a key plank in (VOZ)/(VAZ)/(PBI)'s strategy to build an international network of airline partners that offers global coverage."
The (DOT) noted that in the revised (ATI) application, (VOZ)/(VAZ)/(PBI) "expanded the scope of the alliance to include service to more passengers. It also said that it had completed an upgrade of its reservation system to ensure compatibility with Delta (DAL)'s system, providing consumers with a more seamless travel network. In addition, the carriers said they would serve more cities and offer more capacity at the start of their alliance than they originally proposed, providing more benefits to consumers at the outset."
Air New Zealand (ANZ) and Virgin Australia Airlines (VOZ)/(VAZ)/(PBI) said they will revamp their networks across the Tasman Sea linking Australia and New Zealand as part of their alliance, which was approved in December. The alliance connects (ANZ)’s domestic network of 26 cities to (VOZ)’s domestic network of 31 domestic destinations, offering the largest Australasian route network for transtasman travelers.
The new network will be effective for the upcoming northern winter 2011 schedule and tickets will be on sale from July when the code share commences. Under the new network, (ANZ) will operate approximately 70% of capacity and (VOZ)/(VAZ)/(PBI) will operate 30%, reflecting the market share the airlines had prior to the alliance. The integration will see significant adjustment and harmonization of flights to ensure more convenient schedules for passengers.
(ANZ) Group General Manager Australasia Airline, Bruce Parton said that since the airlines had received regulatory approvals in December, dedicated teams from both airlines had worked to optimize the networks. “The changes better match capacity to demand and in many instances this means a greater range of flight times by removing wingtip flying, as well as better connections to domestic Australia and domestic New Zealand flights,” said Parton, noting, “As indicated last year, we are actively looking at a couple of potential new transtasman routes, which we will likely make a decision on before the end of the year.”
June 2011: Australian and New Zealand air travelers faced another day of travel disruptions as Perth Airport on the west coast was affected by the ash cloud from Chile’s Puyehue-Cordon Caulle Volcano eruption. Qantas, (QAN), Virgin Australia (VOZ) and a host of smaller domestic operators canceled up to 200 flights from the capital of Western Australia as the ash cloud crossed the southwest corner of the country.
According to the "Associated Press," more than >70,000 customers in Australia and New Zealand have been affected by the cancellations since the weekend (June 10/11). So far, more than >1,000 flights have been canceled since the volcano erupted on June 4.
The far-reaching alliance between Virgin Australia (VOZ) and Singapore Airlines (SIA) could significantly alter Australian airline market dynamics, according to analysts. Peter Harbison, (CEO) of the Sydney-based Centre for Asia Pacific Aviation (CAPA), described the partnership as potentially a "seismic shift in market power" given that (VOZ) is aligning with one of the world's most respected airlines. Subject to regulatory approvals, (VOZ) will code share on all (SIA) flights throughout Asia and India, while its frequent flyers will be able to use their points on any flights in (SIA)'s network. (SIA), in turn, will sell seats on all (VOZ) domestic flights.
The deal rounds out (VOZ)'s push to create global alliances to offer its passengers the same choices as Australian market leader Qantas (QAN). (VOZ) over the last year has re-launched itself with a business-class (C) offering and cemented cooperation agreements with Delta Air Lines (DAL), Etihad Airways (EHD) and Air New Zealand (ANZ) as well as carriers affiliated with the global Virgin Group.
(VOZ) (CEO), John Borghetti said that the alliance with (SIA) is a "huge step forward for (VOZ)," adding that he did "not expect any regulatory hurdles" to impede establishment of the partnership. "This alliance is good for consumers and is pro-competition," said Borghetti. "With this new alliance we can now offer our passengers over >400 destinations around the world." The alliance with (SIA) accounts for 70 of those destinations.
Borghetti explained that the close link with (SIA) would help attract more corporate accounts to (VOZ) and assist in (VOZ)'s goal of lifting its share of that business sector from 12% currently to 20%.
However, (QAN) (CEO), Alan Joyce said that he was "adamant that (QAN) would not give up any of its market share," leading analysts such as Harbison to forecast a fare war in the Australian market.
(VOZ) and (SIA) will also offer passengers reciprocal frequent flyer program benefits and lounge access and seamless connections. The two airlines will file an application for authorization with the Australian Competition and Consumer Commission (ACCC) to enable them to cooperate across a broad range of commercial functions.
(SIA) (CEO), Goh Choon Phong said the partnership presents a significant opportunity for (SIA) to drive growth, product innovation and network connectivity. "It will enhance the attractiveness of Australia as a travel destination while also opening up new horizons for travelers from Australia," he commented.
It is expected that regulatory approval will be completed by the end of the year.
SEE ATTACHED PHOTO - - "VOZ-2011-06-ALLIANCE WITH (SIA)."
July 2011: Virgin Australia (VOZ) announced that it is partnering with Sydney-based Renewable Oil Corporation, Vancouver-based Dynamotive Energy Systems Corporation and Australia’s Future Farm Industries Co-operative Research Centre (CRC) to develop a sustainable aviation biofuel that benefits the Australian farming community and the environment. In a world first, the consortium will use innovative fast pyrolysis technology developed by Dynamotive to process mallees, a eucalypt tree that can be grown sustainably in many parts of Australia.
The partnership brings together companies with special expertise in growing, harvesting and processing feedstock into aviation fuel to support the development of a full scale commercial plant in Western Australia.
Virgin Australia (VOZ) (CEO), John Borghetti said that “over the past few years (VOZ) has been working with stakeholders across the industry to research and develop bio-derived renewable fuels that can be used to progressively replace conventional aviation fuels. We believe this new project has great potential given the results with the technology and the availability of this unique Australian feedstock. “It is also particularly attractive to (VOZ) because it aligns with our commitment to supporting the Australian economy and environment, and encouraging Australian innovation.”
Dynamotive has invested in excess of >A$100 Million/$107 million and more than >10 years of work in developing its fast pyrolysis technology from bench-scale through to commercial-scale plants in Canada. The plants are equipped to make pyrolysis oil for fuels and also produce biochar, for soil improvement and carbon sequestration.
Dynamotive (CEO), Andrew Kingston said: “We are very excited to join (VOZ), Renewable Oil Corporation and the (CRC) in this initiative and provide our technology. We have a great opportunity to develop a sustainable industry in Western Australia capable of producing second generation fuels that do not require food sources and have positive effects in land and water management.”
Leading the commercialization of mallees is the (CRC), a national (R&D) joint venture (JV) with experts in breeding, growing and harvesting these trees.
(CRC) (CEO), Kevin Goss said that its “research shows that mallees can be planted in balance with profitable crop and livestock production in Australia’s wheatbelt region. As well as becoming a source of biomass for renewable energy, they offer protection from wind erosion, help to avoid dryland salinity and provide improved livestock shelter. They even provide habitat for native birds and mammals.”
More than >1,000 farmers have planted mallees in belts on their farms, mainly in Western Australia. Later this year, the (CRC) partnership will bring the world’s first hardwood biomass harvester to Western Australia for wide-scale demonstrations.
Renewable Oil, which identified the mallee tree as a promising biofuel feedstock, is Dynamotive’s Australian partner and develops biofuel projects in Australia. The consortium is finalizing plans for a demonstration unit that will make bio-fuels for testing, certification and public trials. The demonstration unit is intended to be operational in 2012, followed by the construction of a commercial-scale plant, which could be operational as early as 2014.
August 2011: Virgin Australia (VOZ) posted a loss of -A$66.6 million/-$69.75 million for its fiscal year ended June 30 compared to a profit of +A$21.3 million in the year-ago period. (VOZ) blamed natural disasters in its home state of Queensland, the radical revamp of its product and the introduction of new airplanes for the loss.
Virgin Blue (VOZ) and its associate airlines (V Australia (VAZ) and Pacific Blue (PBI)) were re-branded as "Virgin Australia" in May.
More than >50% of (VOZ)’s domestic operations are to/from or within Queensland, which was devastated by floods from late December through January and cyclone Yasi. The result also includes an A$36 million in unrealized foreign exchange loss due to the rising Australian dollar. “The financial year 2011 was a year of enormous challenge and significant change as we began repositioning the company to ensure a more stable financial future. These financial results reflect the impact of an unprecedented series of external events and reinforce the importance of our game change program strategy to increase our share of the more resilient corporate and government markets” (CEO), John Borghetti said.
Since (VOZ) relaunched its brand, product and fares in May, yield in June increased +4.3%.
Revenue was up +9.7% to A$3.27 billion. Capacity (ASK)s rose +8.8% to 37.1 billion and traffic (RPK)s were 29.6 billion, up +10%. Load factor eased fractionally to 79.7% LF.
September 2011: Air New Zealand (ANZ) lifted its stake in Virgin Australia (VOZ) from 14.99% to 19.99%, in a move (ANZ) (CEO), Rob Fyfe said will continue (ANZ)’s “strategy to develop scale and reach in this region.”
Fyfe confirmed (ANZ) has no intention of making a takeover bid for (VOZ).
In a complex deal, the increased interest is held through an equity derivative agreement with Deutsche Bank, which gives (ANZ) an increased economic interest of up to 5% in (VOZ), subject to certain conditions. One condition is that the purchase does not cause (VOZ) to breach its foreign ownership cap of 49% specified in the Australian Air Navigation Act. Under the agreement, (ANZ) is guaranteed a minimum additional exposure of 3.5% and up to a maximum additional exposure of 5%.
The outlay for the minimum exposure of 3.5% will be A$23 million/$22.5 million, while the outlay for the maximum 5% will be A$32.8 million. (ANZ) said it intends to work with (VOZ) to bring its interest out of the derivative and into physical shares as soon as possible within the constraints of the foreign ownership cap. Prior to entering into the equity derivative arrangement, (ANZ) received Australian Foreign Investment Review Board approval to purchase up to 19.99% of (VOZ).
Fyfe confirmed to (VOZ)’s (CEO), John Borghetti in a telephone call there is no intention to make a takeover bid for (VOZ). “Our increased investment in Virgin Australia (VOZ) continues (ANZ)’s strategy to develop scale and reach in this region,” Fyfe said. “The transTasman alliance with (VOZ) was the first step in this strategy, followed by our initial investment in January of this year. This increased investment demonstrates our continued belief in the strategy that (VOZ) is pursuing and our confidence in the (VOZ) management team to deliver this strategy,” Fyfe said.
“The transTasman alliance that we have with (VOZ) is now well underway and delivering great results for customers and also for both airlines. Our combined share in the transTasman market has grown significantly year on year,” he said. “As we noted at the time of our original investment, our stake in (VOZ) also provides us with an interest in the number two airline in Australia and, through this, access to opportunities in the growing Australian domestic market,” said Fyfe, noting, “(ANZ) has no intention to enter the Australian domestic market in its own right.”
Delta Air Lines and Virgin Australia (VOZ)/(VAZ) will expand their code share agreement on flights between the USA and Australia. (DAL) will add its code to (VOZ)/(VAZ) flights between Los Angeles and Sydney, Melbourne, and Brisbane, while (VOZ)/(VAZ) will add its code to (DAL) service between Los Angeles and Sydney.
(ILFC) has agreed to purchase and leaseback five new 737-800s to Virgin Australia (VOZ), scheduled to be delivered in 2012 and 2013.
October 2011: The Australian Competition and Consumer Commission (ACCC) has granted draft approval for Virgin Australia’s (VOZ)'s comprehensive alliance with Singapore Airlines (SIA).
The alliance with (SIA) completes (VOZ)’s global strategy of linking with some of the industry’s major players. In the past year, (VOZ) has won approval for alliances with Delta Airlines (DAL), Etihad Airways (EHD) and Air New Zealand (ANZ).
(VOZ) (CEO), John Borghetti said the alliance will “enable us to deliver an attractive and competitive service for travelers in Australia and Asia,” calling it a “key plank in Virgin Australia (VOZ)’s strategy to build an international network of airline partners that offers global coverage.”
(ACCC) Chairman, Rod Sims said the alliance will likely result in material benefits to the public, including enhanced products and services. It is also likely to make “(VOZ) more competitive with other airlines, including Qantas (QAN)," Sims said.
The Competition Commission of Singapore has approved the proposed alliance between Singapore Airlines (SIA) and Virgin Australia (VOZ), removing the last hurdle for the tie-up.
Abacus International was named preferred global distribution system (GDS) by Virgin Australia (VOZ).
737-8FE (40996, VH-YFH "Mindil Beach"), ex-(N1796B) delivery.
December 2011: The Australian Competition and Consumer Commission (ACCC) has approved the comprehensive integrated network alliance between Virgin Australia (VOZ) and Singapore Airlines (SIA).
The (ACCC) Chairman, Rod Sims said the alliance “is likely to lead to increased competition for international air passenger services." Under the alliance, the airlines will cooperate on all aspects of their Australia - Singapore services and any international and domestic connecting routes, including joint pricing and scheduling, as well as joint marketing and sales.
"The ability to offer a comprehensive international and domestic network, along with enhanced frequent flyer and lounge products, is likely to be attractive to both corporate and government passengers," Sims said.
By the end of the year, (VOZ) and (SIA) will launch reciprocal frequent flyer benefits.
The Competition Commission of Singapore approved the tie-up in October.
The (ACCC) approval is the final tick for (VOZ)’s virtual airline strategy and it will now be able to offer global flight coverage through alliances with Etihad Airways (EHD), Air New Zealand (ANZ), Delta Air Lines (DAL), and (SIA), increasing its international reach from around 60 destinations to over >400 destinations worldwide.
The Virgin Australia group launched its international airlines V Australia and Pacific Blue under the new brand, Virgin Australia (VOZ). Establishing one brand and identity for (VOZ)’s domestic and international operations is a key part of the company’s game change program strategy and follows an agreement with Singapore Airlines (SIA), which is a 49% stakeholder in Virgin Atlantic Airways (VAA).
When (SIA) acquired the stake in 2000, one of the conditions was that (VOZ) could not use the Virgin name outside Australia.
(VOZ) (CEO), John Borghetti said that having both the domestic and international airlines operating under the Virgin (VOZ) brand was one of the company’s most significant achievements this year.
“The Virgin Australia (VOZ) name enables us to tap into the huge power of the Virgin brand around the world (a brand that signifies style, innovation, quality, value for money and the best service)” he said.
Now that the international airlines are all operating under the Virgin brand, Borghetti said its focus is on redesigning the product in the air to “ensure a first-rate travel experience across all of our airlines.” (VOZ) will reveal the new designs in the first half of 2012, he said.
The company’s trading name has also been changed from Virgin Blue Holdings Ltd to Virgin Australia Holdings Ltd.
January 2012: Virgin Australia (VOZ) will deploy A330s on the Melbourne (MEL) - Perth (PER) route to tap the resources boom in Western Australia and attempt to capture more of the business market from Qantas (QF). According to (VOZ), the move will add 20,000 seats a year.
In a significant ramp-up in the intensifying competition between the two airlines, (VOZ) will take delivery of two new 278-seat A330s in May and put them into service on the (MEL) - (PER) route from May 14. The A330s will replace 168-seat, 737s.
Last year, (VOZ) deployed its first two A330s on the Sydney (SYD) - (PER) route, which heralded the roll-out of (VOZ)’s new up-market image and introduction of business (C) class.
The Australian Competition and Consumer Commission (ACCC) has granted interim approval for a proposed corporate alliance between Virgin Australia (VOZ) and Skywest Airlines (SKD).
Under the alliance, the two airlines will offer bundled air passenger transport services to corporate customers seeking integrated charter, domestic and international services.
(ACCC) Chairman, Rod Sims said the alliance is unlikely to result in permanent changes to relevant markets.
"It will only affect corporate customers who have the option not to acquire the integrated air services package from (VOZ) and (SKD) if they do not consider there is any benefit to them," Sims said.
The alliance is a further link between the two airlines, which started with code shares in 2009 and developed into a 10-year strategic and operational alliance providing regional service to Australia.
As part of that deal, (SKD) is operating (VOZ)-branded ATR 72s to new and existing destinations around Australia.
(VOZ) (CEO), John Borghetti is aiming to see 20% of the airline’s revenue come from Australia’s corporate and government market by June 2013.
As of June 2011, that figure stood at 13%, up one-third over the prior year; however, insiders suggest the number is now closer to 15% after (QAN)’s recent industrial woes. For the past 10 years, (QAN) has faced no business (C) class competition since the collapse of Ansett (ANS).
SilkAir (SLK) will serve Darwin, Australia. The new Darwin service follows the new joint venture (JV) being formed between Singapore Airlines (SIA) and Virgin Australia (VOZ), which itself will start flying to Darwin from Sydney in an effort to feed the new SilkAir (SLK) flights. Singapore Airlines (SIA) and (VOZ) began frequent flier cooperation last month.
Amsterdam-based SkyNRG finished 2011 on a high note by partnering with Thai Airways (TII) to conduct what was called “the first passenger biofuels flight in Asia” in late December (Air China (BEJ) flew a biofuel demonstration flight in October without paying passengers). The (TII) flight from Bangkok to Chiang Mai included a 777 with both engines running on a 50-50 fuel mix of bio-jet fuel derived from used cooking oil and conventional petroleum-based jet fuel. As we’ve seen before with these “first” flights, (TII) airline officials said the flight marked the beginning of a collaborative effort to develop a bio-jet fuel supply chain in Thailand. For SkyNRG, which sourced the fuel, this flight followed similar flights
by AirFrance (AFA), Alaska (ASA), Finnair (FIN), (KLM) and Thomson Airways (ATZ)/(TFY), all since July, when bio-jet fuel became standardized.
In their search for commercially viable bio-jet fuel, airlines are leaving no stone unturned in Australia. Lufthansa has signed an agreement with the Perth-based biofuel company Algae.Tec. The plan is to “jointly evaluate the potential” of Algae.Tec’s algae-based crude oil as a low-carbon jet fuel source. Meanwhile, Air New Zealand (ANZ) and Virgin Australia (VOZ) signed similar agreements with the Sydney-based biofuel company Licella, which has technology to convert a range of waste plant material, such as sawdust, corn stalks and sugar cane waste, into bio-jet fuel.
Virgin Australia (VOZ) is not currently recruiting Flight Crew (FC) pilots. See FltOps.com and FAPA.aero.
March 2012: Virgin Australia (VOZ)/(VAZ) will wet lease one of its 777-300ERs to alliance partner, Etihad Airways (EHD) during a once weekly 34 hour 55 minute layover in Abu Dhabi. (EHD) has earmarked using the airplane to bolster services to Kuala Lumpur, a popular market for Gulf travellers and one that competitor Emirates (EAD) has been increasing capacity to.
The decision to wet lease the airplane to (EHD) once a week, from May 2012 subject to regulatory approval, finally allows (VOZ)/(VAZ) to better utilise the once weekly extended layover as part of the carrier's 3x-weekly Sydney - Abu Dhabi services which commenced in February 2011. The other two services have 10 hour 55 minute layovers.
Airbus (EDS) has joined a consortium including Virgin Australia (VOZ) to study a new pathway to produce sustainable aviation fuels. Eucalyptus mallee trees, grown in Western Australia’s wheat belt are sustainably harvested and converted to a feedstock for refining into alternative aviation fuel via a process called Pyrolysis.
Mallee is indigenous to Australia and is well adapted to the environment. It is a suitable sustainable crop because it helps return salt-affected land to a productive state. Mallee can be planted on farms alongside crops, and provide a range of environmental benefits and contribute to the long term sustainability of the overall farming operation. Growing these trees to make alternative fuels encourages large scale planting, which is expected to bring a range of environmental and social benefits to farmers and rural communities.
The Pyrolysis thermal conversion process has yet to be recognised by the world’s fuels standards authorities. Airbus (EDS)'s role includes supporting the approval and certification process so that Pyrolysis based fuels can be used for the first time in commercial aviation.
The consortium also includes Future Farm Industries (CRC), which is developing sustainable farming systems as part of the Australian Government’s Cooperative Research Centres (CRC) program.
The project objective is to have a pilot alternative fuel production plant operating in Australia in the next year. The sustainability analysis is managed by the (CRC), Airbus (eds) and the UK’s Manchester Metropolitan University. “Alternative fuels are a crucial part of the roadmap for sustainable aviation and to help meet our ambitious CO2 reduction targets. We are privileged to be working with our Australian partners in this exciting value chain project,” said Tom Enders, Airbus (eds) President & (CEO).
Virgin Australia (VOZ) Group Executive of Operations, Sean Donohue said: “In order to produce a biofuel that can be used sustainably in our current aircraft, it is important to have members from every part of the supply chain involved. Airbus (EDS) will bring vast expertise in airplane manufacturing to the consortium and we are very pleased to have a company of its calibre joining this promising Australian project”.
The partnership agreement aims to develop a complete sustainable aviation bio-fuel production capability in Australia, using only sustainable resources and is part of the Airbus (EDS) goal to have in place a value chain in every continent by 2012. So far (EDS) has value chains in Latin America, Europe the Middle East, and now Australia.
April 2012: Virgin Australia Holdings (VOZ) will invest A$8 million/$8 million in Skywest Airlines (SKD), giving it a 10% stake in the Perth-based carrier.
(VOZ) states the investment will “capitalize on opportunities in regional Australia by supporting further growth of (VOZ) and Skywest (SKD)’s regional partnership.” It will be made via a convertible facility with (SKD), which Virgin Australia (VOZ) can change to ordinary shares in (SKD) at a conversion price of A$0.45 per (SKD) share with a maturity date of April 15, 2015, and a coupon rate of 7.5% per annum. The deal is pending (SKD) shareholder approval.
“This investment highlights our belief in the growth potential of the Australian regional market and strengthens our partnership with Skywest (SKD),” (VOZ) (CFO) Sankar Narayan said.
Earlier this year, the Australian Competition and Consumer Commission (ACCC) granted interim approval for a proposed corporate alliance between the two carriers.
“We have grown our regional operations significantly since launching our regional network with Skywest (SKD) in October 2011 with the commencement of new services to Emerald, Gladstone and Port Macquarie. These services have been highly popular with the flying public and are already among our best performing regional routes,” said Narayan. “The fleet of four new ATR airplanes that we are using to operate these services will increase to 12 by the end of the 2013 financial year, and there is plenty of opportunity to further expand our regional footprint.”
Virgin Australia (VOZ) plans to create a separate business division for its Velocity Frequent Flyer Program. The division will be led by a newly appointed (CEO), Neil Thompson.
Thompson will join the organisation in August and will manage the velocity frequent flyer program as a standalone business unit. He will directly report to John Borghetti, (CEO) of Virgin Australia (VOZ).
Thompson has more than >20 years of experience in loyalty, direct marketing programs and aviation.
Borghetti says: "Velocity frequent flyer remains a key growth opportunity for our business. The next stage will be to position it as the leading loyalty program in Australia and as a key driver of future earnings."
"This appointment, along with the other internal changes, enables us to capitalise on the significant earnings growth potential through third-party partnerships and improved participation of our frequent flyers," Borghetti adds.
June 2012: Etihad Airways (EHD), one of the Gulf region’s fast-growing carriers, said it has bought a 3.96% equity stake in Virgin Australia (VOZ).
In an announcement posted by (VOZ) on the Australian stock market, (EHD) said it built its holding over recent weeks through on-market share purchases. (VOZ) shares were trading at 41 Australian cents/40 USA cents.
The two airlines are already part of an alliance which features code sharing on each other’s flights, reciprocal frequent flyer recognition and joint bidding for corporate accounts.
“Etihad Airways (EHD) believes that this equity investment in Virgin Australia (VOZ)’s domestic operations significantly strengthens the 10-year strategic partnership forged by the two companies in August 2010,” it said. “It will enrich the commercial benefits which the alliance already provides for both airlines, as well as increasing the benefits to Australian consumers and visitors to Australia.”
Later, it was stated Virgin Australia (VOZ) has no concerns about moves by Etihad (EHD) to further increase its stake in (VOZ) to 10%, as reported by Australia’s "The Age" newspaper.
(EHD) had earlier acquired a 3.96% equity stake in (VOZ), and almost immediately increased it to 4.99% a day later. “We believe it’s a vote of confidence in our strategy and they want to have a part of it,” a (VOZ) spokesperson said.
That strategy has seen (VOZ) move to take more of the business travel market both within Australia and grow internationally via strategic alliances and code shares. However, sources suggest (EHD) would be unlikely to do anything disruptive and have ruled out such dramatic moves as a hostile takeover.
Shortly after, (VOZ) union leaders and some politicians in Australia publicly voiced their opposition to plans by Etihad Airways (EHD) to increase its stake in (VOZ) to around 10%. The Virgin Group and Air New Zealand (ANZ) both hold more than >20% each in Virgin Australia (VOZ).
(EHD) has recently been on a buying spree, increasing its stake in Air Berlin (BER) to almost 30%. It also owns 40% of Air Seychelles (ASY).
Virgin America (VUS) is seeking USA Department of Transportation approval to code share with Virgin Australia (VOZ) on a series of (VOZ) routes within the USA. The code share will place the (VOZ) code on (VUS) services from Los Angeles (California) to Boston, Chicago, Dallas, Fort Lauderdale (Florida), Philadelphia (Pennsylvania), Portland (Oregon), Seattle, and Washington.
Once approved, this will be the first-ever code share agreement for (VUS), building on a 2009 interline agreement with (VOZ) that connected Australia and USA routes, according to a (VUS) statement.
(VOZ) serves 13 USA destinations via its code share with Delta Air Lines (DAL).
“The United States is a very important market for Australia; it is the third most popular international destination for Australian visitors and our fourth biggest source of overseas visitors to Australia,” (VOZ) Group Executive Alliances, Network & Yield, Merren McArthur said.
July 2012: Etihad Airways (EHD) has been given permission by the Australian government to double its Virgin Australia (VUS) shareholding from 4.99% to 10%.
(EHD) acquired 3.96% of Virgin Australia Holdings (VAH) in June and has since built its stake to 4.99%. Today’s Australian Foreign Investment Review Board clearance means (EHD) can now further increase its shareholding to a maximum of 10%.
An (EHD) spokesman confirmed (EHD) will take this option: “They are going to go to 10%,” he said. The spokesman was unable to immediately comment on how the new shares will be acquired or the likely timing for the transaction.
(EHD) and (VOZ) have a strategic partnership that includes code shares, joint marketing initiatives and a reciprocal frequent flier program agreement. “The strategic partnership has already delivered significant revenues to each airline. It is expected that the equity stake in Virgin Australia (VOZ) will lead to further revenue generating opportunities,” (EHD) said.
(EHD) serves Sydney, Brisbane and Melbourne from Abu Dhabi and plans to add a new link to Perth “in the future.”
Virgin Australia (VOZ) has ordered 23 Boeing 737 MAX 8 airplanes, the first in Australia, plus four options. Deliveries are scheduled for between 2019 and 2021.
(VOZ) said it has delayed the delivery of some 737NG airplanes until after 2016 to align with its capacity plan for the next three years. This leaves 31 scheduled deliveries of 737-800 airplanes between 2013 and 2016.
(VOZ) also expects to phase out all of its 737-700s by the end of 2013.
“In the past year alone, we have reduced our average fleet age from 4.9 to 4.2 years,” (VOZ) (CEO), John Borghetti said.
3 737-8FEs (38713, VH-YIL "Seventy Five Mile Beach;" 38716, VH-YIM "Bridgewater Bay;" 39924, VH-YIJ "Pennington Bay"), leased.
August 2012: Virgin Australia (VOZ) reported a net profit of +A$22.8 million/+$23.6 million, reversing a -A$67.8 million loss in the year-ago period.
(VOZ) attributed the reversal to its game change program, which is delivering positive results despite high fuel prices.
Total revenue increased +19.8% to $3.9 billion, up from $3.2 billion in 2011. This produced an underlying profit of +A$82.5 million, reversing last year’s loss of -A$66.6 million.
Group yield rose +12% to 11.09 cents, as passenger numbers increased to 19.4 million from 18.6 million year-over-year. Load factor dipped to 78.1% LF from last year’s 79.8% LF, while (ASK)s grew to 39.8 billion from 37.1 billion.
(CEO), John Borghetti said, “Given the uncertain economic environment, we are unable to provide clear 2013 financial year guidance at this stage. With the game change program largely embedded, we are confident we have established a sound platform from which we can respond to changing market conditions.”
Virgin Australia (VOZ) expanded its domestic network with regional airplanes on 8 August. With 104Y-seat E190s, (VOZ) now flies 5x-weekly, daily on weekdays, between its home base in Brisbane (BNE) and the mining city of Mount Isa (ISA) in north-western Queensland. The route is launched in commercial agreement with Xstrata Mount Isa Mines, which supports the service. (VOZ) has briefly operated the route before, back in 2001 - 2002. As (VOZ) re-enters the route, it ends Qantas (QAN) monopoly with 13x-weekly flights.
September 2012: Etihad Airways (EHD) has announced that it has now been able to buy additional shares in Australian partner, Virgin Australia (VOZ) to increase its stake to 10% as previously approved by the Australian authorities.
Construction of Perth's new domestic terminal, scheduled to open in early 2013, is almost complete. The terminal, the first to be built in Perth in 26 years, will cater to regional travel in western Australia, facilitating travel for many fly-in fly-out passengers across the state.
It will have 16 check-in counters, 14 airplane gates, three baggage claim belts and a spacious departure lounge. The terminal is part of a A$750 million/$783 million expansion and redevelopment project at Perth airport, which is expected to handle up to 20 million passengers by 2020. The airport handled 12.6 million passengers in Fiscal Year (FY) 2011/12, a rise of +10.3% from a year earlier.
Expansion works began at the airport's international arrival hall at Terminal 1 in June. The terminal's immigration area and baggage claim hall will be relocated and expanded to minimize queuing and waiting times. "The international arrivals expansion will be completed by the middle of 2014 and will significantly improve the customer experience for western Australians and visitors to our state," says Perth Airport's (CEO), Brad Geatches.
The construction of a new domestic pier and expansion of the international departure hall is also expected to start later this year. Tenders for these projects, the "most complex" of Perth's redevelopment program, will close on September 10. "With the new domestic terminal currently being built in close proximity to the international terminal, it will primarily service regional western Australia as well as some interstate routes from 2013," said Geatches.
He added that the addition of the domestic pier at Terminal 1 will enable passengers to transfer seamlessly between regional interstate and international flights. The new domestic pier, measuring 200 m/656 ft in length, will include facilities like spacious check-in and arrival halls and a premium lounge for Virgin Australia (VOZ).
The international departure hall, meanwhile, will have a new check-in area with 18 additional check-in counters and a new lounge. The Terminal 1 domestic pier and international departures expansion project includes a "significant extension" of the existing terminal and the addition of a new two-storey pier.
Construction of an A380 gate will also be fast-tracked within the next 12 months to facilitate the introduction of regular A380 services by airlines.
October 2012: Virgin Australia (VOZ) will increase 17x-weekly, Brisbane (BNE) - Emerald ATR 72 service to 24x-weekly, on October 29. It will also increase 14x-weekly, (BNE) - Newcastle Fokker F 100 service to 19x-weekly, on November 12 and 35x-weekly, (BNE) - Rockhampton ATR 72 service to 40x-weekly, on November 12.
Virgin Australia (VOZ) has acquired 60% of Tiger Airways Australia (TAU), 100% of Australian regional, Skywest Airlines (SKD) and has sold a 10% stake to Singapore Airlines (SIA).
(VOZ) said the deals would accelerate growth, diversify earning and intensify competition in Australia. If approved, the Virgin Australia Group will grow to 139 airplanes and more than >9,000 employees. “The acquisition of Tiger Australia (TAU) and (SKD) provides Virgin Australia (VOZ) with a strong presence in the budget, Fly-in Fly-Out and regional markets, enabling us to fast-track our expansion in these areas and become a stronger competitor,” (VOZ) (CEO), John Borghetti said.
Specifically, (VOZ) has inked a share purchase agreement with Tiger Airways (TGR) to acquire control of (TAU) for AUD35 million/$33.2 million, plus a further AUD5 million if “certain financial performance targets” are hit within five years. It has agreed in principle to fully acquire (SKD) for AUD0.45 per share, which would be paid in cash and new (VOZ) shares, although the deal still needs to be approved by (SKD)’s shareholders. Finally, (SIA) will buy 10% of (VOZ) through a share placement.
If the (SKD) deal goes ahead, the airline will become part of the (VOZ) brand, but will continue to fly under its existing air operator’s certificate (AOC). (SKD) will also retain its own (CEO) and management team and continue to be based in Western Australia. “We launched a regional network partnership with Skywest (SKD) in October 2011 and now we will be able to realize the full potential of the operation through developing a more integrated network, service and frequent flyer program,” Borghetti said.
Under the (TAU) deal, (VOZ) and (TGR) are planning to enter a shareholder, brand licensing and services agreement. The partners have also agreed to invest up to a further AUD62.5 million in (TAU). “The joint venture has flexibility to grow Tiger Australia (TAU)’s fleet from 11 to up to 35 airplanes by 2018,” (voz) said.
“This transaction enables Virgin Australia (VOZ) to access the budget market and enables Tiger Australia (TAU) to expedite its growth, providing greater competition to this important market segment. By partnering with Tiger Airways (TGR), we can use our expertise to leverage (TAU)’s competitive cost base and build a sustainable budget carrier. We are committed to maintaining the (TAU) business model and brand, and we look forward to collaborating with (TGR) as the business grows,” Borghetti said.
November 2012: Virgin Australia (VOZ)'s pier in Sydney Airport's domestic terminal will expand from a current nine gates to 14. This includes 4 gates for wide bodies. (VOZ) expects this to improve operations, although some people see a need for a long term solution to the airport's capacity limits. The airport plans to reorganize its operations by 2019 so that Qantas (QAN) and (VOZ) will each, with their alliance airlines occupy their own terminals. Traffic at Sysney airport grew +2% in the last 12 months, with last months volumes up +6% helped by new service from Scoot (SCT) and Air Asia X (ASX).
January 2013: Australia’s competition watchdog has approved Virgin Australia (VOZ)’s acquisition of Perth-based, Skywest Airlines (SKD), although hurdles remain.
In October, (VOZ) announced plans to acquire 60% of Tiger Airways Australia (TAU) and 100% of Australian regional, Skywest Airlines (SKD). Responding to the application, the Australian Competition & Consumer Commission (ACCC) said it will rule on the Tiger Airways Australia (TAU) deal by February 7 and announced it will not oppose the (SKD) acquisition.
“The message that we received from the market was broadly supportive of the proposed acquisition. The services that (VOZ) and (SKD) supply are seen as largely complementary, rather than competitive with each other,” (ACCC) Chairman, Rod Sims said.
An investigation into the tie-up revealed overlap on just one route, between Perth and Broome. The (ACCC) therefore, concluded the deal is “unlikely to lead to a substantial lessening of competition.”
(VOZ) (CEO), John Borghetti welcomed the approval, saying: “The (ACCC)’s clearance represents an important step for Virgin Australia (VOZ) in completing the proposed acquisition of Skywest (SKD).” However, he added the deal still needs to be approved by the Foreign Investment Review Board, (SKD)’s shareholders and the Singapore High Court.
If the deal goes ahead, (SKD) will become part of the Virgin Australia (VOZ) brand, but will continue to fly under its existing air operator’s certificate (AOC). It will also retain its own (CEO) and management team and continue to be based in Western Australia. “We will invest to support the growth of Skywest (SKD),” Borghetti said.
Virgin Australia (VOZ) is Australia’s second largest airline after the Qantas (QAN) Group, operating a fleet of 100 airplanes on 3,200 weekly flights. Skywest (SKD) has 28 airplanes and provides regional flights within and beyond Western Australia.
February 2013: Australia’s competition watchdog has warned that Virgin Australia (VOZ)’s proposed acquisition of a 60% stake in Tiger Airways Australia (TAU) could limit competition.
The Australian Competition & Consumer Commission (ACCC) has released a “statement of issues” on the tie-up and has set a February 22 deadline for responses. It is aiming to reach a decision on the deal by March 14, pushing back the original February 7 deadline.
Budget carrier Tiger Australia (TAU) launched operations in 2007 and serves 11 domestic routes with 11 airplanes. Its would-be partner, Virgin Australia (VOZ), is also acquiring Australian regional Skywest Airlines (SKW). Virgin Australia (VOZ) ranks as the country’s second largest operator after the Qantas (QAN) Group.
Laying down the watchdog’s preliminary views, (ACCC) Chairman, Rod Sims said the acquisition may raise domestic competition concerns, cutting the number of mainline airline groups from three to two.
“This potential reduction in competition arises as a result of the increased ability on the part of Qantas (QAN)/Jetstar (IMU) and Virgin Australia (VOZ)/Tiger Australia (TAU) to coordinate their activities once Tiger Australia (TAU) is no longer operating as an independent low cost carrier,” Sims said. However, “certain factors” could shift the (ACCC)’s view such as the financial position, size and shape of Tiger (TAU) post-acquisition.
“If the (ACCC) were to conclude that Tiger Australia (TAU) would exit the market in the absence of the proposed acquisition, this would be highly relevant to our assessment,” Sims said. “Another relevant factor is that the merger parties have publicly announced an intention to expand Tiger Australia (TAU)’s fleet from its current 11 airplanes to 35 airplanes by 2018. If the (ACCC) was satisfied that a significant increase in capacity would take place, this would also diminish the prospect of any increase in coordinated conduct in the market,” he added.
March 2013: Virgin Australia (VOZ) reported first-half Fiscal Year (FY) 2012/13 net profit was +A$23 million/+$23.5 million, down -56% from +A$51.8 million year-over-year. (VOZ)’s fiscal year 2012/13 first half ended December 31, 2012.
Underlying profit before tax was +A$61 million, down -36.5% from +A$96.1 million in the year-ago period.
(VOZ) (CEO), John Borghetti said the business was impacted “by the introduction of the carbon tax, the cost of which we were unable to recover due to aggressive competition in the market.” The tax cost A$24.4 million.
However, revenue was up for the period, with a +5.4% growth that built on the +18% growth achieved during the year-ago period.
(VOZ) said it carried the highest number of passengers recorded in any half, up around +200,000 to exceed >10 million for the first time.
Net operating expenses were marginally higher, exceeding >$A2 billion from A$1.9 billion in the year-ago period. However, underlying (CASK)s, ex-fuel, fell -1.5% for the period. “We have made significant progress on our three-year business efficiency program designed to ensure we have a sustainable cost advantage now and in the future. Over the half, the project has delivered sustainable efficiency gains of A$25 million and we are on track to deliver over >A$60 million by the end of the financial year,” Borghetti said.
He said there had been “strong progress” on a multi-faceted plan for profitable growth that included expansion in the high-growth regional and budget markets. This included the proposed acquisition of Skywest Airlines (SKD) (100%) and 60% of Tiger Australia (TAU), as well as a 10% strategic investment in Virgin Australia (VOZ) by Singapore Airlines (SIA). (VOZ) also implemented its Sabre reservations system. “The Group has delivered a solid result in a difficult operating and economic environment, reflecting the significant progress we have made in diversifying our revenue base and improving cost control,” Borghetti said. However, he warned the continuing uncertain economic and competitive environment (and the need to support current and future strategic initiatives) meant (VOZ) would not be declaring a dividend and would do so only when conditions were “appropriate.”
The challenging economic environment also “precludes us from providing a profit guidance for the year,” Borghetti said.
Skywest Airlines (SKD) reported a consolidated net loss after tax of -S$2.2 million/-$1.8 million for the half-year ended December 31, 2012, reversed from a +S$4.5 million profit for the year-ago period. (SKD) said the results were due to challenging conditions putting downward pressure on loads and yields, as well as several non-recurring costs, including the carbon tax implemented on July 1, 2012 (S$2 million pre-tax).
Excluding these non-recurring costs, the result would have been profitable, (SKD) said. Revenue during the period increased +19% to a record S$173 million, up from S$145 million year-over-year.
Non-recurring expenses included preparations for the introduction of a second A320, consolidation of administrative offices into a more economic off-airport location, the transfer of Flight Operations from the existing passenger terminal to new facilities at Perth Airport’s new terminal, and advisory costs related to the proposed acquisition of Skywest (SKD) by Virgin Australia (VOZ).
In his report, Executive Chairman, Jeff Chatfield said the past 12 months had been “a period of great change for Skywest (SKD).”
Singapore’s High Court has given the go-ahead for Virgin Australia (VOZ) to acquire Perth-based regional carrier Skywest Airlines (SKD), marking one of the final hurdles for the deal. In October 2012, (VOZ) detailed plans to acquire 100% of (SKD) and 60% of Tiger Airways Australia (TAU). The deal has already been passed by (SKD)’s shareholders, the Australian Competition and Consumer Commission (ACCC), and Australia’s Foreign Investment Review Board (FIRB).
In a statement to the stock exchange, (SKD) said: “The directors are pleased to announce that the scheme was sanctioned by the court. The scheme shall become effective upon the lodgement of a copy of the order of the court with the Accounting & Corporate Regulatory Authority of Singapore.”
(SKD)’s shares will be suspended from trading on the (AIM) and (ASX) stock exchanges March 27 so the acquisition can go ahead.
Virgin Australia (VOZ) will deploy one A330 on two of its three weekly, Brisbane - Perth services on May 15.
Australia’s sixth-largest city, Gold Coast, located 94 km south of the Queensland capital Brisbane, is famous for its beaches, sub-tropical rainforest, theme parks, nightlife and shopping, and is directly accessible from nine domestic and six international cities via Gold Coast Airport, which is also the sixth-largest in the country.
Passenger numbers have grown from 2.2 million in 2003 to over >5.6 million last year, making it the fastest growing airport in Australia in the last decade. Over this period, a passenger volume decrease was noted only once, in 2011 (-4%), with growth quickly restored in 2012, resulting in a traffic increase of +7% over the preceding year. Examination of the early capacity data for 2013 shows that the airport is set to break through the six million mark this year.
While Gold Coast’s Airport’s monthly passenger movements show a fair amount of fluctuation (akin to the region’s world-famous waves), the airport has made some progress in reducing monthly variance from 34% in 2011 (between peak month of January and low month of June) to 29% recorded in 2012 (December versus May). However, this indicator remains much higher than that of the similarly sized Adelaide, where monthly traffic variance of only 13% was found. The limited presence of full-service carriers at Gold Coast (only 10% of total weekly departures) leaves the airport prone to the more seasonal nature of low-cost services, making the flattening of the seasonality profile more difficult.
Two home-grown low-cost carriers (LCC)s account for more than >80% of weekly seats available at Gold Coast. While the dominance of the market from Gold Coast by the Qantas Group-owned Jetstar (IMU) and Virgin Australia (VOZ) has been somewhat reduced from 92% a decade ago, to around 80% in April 2013, strong rivalry between the two carriers persists. Indeed, Virgin Australia (VOZ)’s entry into the market in 2002 posed a formidable threat for Qantas (QAN), which in 2005 went on to replace most of its capacity at the airport with Jetstar (IMU)-operated services.
SEE ATTACHED - - "VOZ-GOLD COAST TOP 8 - 2013-03."
Tiger Airways Australia (TAU) is the carrier which has added the most capacity over the course of last year, although it handles considerably lower traffic volumes than the two leading carriers. Examination of "Innovata" data shows that (TAU) will provide twice as many flights in April 2013 than it did a year before.
Qantas (QAN) has also reacted, and after a three-year break, it is returning to the Sydney-Gold Coast city pair with thrice-daily operations. In addition, Jetstar (IMU) responded by adding +8% to its capacity on the route. As a result, as much as +30% more seats are offered overall in the market from Gold Coast to Sydney this April as compared to the preceding year, accounting for a half of total scheduled capacity from the airport.
Even though +26% more international seats are offered in April 2013 compared to the same period last year, this segment only accounts for 14% of the airport’s traffic. Gold Coast’s first long-haul route was AirAsia X (ASX)’s Kuala Lumpur service, launched back in 2007. A total of four long-haul routes are currently offered at the airport. The latest long-haul arrival is Scoot (SCT), with its offering to Singapore, which after only 10 months of operation has become the #1 in the long-haul market from Gold Coast.
April 2013: Singapore Airlines (SIA) is increasing its stake in Virgin Australia (VOZ) with the acquisition of a further 9.9% of (VOZ) shares. This will bring its stake in (VOZ) to 19.9%. (SIA) will purchase 255.5 million shares for a total consideration of A$122.6 million/$126 million.
The purchase is subject to approval from Australia’s Foreign Investment Review Board (FIRB). The move comes a day after the Australian Competition & Consumer Commission (ACCC) approved Virgin Australia (VOZ)’s deal to purchase a 60% controlling stake in Tiger Airways Australia (TAU) from Singapore Airlines’ budget associate, Tiger Airways (TGR) Holdings Ltd.
Singapore Airlines (CEO), Goh Choon Phong said: “Increasing our stake in (VOZ) is another example of (SIA)’s deep commitment to the important Australian market. It also demonstrates our support for the ongoing transformation of (VOZ), which has created a more competitive aviation market in Australia.”
(SIA) acquired 10% of (VOZ) in October 2012 through an injection of funds in Virgin Australia (VOZ) Holdings. The two airlines began a long-term partnership in 2011 that encompasses code sharing; reciprocal frequent-flyer program benefits and lounge access; coordinated schedules to provide seamless connections; and joint sales, marketing and distribution activities.
Virgin Australia (VOZ) Holdings has completed its acquisition of Perth-based regional, Skywest Airlines (SKD). It has also appointed Merren McArthur as Virgin Australia Group Executive Regional Airlines.
The deal was first announced October 30 and has been cleared by Skywest (SKD)’s shareholders, the Australian Competition & Consumer Commission (ACCC), Australia’s Foreign Investment Review Board and the Singapore High Court.
Virgin Australia (VOZ) is in the process of creating a new brand: "Virgin Australia Regional" by acquiring Skywest (SKD).
Merren McArthur, who has been Virgin Australia (VOZ) Group Executive Alliances, Network & Yield since 2011, will take on the new position of Virgin Australia (VOZ) Group Executive Regional Airlines. She will be based in Western Australia and has been tasked with ensuring a smooth integration of the two businesses.
McArthur has been with Virgin Australia (VOZ) for more than >5 years and has previously held roles including Group Executive Corporate Advisory, General Counsel & Company Secretary. “We believe there is a need for more competition on regional routes and our plan is to grow the current operations and expand our network to new destinations throughout Australia,” McArthur said.
May 2013: Singapore Airlines’ (SIA) move to nearly double its holding in Virgin Australia (PBI)/(VOZ) to 19.9% reinforces the (SIA) Group’s new strategy of focusing more on Asia-Pacific, including the Australian market. The recent purchase of an additional 9.9% stake in Virgin Australia (PBI)/(VOZ) from founding shareholder, the Virgin Group also dilutes the presence of (SIA) rival Etihad (EHD), which now owns about a 9% stake in Virgin Australia (PBI)/(VOZ).
Although equity is not the main driver, the increased stake could give the (SIA) Group an edge as it looks to further deepen its code share partnership with Virgin Australia (PBI)/(VOZ), particularly in the key Australia - Europe market.
Independent Virgin Australia (PBI)/(VOZ) has quickly emerged as (SIA)’s most significant partner in the two years since the two airline groups first forged a code share agreement, a further testament to the waning importance of global alliances. (SIA), which is a longstanding member of the Star (SAL) Alliance but has traditionally taken a passive role in the alliance, is keen to embed its relationship with Virgin Australia (PBI)/(VOZ) as other current and prospective partners circle.
Australia’s Foreign Investment Review Board (FIRB) has approved Virgin Australia (VOZ)’s acquisition of a 60% stake in Tiger Airways Australia (VAU), Virgin Australia Holdings (VAH) has announced. (VAH) confirmed the (FIRB) had “no objections” to the proposed acquisition.
In February, the Australian Competition & Consumer Commission (ACCC) Chairman, Rod Sims had said the acquisition may raise domestic competition concerns, cutting the number of mainline airline groups from three to two. “This confirmation satisfies another condition for the proposed acquisition of Tiger Australia (TAU), which will enable Virgin Australia (VOZ) to access the budget market segment and expedite the growth of (TAU),” (VAH) said, adding the proposed transaction still remains subject to certain conditions.
Virgin Australia (VOZ) expects the transaction to be complete by mid-July.
(PBI)/(VOZ) inaugurated services on the 300 km route from Brisbane (BNE) to Bundaberg (BDB), which is also located in Queensland. Beginning on May 4th, (PBI)/(VOZ) offers daily flights, which it operates using ATR72s. Competition comes from Qantas (QAN), which flies the route with 27 weekly frequencies. Merren McArthur, (PBI)/(VOZ)’s Alliances, Network & Yield Group Executive, said: “Bundaberg has been a monopoly market for over >10 years and the local community and tourism operators have told us that they would welcome competition in the region. The midday flight is convenient for holiday makers and business travellers, as there are 11 domestic and international connections within three hours of the flight landing in Brisbane.”
(ILFC) (ILF) has delivered the first of three new 737-800s to Virgin Australia. The airplanes are intended to support (VOZ)’s strategic fleet renewal.
June 2013: Etihad Airways (EHD) has increased its equity stake in Virgin Australia (VOZ) to 19.9%, the maximum level approved by the Australian Foreign Investment Review Board. "It reflects our strong support for the business strategy and management team of (VOZ) and our enduring commitment to the Australian market," said (EHD)'s President & (CEO), James Hogan - - SEE ATTACHED - - "VOZ-2013-06 - AUSSIE STAKE."
INCDT: - SEE ATTACHED - - "VOZ-2013-06 - INCDT 737-800."
2 737-8FEs (41010, VH-YFQ "Whiting Beach;" 41011, VH-YFP "Nobby's Beach"), deliveries.
July 2013: Air New Zealand (ANZ) and Virgin Australia (VOZ) will be allowed to continue their trans-Tasman alliance under a draft decision issued by the Australian Competition and Consumer Commission (ACCC) on July 10 2013. But the (ACCC) has made some significant changes to the routes that will be regulated with capacity and growth conditions.
The Commission has rejected the alliance partners’ request for all minimum capacity conditions to be lifted. Instead the (ACCC) has increased the total number of routes that will be subject to capacity conditions. In addition the (ACCC) will require both airlines to provide regular key performance data to allow the regulator to better track the public benefits and detriments the alliance delivers over the next three years.
The carriers are also likely to challenge the (ACCC)’s draft decision to grant re-authorization of the metal neutral alliance for just three years, rather than the five years requested, placing it at odds with the five year term granted to the rival Qantas (QAN) and Emirates (EAD) alliance in March 2013.
August 2013: Virgin Australia (VOZ) introduced direct flights on August 15 between Melbourne (MEL) and Hamilton Island (HTI), the largest inhabited island of the Whitsunday Islands in Queensland. (VOZ), the country’s second largest carrier, introduced the route with four weekly frequencies, competing with Jetstar Airways (IMU)’s five weekly operations to the popular global tourist destination. Virgin Australia (VOZ), formerly known as Virgin Blue Airlines uses a 737-800 to service the 1,960 km route. This addition is (VOZ)'s 21st destination out of Melbourne.
According to FAPA.aero, Virgin Australia (VOZ) is recruiting pilots (FC) whom are eligible to work in Australia and/or New Zealand.
September 2013: FAPA . . . Future & Active Pilot Advisors.
See FAPA.aero: Pilot (FC) Career Conferences & Job Fairs
Note: The next Pilot Job Fair will be held in Chicago next month.
According to FAPA.aero, Virgin Australia (VOZ) is not hiring flight crew (FC) at this time.
October 2013: Etihad Airways (EHD) has confirmed it now owns a 19.9% equity stake in Virgin Australia (VOZ). (EHD) first bought 3.96% of (VOZ) in June 2012 and has since been building up its holding. Australia’s Foreign Investment Review Board had already approved (EHD) increasing its shareholding to as much as 19.9%.
(EHD) “now holds more than >515 million shares in its equity partner airline,” the Abu Dhabi-based airline said. (EHD) and (VOZ) signed a 10-year strategic partnership agreement in August 2010. “The strategic partnership continues to deliver significant revenue streams and other benefits to each airline,” (EHD) President & (CEO), James Hogan said. “Increasing our equity in (VOZ) will further enrich the commercial benefits.”
(VOZ) is on the road to privatization, Australian market analysts have predicted. According to the "Sydney Herald," speculation about possible ownership scenarios has intensified since Etihad Airways (EHD) increased its stake in (VOZ) to 19.9%, while Air New Zealand (ANZ), Virgin Australia (VOZ)'s largest shareholder, has also received regulatory clearance to boost its stake from 23% to 26%. It is believed that both (ANZ) and 19% shareholder, Singapore Airlines (SIA), will likely pair up in the medium term, in a bid to acquire (VOZ). However, should this go ahead, tighter cooperation between the two would be a prerequisite. Analysts further pointed to (VOZ) boardroom chaos should the three major shareholders "move to a 30% - 40% shareholding over time, without any pair of airlines working in tandem." As it stands, no airline has yet made any mention, or any move for that matter, regarding plans to pair up.
November 2013: Virgin Australia (VOZ) is looking to raise A$350 million in capital, with its main shareholders, Air New Zealand (ANZ), Singapore Airlines (SIA) and Etihad (EHD) increasing their stakes in the carrier. While (VOZ) refused to give a profit forecast for the 2014 financial year, it said the deal, a fully underwritten pro rata accelerated non-renounceable entitlement offer, would allow (VOZ) shareholders to buy five new shares at 38c for every existing 14 shares held on the record date of November 19.
(ANZ), which is a 22.9% shareholder, will take up its entitlement in full and could increase its shareholding to 25.5%. (EHD), which has 19.9% will take up a full entitlement with a potential cash settled derivative of $30.5 million that could take its shareholding to 22.2%.
Singapore Airlines (SIA), with 19.8%, will put in $69.9 million as well as a possible additional $30.4 million investment that could take its stake to 22.1%. The three airlines are also expected to each get a seat on (VOZ)’s board.
Meanwhile, the Virgin Group will continue to have 10% of the airline.
Virgin Australia (VOZ) (CEO), John Borghetti said the capital raising was aimed at “enhancing liquidity” and the airline’s gearing position.
“It will provide the group with additional flexibility and resilience, enabling us to consolidate initiatives as part of the Game Change Program strategy,” said Borghetti. “We reiterate the guidance we provided when we announced our 2013 financial year results in August. Given the ongoing uncertain economic environment, competitive challenges and market volatility, we are unable to provide profit guidance for the 2014 financial year at this time,” he added.
Borghetti said (VOZ) was considering different measures to strengthen its balance sheet. This includes the sale and leaseback of its airplane hangar at Brisbane Airport in June 2013 and the pricing of a US$797.3 million Enhanced Equipment Notes offering in October 2013.
Qantas (QAN) has lashed out at Virgin Australia (VOZ)'s capital raising and says it has contacted the federal government to "express concerns". (QAN) said it was worried about "potentially damaging shifts in Australia’s aviation industry". This comes after (VOZ)'s main shareholders ((Etihad (EHD), Air New Zealand (ANZ), and Singapore Airlines (SIA)) agreed to each look at increasing their stakes in (VOZ) to give it a $300 million cash injection.
(QAN) argues this created an uneven playing field. "Virgin Australia (VOZ)’s proposed capital raising could see its foreign ownership rise to more than >80% without the need for any further regulatory approval. Despite this, (VOZ) would retain all the traffic rights given to Australian carriers," (QAN) said. "The decision of these shareholders to invest in (VOZ)’s loss-making strategy highlights that these airlines aren’t subject to the same commercial realities as (QAN)," it added.
But Virgin Australia (VOZ) hit back, arguing that it had introduced more choice and competition into the market. "Up until recently, Australia's corporate travel market was a monopoly for over a decade and Australian business travellers and the economy have suffered as a result of the lack of competition," it said.
"The capital raising is designed to enhance Virgin Australia (VOZ)'s liquidity and gearing position to ensure we are in a stronger position moving forward," it added.
Virgin Australia (VOZ) added an internal route to Paraburdoo (PBO), in the Pilbara region of Western Australia, from Perth (PER) on November 21st using (VOZ)’s Fokker F 100s. The twice-weekly service (Thursdays and Fridays) brings competition to the 987 km sector for the first time, with Qantas (QAN) already offering up to a six times daily service. Merren McArthur, (VOZ)’s Group Executive Regional Operations said: “Our new Western Australia-based regional operation enables us to quickly identify and respond to growth opportunities such as this one and to bring benefits to businesses and communities throughout regional Australia.”
December 2013: With little fanfare, Virgin Australia (VOZ) and Tigerair Australia (TAU) have made the first public change to their networks as part of the dual-brand strategy they are now pursuing following Virgin (VOZ)'s purchase of one-time competitor, (TAU) that gives (VOZ) a budget off-shoot to match the Qantas Group's Qantas (QAN)-Jetstar (IMU) pairing. (TAU) will enter the Brisbane - Darwin market at flight timings almost identical to Virgin, which will change its timings to match (QAN).
The nuances may seem local but the implications are global: Australia will be the first market to see two full-scale dual-brand strategies compete head-to-head with each other. Product, service and brand are key ingredients to a successful dual-brand strategy, but the network underpins it. Many airlines have tried a dual-brand strategy but most bundle some (sometimes all) of the necessary components. Virgin Australia (VOZ) is not just going to attempt a dual-brand strategy but is doing so in the backyard of one of the airlines that pioneered it. In one of the ironies typical of the Australian market, (QAN) developed Jetstar (IMU) and the dual-brand strategy to combat then low-cost Virgin Blue. In response, (VOZ) started to move upmarket and reached a point where it largely had to become full-service, exposing its inability to successful target the low-end of the market. Buying (TAU) completes a nearly decade-long circle, but begins the intricate process of making the two airlines work alongside each other.
February 2014: Following hard on the heels of the poor financial performance reported by Qantas (QAN)) for the six months to December 31, 2013, its main rival Virgin Australia (VOZ) has also posted a downturn in profits for the same period.
For the first half of the current financial year, (VOZ) reported a net loss after income tax of -AUD83.7 million/-$75 million, reversing a net profit of +AUD23 million reported for the prior corresponding half-year ended December 31, 2012.
(VOZ) attributed the downturn in its financial performance to challenging market conditions, ongoing subdued consumer sentiment, and economic uncertainty, as well as strong market capacity growth in Fiscal Year (FY) 2013, aggressive pricing and Australia’s carbon tax.
(CEO), John Borghetti said: “The results reflect the tough trading conditions across the entire industry for the first half of (FY) 2014. The Australian aviation market continues to be impacted by the significant capacity growth that occurred during (FY) 2013, compounded by weak economic conditions and the inability to recover the cost of the carbon tax. Consequently, the Australian domestic aviation industry has made a first-half loss for the first time in 20 years.”
On a positive note, Virgin Australia (VOZ) reported that first-half revenue and income exceeded AUD2.2 billion for first time, up +6.4% breaking from AUD2.1 million in the year-ago period. However, net operating expenses for the period increased +10.9% to AUD2.3 billion from AUD2.1 billion during the same period in 2012. Of these, fuel was the single greatest cost item at AUD608 million (up from AUD576 million year-on-year), followed by labor and staff related expenses at AUD517 million (up from AUD450 million during the year-ago period).
Passenger numbers grew +3.7% to 10.5 million year-on-year, while (ASK)s were up +1.6% to 21.5 billion. Load factor was up +0.9 percentage points from 78.9% LF to 79.8% LF year-on-year.
As far as the outlook is concerned, Borghetti said: “During the first half of (FY) 2014, Virgin Australia (VOZ) has focused on consolidating its position as an effective competitor in all key market segments. As part of this, several major strategic initiatives have been executed, including restructuring the balance sheet, completing strategic investments and leveraging our new business platform. Giving the infancy of these initiatives and the tough operating and trading environment, we are yet to see their full impact. Over the next 18 months, we will focus on optimizing the business for consistent and sustainable performance.”
He added: “Given the uncertain economic environment, we are unable to provide guidance for the 2014 financial year at this time.”
May 2014: Etihad Airways (EHD) has increased its stake in Virgin Australia (VOZ) to 21.24% from 19.9%, following approval from Australia’s Foreign Investment Review Board. (EHD) first purchased a stake in (VOZ) in June 2012, taking a nominal 3.96% shareholding in (VOZ). It has since increased its stake in small increments, reaching 19.9% in October 2013.
The two airlines signed a 10-year commercial partnership agreement in August 2010, and (VOZ) has since formed similar alliances with its two other major airline shareholders, Singapore Airlines (SIA) and Air New Zealand (ANZ). In March, Singapore Airlines (SIA) increased its stake in the Australian carrier from 19.8% to 22.2%, while (ANZ) has reportedly increased its stake from 23% to 25.5%.
Australia’s air navigation services provider, Airservices Australia, will install 13 new Automatic Dependent Surveillance-Broadcast (ADS-B) ground stations starting next year to enhance its coverage of satellite-based air traffic surveillance in Australian airspace. This boost (ADS-B) coverage ahead of 2017 airplane fitment mandate.
Nearly six months since Australia mandated the use of Automatic Dependent Surveillance-Broadcast (ADS-B), more than >97% of domestic and international airline flights in Australian airspace above >29,000 feet (flight level 290) are being conducted using (ADS-B) surveillance, according to air navigation services provider, Airservices Australia.
The first (ADS-B) fitment mandate became effective December 12, 2013 for all Instrument Flight Rules (IFR) flights at or above >29,000 ft in Australian airspace. On February 6, 2014, the Civil Aviation Safety Authority (CASA) required all new (IFR) airplane registrations in Australia to be (ADS-B) capable, as well as all new transponder installations in older (IFR) airplanes.
As of January 6, 2016, all (IFR) airplanes operating within 500 nm to the north and east of Perth, Western Australia, will be required to be fitted with (ADS-B). By January 6, 2017, all Australian registered (IFR) airplanes flying within Australia’s airspace will be required to operate using (ADS-B).
Australia has a network of 61 (ADS-B) ground stations providing continent-wide air traffic control surveillance. Over the next three years, Airservices will install a further 15 (ADS-B) ground stations to provide additional surveillance coverage at lower altitudes and extend higher level coverage offshore.
Airservices Australia said the aviation industry has “strongly supported (ADS-B), with Australia’s major airlines and operators, including a number of international and regional airlines, embracing the new technology by investing in the installation of (ADS-B) equipment into their airplanes.”
August 2014: Virgin Australia (VOZ) is selling a minority share of its frequent flyer business to a prominent Asia-Pacific investment group in a move that will yield +A$336 million/+$314.1 million for (VOZ).
(VOZ) announced the sale on the same day that it reported a net loss of -$A355.6 million for the fiscal year ended June 30, 2014.
Just a day earlier, Qantas (QAN) revealed its decision to not sell a partial stake in its own frequent flyer program, after carefully considering such a step. Under the deal, Affinity Equity Partners will purchase a 35% stake in (VOZ)’s Velocity frequent flyer program. The sale price means the enterprise value of the entire program is A$960 million.
Velocity will remain part of the Virgin Australia Group, and while it will have a separate board, (VOZ) will appoint the Chairman and retain majority representation.
(VOZ) (CEO), John Borghetti said (VOZ) is not considering selling any further stakes in Velocity. Regarding the contrasting choices, (VOZ) and (QAN) have made regarding their loyalty programs, Borghetti notes that they are “in very different situations.” While the (QAN) program is very mature, the (VOZ) equivalent is not, and the addition of Affinity as a partner will help “turbocharge its development.”
Velocity has 4.5 million members, and (VOZ) plans to grow the program to seven million members over the next three years.
(VOZ)’s fiscal year net loss was significantly worse than the -$98.1 million deficit in the previous year. The underlying pre-tax loss for the 2014 fiscal year was -$211.7 million, versus a -$93.8 million loss in 2013. Both the international and domestic operations saw wider losses.
Revenue increased by +7.1% to A$4.3 billion, and yield was up +1.2%. Virgin Australia (VOZ)’s share of losses from its 60% ownership of Tigerair Australia (TAU) was A$46.1 million and (VOZ) said it plans for (TAU) to achieve profitability in fiscal year 2017.
Applauding the government for its recent repeal of the carbon tax, (VOZ) saids the fees cost it more than >A$100 million over the past two years since it was unable to pass them on to customers.
Virgin Australia (VOZ) made some adjustments to its fleet plan to improve its productivity and efficiency. It struck a deal with Boeing to bring forward the first deliveries of its Boeing 737 MAX airplanes from 2019 to 2018, and is also retiring two of its older Airbus A330s.
One of the A330 retirements has already occurred, and the other will coincide with the delivery of another new A330 in September. The A330s are currently used for flights to Perth from the major east coast cities, and the net decrease of one airplane will be absorbed by replacing A330 service between Perth and Brisbane with 737-800s. Frequency will be increased on this service to maintain capacity.
(VOZ) has also announced it will add its business-class (C) product to the 737-800s that it uses for short-haul international flying to New Zealand and Pacific Island destinations. The business-class (C) seats will be added to 10 airplanes in March and April 2015. The other parts of (VOZ)’s domestic mainline and international operation already feature business class (C).
October 2014: News Item A-1: Virgin Australia (VOZ) reported an underlying loss before tax of -AUD45 million/-$40 million for the first quarter of the 2015 financial year. This represents a +18.3% improvement over the prior-year period, despite the first quarter being traditionally a seasonally weaker period for (VOZ). The first-quarter period covers July 1 - September 30, 2014. Statutory loss after-tax for the quarter was -AUD59.1 million.
Revenue increased +1.3% year-on-year, but continued weakness in leisure demand held group yield largely flat, bringing revenue load factors down marginally compared to the same period in the 2014 financial year.
Domestic passenger numbers for the quarter were down -1.9% to 4.5 million, while domestic (RPK)s were down -0.6% to 5.3 billion. (ASK)s were up +0.6% to 6.87 billion, but load factor was down -1% to 77.2% LF, compared to the year-ago period.
International passenger numbers were up +2.1% for the quarter, to 730,775; (ASK)s were up +1.2% to 4.1 billion.
For the airline as a whole, first-quarter passenger numbers were down -1.4% to 5.2 million, while (ASK)s were up +0.8% to just shy of 11 billion for the quarter. Revenue load factor for the total route network was down -0.3% to 79.4% LF.
Virgin Australia (VOZ) (CFO), Sankar Narayan said: “The results reflect an improved performance compared to the prior corresponding quarter, despite ongoing weak consumer sentiment. It is also important to note that the first quarter of the year is traditionally a weaker demand period compared to the second quarter.”
The underlying result excludes (VOZ)’s share of equity accounted losses of Tigerair Australia (TAU) amounting to AUD11.6 million for the first quarter, up from AUD9.7 million in the prior corresponding period. Available seats on Tigerair Australia (TAU) increased +4.5% during the period and revenue load factor was up +0.5% points over the corresponding period in the previous financial year. Passenger numbers were up +5.6% to 900,561, while (RPK)s increased +10% to just over >1.1 billion. (ASK)s grew +9.3% to 1.24 billion from 1.14 billion during the previous first quarter.
“(TAU) performance for the quarter was impacted by weak consumer sentiment, which has a more pronounced impact on low cost carriers (LCC), with earnings impacted by aligning capacity with underlying demand,” Narayan said.
Since the end of the first quarter, (VOZ) has announced plans to buy the remaining 40% stake in Tigerair Australia (TAU) held by Singapore Airlines (SIA), giving it 100% ownership of the low-cost carrier (LCC). Subject to regulatory approval, the transaction is expected to be completed by the end of this year.
(VOZ) (CEO), John Borghetti said: “This proposed transaction marks an important milestone for Tigerair Australia (TAU) and forms part of the Virgin Australia Group’s "Virgin Vision" strategy to 2017. Given the ongoing subdued consumer demand in the Australian domestic market, the growth of the (TAU) domestic fleet is likely to be reduced. Under this proposed transaction, we will benefit from the economies of scale and achieve profitability ahead of schedule by the end of 2016, by leveraging the resources of the wider (VOZ) Group.”
Borghetti said (VOZ) remained committed to maintaining the (VOZ)’s (LCC) business model and the separate (TAU) brand, and said the partnership between (VOZ) and Tiger Holdings would continue through brand licensing and services provided by Tiger Holdings, direct to (TAU). It is expected that (VOZ) will consolidate (TAU)’s financial results going forward as result of the transaction.
News Item A-2: Virgin Australia (VOZ) is broadening its access to South Africa and the USA, thanks to the expansion of code share agreements with partner carriers.
(VOZ) is following a long-established strategy of building up its international network primarily through partnerships with other airlines. Boosting its existing code shares with Delta Air Lines (DAL) and South African Airways (SAA) gives it new destinations in these markets.
The (SAA) deal allows Virgin Australia (VOZ) to add its code on (SAA)’s flight between Johannesburg and Perth from October 21. The pair already had a code share, but had only allowed (SAA) to access (VOZ)’s domestic network, without reciprocal benefits.
(VOZ) at one time served Johannesburg from Melbourne with its own airplanes, but cut the route about four years ago. (VOZ) subsequently offered service to South Africa via its alliance with Singapore Airlines (SIA). (VOZ) will retain the South Africa code share flights with Singapore Airlines (SIA), so its customers will now have two choices to travel to that country.
The latest move completes (VOZ)’s supplanting of Qantas (QAN) as (SAA)’s partner in Australia. (QAN) and (SAA) previously code shared on the (SAA) service to Perth, and (QAN)’s flight from Sydney to Johannesburg. This arrangement ended May 31.
Meanwhile, Virgin Australia (VOZ) is adding three new USA destinations to its code share agreement with (DAL). The additional routes are from Los Angeles to Nashville, Kansas City and Raleigh/Durham, North Carolina.
(DAL) and (VAA) formed an extensive partnership in 2011, and the pair gained antitrust immunity to cooperate closely. The two carriers code share on flights between the USA and Australia, as well as on domestic services. (DAL) and (VAA) each fly once a day between Sydney and Los Angeles, and (VAA) also offers flights from Melbourne and Brisbane to Los Angeles. However, the Melbourne service will be cut October 25.
January 2015: News Item A-1: Etihad Airways (EHD) has further increased its stake in Virgin Australia (VOZ), in the wake of official approval for such a move.
(EHD) has bought a new tranche of shares, lifting its stake in Virgin Australia Holdings (VAH) from 22.9% to 24.2%.
Etihad (EHD) has steadily increased its interest in Virgin Australia (VOZ) since it made an initial purchase of 3.9% of its stockholding in 2012.
(EHD) said that the off-market transaction followed clearance from Australia’s Foreign Investment Review Board to hoist its stake in (VAH) in line with the country’s Corporations Act 2001.
The significance of the move was outlined by Etihad (EHD) President & (CEO), James Hogan. Increasing (EHD)’s stake in (VAH) confirmed its confidence in Virgin Australia (VOZ)’s management team and business strategy and cemented further Etihad Airways (EHD)’s commitment to Australia, he said. “The Australian market is one of the most important in Etihad Airways (EHD)’s network and our partnership with Virgin Australia (VOZ) enhanced by investment in the airline) is key to our commercial success.”
(EHD) and Virgin Australia (VOZ) have a 10-year commercial agreement, which runs until 2020, which includes code sharing on each other’s networks, joint marketing, frequent flyer reciprocity, exchange of technical crew, and the wet lease of a Virgin Australia (VOZ) Boeing 777 to operate a weekly service between Abu Dhabi and Kuala Lumpur.
News Item A-2: Singapore-based low-cost carrier (LCC) Scoot (SCT) is significantly boosting its network in its key Australian market, thanks to a new interline deal with Virgin Australia (VOZ).
Scoot (SCT), a subsidiary of Singapore Airlines (SIA), will be able to sell tickets to eight additional destinations in Australia via the interline agreement with (VOZ). Scoot (SCT) will connect to these routes through its existing Australian gateways in Sydney, Perth, and the Gold Coast.
The interline deal gives (SCT) the opportunity to expand its reach in Australia without committing more capacity. The recent and planned growth of international service into Australia by Asian carriers (particularly long-haul low cost carriers (LCC)s) has made adding new flights a tougher proposition.
The Virgin Australia (VOZ) destinations covered by the agreement are Adelaide, Ayers Rock/Uluru, Brisbane, Canberra, Cairns, Hobart, and Launceston. Melbourne will also be included, until (SCT) launches its own direct flights to that city in November.
(SCT) has previously discussed forming a link with Tigerair Australia (TAU), which is a subsidiary of Virgin Australia (VOZ). However, Scoot (SCT) presumably decided (VOZ) offers a broader domestic network. The interline deal does not include any Tigerair Australia (TAU) services.
Scoot (SCT) already interlines with parent, Singapore Airlines (SIA) and the group’s other subsidiaries, SilkAir (SLK) and the Singapore-based, Tigerair (TGR)) which is separate from Tigerair Australia (TAU). It also interlines with Thailand’s Nok Air (NKA).
The new interline deal is not reciprocal, so Virgin Australia (VOZ) will not be selling interline tickets on any (SCT) flights. (VOZ) already code shares with Singapore Airlines (SIA) on many international routes. The main benefit to the Australian carrier from the (SCT) interline, will be feeding more traffic into its domestic network.
Virgin Australia (VOZ) has made it clear that it will not code share or interline with its own (LCC) subsidiary, Tigerair Australia (TAU), as it does not want to dilute its full-service product.
February 2015: While Virgin Australia (VOZ) has dragged its new acquisition Tigerair Australia (TAU) to breakeven, (VOZ) is now looking for ways to address weakness in its international operation that continue to keep the company in the red.
(VOZ) has identified the international business as being its most challenging sector at the moment, with (CEO), John Borghetti describing it as “under-performing.” Most of the pressure is on short-haul Asian routes and flights to Abu Dhabi that link to Etihad Airways (EHD)’s European network.
(VOZ)’s domestic operation helped (VOZ) achieve a much-improved result for the six months ended December 31. However, Borghetti stressed that the international division, which carries 14% of (VOZ)’s passengers, has an important role in continuing to lift Virgin Australia (VOZ)’s results.
(VOZ) reported a net loss of -A$47.8 million/-$37.3 million for the six months ended December 31, narrowed from a net deficit of -A$74.3 million in the six months ended December 31, 2013. Revenue for the period increased +6.3% year-over-year to A$2.38 billion, while expenses rose +4.8% to A$2.38 billion, producing a breakeven operating result.
(VOZ) said it has launched a series of initiatives aimed at boosting its international performance. Some, such as cabin upgrades and network readjustments, have already been announced. But other impending measures have yet to be revealed, and Borghetti said he’s confident these will be enough to bring this part of the business to profitability.
The Tigerair Australia (TAU) subsidiary provided more positive news in the fiscal half-year results, with Borghetti citing evidence of a turnaround. While the September quarter resulted in another loss, (TAU) recorded a slim +A$0.5 million underlying pre-tax profit for the December quarter, representing its first quarterly profit since the end of 2010. Virgin Australia (VOZ) bought a majority stake in the struggling low-cost carrier in 2013, and completed the purchase of the remaining shares this month.
Borghetti said (TAU) remains on track to reach its goal of sustainable profitability by the end of its 2016 fiscal year. “If anything, it might be sooner,” he said. (TAU)’s momentum is underlined by the fact that revenue growth of +18% in the first half of the current fiscal year was three percentage points ahead of its capacity increase.
(TAU)’s Airbus A320s are currently only used on domestic routes, but Virgin Australia (VOZ) is considering putting them on short-haul international services as well. As for the details of where and when this will occur, Borghetti said he will “keep this up my sleeve a bit longer.”
(VOZ) gained just A$3 million in benefits from lower fuel prices in the fiscal half-year, due to its hedging program. However, Borghetti estimated that the fuel price benefit could be A$50 million in the fiscal year second half ended June 30. Excluding fuel and (TAU)’s results, (VOZ)’s unit costs fell -3.6% year-over-year in the fiscal first half.
March 2015: Virgin Australia (VOZ) says it will deploy its fleet of six A330-200s onto international flights beginning early next month. The 279-seater airplane will be introduced on Saturdays during peak travel periods in response to increased demand.
The A330s, which until now have been restricted to domestic flights between Brisbane International, Perth International, Sydney Kingford Smith, and Melbourne Tullamarine, will be deployed on (VOZ)'s Sydney Kingford Smith to Nadi, Fiji route from April 4 – 18 and from June 20 to October 24 of this year. They will also be deployed on select days during the Christmas and New Year period.
(VOZ) operates up to 22 flights per week between Nadi and Sydney, Melbourne, and Brisbane.
June 2015: Virgin Australia ((IATA) Code: VA, based at Brisbane International) (VOZ) has announced that it will formally launch its new Virgin Australia Cargo unit on July 1, 2015, one day after its existing exclusive arrangement with the Toll Group ceases on June 30.
“(VAU) will now actively compete in the domestic and short haul international cargo market for the first time,” Merren McArthur, Group Executive, Virgin Australia Cargo, said. “We will leverage the famous Virgin Australia (VOZ) customer focused culture to deliver exceptional service at competitive rates."
Toll Aviation ((ICAO) Code: JCC, based at Brisbane Archerfield) is, for the moment the designated freight provider for all Virgin Australia (VOZ) domestic services (except for those operated by Virgin Australia Regional ((IATA) Code: XR, based at Perth International) (SKD). Virgin Australia Regional Airlines (SKD) Freight is the designated freight provider for services operated by Virgin Australia Regional Airlines (SKD) on Fokker F 50, Fokker F 100 and A320-200s, between Perth International and Albany, (WA); Broome, Derby Curtin, Geraldton, (WA); Esperance, Kalgoorlie, Kununurra, and Ravensthorpe.
Virgin Australia (VOZ) also offers bellyhold freight capacity on its fleet of six A330-200s and five 777-300ERs (operated by Virgin Australia International (VOZ).
July 2015: Flights are again being disrupted between Australia and Bali because of a cloud of ash from an active volcano that erupted July 2. Ash from Mount Ruang, which erupted on Thursday, July 2 has drifted towards Denpasar Airport, causing visibility issues. The volcano is about 150 km from the airport.
Jetstar (IMU) has cancelled all morning flights from Perth and Brisbane to Bali.
Virgin (VOZ) has also cancelled its flights in and out of Bali today.
It follows flight cancellations after the eruption and on the weekend due to the ash. "We've seen unfavorable winds push the ash cloud even closer to Denpasar Airport this morning and we're not satisfied it is safe to operate services in these conditions," Jetstar (IMU) said.
"We'll continue to closely monitor the ash cloud with the Volcanic Ash Advisory Center throughout the day and provide an update on our evening flying this afternoon. "We regret the disruption these cancellations have caused travellers, but the safety of our customers and crew is our first priority."
Virgin (VOZ) said passengers whose flights had been cancelled would be able to change their flight or receive a travel credit. "The safety of our guests and crew is our highest priority, and we will keep customers updated as new information becomes available," the company said.
Passengers are being urged to check with their airlines before going to the airport.
August 2015: News Item A-1: The Virgin Australia Group reported a net loss of -A$93.8 million/-$71.8 million for the full year ended June 30 (FY) 2015), narrowed from a -A$353.8 million loss in the previous financial year.
Total Group revenue and income increased +10.3% year-on-year to A$4.8 billion, inclusive of A$284.1 million of Tigerair Australia (TAU) revenue since October 17, 2014.
Virgin Australia Group (CEO), John Borghetti said: “The Virgin Australia Group has delivered a significant improvement in performance for the 2015 financial year, which reflects the positive trajectory of the overall business. I’m pleased to confirm that, based on current market conditions, all fundamental business metrics are on track for the Group to return to profitability and report a Return on Invested Capital in line with its cost of capital for the 2016 financial year.”
Current cost of capital is approximately 10%, and return on invested capital has increased +4.7% points from +1.4% a year ago to +6.1%.
“Unit revenue is increasing, unit costs are decreasing, and operational performance and customer satisfaction continue to improve,” Borghetti said. “The Group is ahead of our target of A$1 billion of cumulative cost savings by the end of (FY) 2017. We are now on track to achieve in excess of >A$1.2 billion in cumulative cost savings by this date, excluding fuel pricing and hedging benefits.”
The group reported a strong turnaround in Virgin Australia (VAU) Domestic business, with operating earnings (EBIT) of A$111.1 million, an improvement of +A$210.1 million on (FY) 2014, and on track for further margin improvement for (FY) 2016.
Revenue increased +4.8% year-on-year, on the back of capacity increases of +1.3%, driven by growth in the corporate and government, charter, interline and code share segments. Yield improved +5.2% compared to (FY) 2014, driven by an increased share of higher-yielding market segments.
“Over the 2015 financial year (VAU) Domestic has continued to drive positive yield growth,” Borghetti said. “The business is well positioned for future growth.”
Virgin Australia International (VAU) reported a drop in operating earnings, down -A$22.8 million year-on-year to A$68.9 million for (FY) 2015. Revenue was down -3.35% compared to (FY) 2014, on a capacity decline of -0.4%. The group said that increased competitive pressure, particularly in the Southeast Asian and long-haul markets, constrained yield recovery during the financial year.
The first phase of initiatives to improve the performance of the international business has begun to show improvement, with underlying (EBIT) improving by +A$2.4 million in the second half of (FY) 2015 compared to the prior corresponding period. A second phase of the plan will involve launching the Tigerair Australia (TAU) brand in the short-haul international market, to better cater to changing dynamics in the region.
The International Business is expected to be profitable by the end of (FY) 2017.
Borghetti also noted a “significant improvement” in Tigerair Australia (TAU)’s performance, with (EBIT) up by +A$42.7 million, putting it on track to achieve full year profitability for (FY) 2016.
“The Group’s unit revenue gains combined with our continued leadership on cost will drive earnings growth going forward. We now have a strong balance sheet from which to execute our strategy and a powerful portfolio of growth businesses,” Borghetti said. “As a result of the progress on our strategy to date, we are now on a positive trajectory and on track to significantly improve financial performance again for the 2016 financial year.”
News Item A-2: The Australian Competition & Consumer Commission (ACCC) has officially renewed Virgin Australia (VOZ)'s and Delta Air Lines (DAL)'s trans-Pacific partnership authorization by a further five years. The announcement comes 8 weeks after provisional acceptance was first announced.
"The applicants sought re-authorization for a period of 10 years," the regulatory body said. "The (ACCC) granted authorization for five years due to the ongoing evolution of services on the trans-Pacific and the dynamic nature of the aviation industry."
Under their alliance, the two carriers offer both code share and interline connections to an expanded network of 191 destinations within North America and Central America and 59 destinations throughout Australasia. They also coordinate flight scheduling and connection times and cooperate across each other's frequent flyer programs.
While the (ACCC) deemed a renewal of the alliance's authorization to be in the public's interest given its access to a single integrated network and associated onward domestic USA and Australian connectivity, it did raise concerns that bringing together two airlines that would otherwise be close competitors on USA - Australia flights would lessen competition and create an operation akin to that of dominant carriers Qantas (QAN) and American Airlines (AAL). Of the five Australia - USA routes examined for potential anti-competitive effects (Sydney Kingford Smith to Los Angeles International/San Francisco, California/Dallas/Fort Worth; Melbourne Tullamarine to Los Angeles International; and Brisbane International to Los Angeles International), the (ACCC) said it had focused on Sydney - Los Angeles in particular, as it is the only route on which both Virgin (VAA) and (DAL) currently operate services, and it is the largest of the trans-Pacific routes by capacity.
"On this route in the year ended April 2015, Qantas (QAN) was again the largest competitor with 48% of capacity compared to 37% for the Alliance and 15% for United Airlines (UA, Chicago O'Hare)," it said.
Given the Alliance's position in respect to (QAN)/(AAL)'s dominance, the (ACCC) ruled that material public benefit would outweigh any detriment to the public interest and thus renewed its approval until September 7, 2020.
(QAN) is also seeking a ten-year re-authorization for an existing alliance with Etihad Airways (EHD) covering flights between Australia and the Middle East. The application was submitted on August 6.
Under their agreement, (EHD) code shares on Virgin Australia International's 3x-weekly, Sydney - Abu Dhabi International service while Virgin (VOZ) code shares on (EHD)'s multiple weekly flights from Abu Dhabi to Brisbane International, Melbourne Tullamarine, and Perth International. Virgin Australia (VOZ) also code shares on (EHD) flights to an additional thirty nine destinations beyond its Abu Dhabi hub, while (EHD) code shares on Virgin Australia (VOZ) flights to fifty destinations beyond its Australian gateways.
Should their alliance be extended by the requested ten year period, Etihad (EHD) has pledged to expand its Australia services employing some of the fourteen new weekly Sydney, Melbourne, Brisbane, and Perth International frequencies that were allocated to the (UAE) under a March 2015 deal with Canberra.
The (VOZ)/(EHD) alliance argues that its renewal and extended growth would be in the public interest, given that it would provide additional competition to dominant carrier Emirates (EAD) and partner Qantas (QAN), which together fly 80% of passengers between Australia and the United Arab Emirates (UAE).
News Item A-3: Travelport signed with Virgin Australia (VOZ) to provide global distribution, including its Rich Content & Branding solution.
News Item A-4: See "VOZ-2015-08 - A330 Business Class Suite.jpg" which shows (VOZ)'s new A330 business (C) class suite. The new wide-body premium product experience, "The Business" will be available on all six of (VOZ)'s A330s by the end of October.
(VOZ) said its setting new standards in Business Class around the world. The suites feature the longest and widest fully lie-flat bed, measuring 80 x 28 in/203 x 71 cm in a reverse herringbone 1-2-1 layout, giving each seat direct aisle access. High-definition 16 in/40 cm touch screens complete with Virgin Australia Entertainment seatback system and a restaurant-style fine-dining experience enabling passengers to eat at anytime during the flight.
Later this year, (VOZ) will change the game again with the launch of a new long-haul Business Class product on its Boeing 777 flights to Los Angeles and Abu Dhabi.
News Item A-5: "Top 10 Premium Economy Class 2015" by AIRWAYS publication placed Virgin Australia (VOZ) in 7th place - - see attached "VOZ-2015-08 - Top 10 Premium Economy Class 2015."
October 2015: Amadeus has been selected by Virgin Australia (VOZ) to adopt the Amadeus Altéa Departure Control Flight Management (Altéa (DC) - (FM)). For the first time, the solution will be delivered as a standalone component to an airline that is not using the Amadeus Altéa Suite, Amadeus’ airline Passenger Service System (PSS). The solution will automate Virgin Australia (VOZ)’s aircraft load control and optimize flight departures, integrating with their current (PSS).
November 2015: News Item A-1: "Australia may reauthorize Virgin Australia - Etihad Airways Tie-up" by (ATW) Victoria Moores, November 2, 2015.
The Australian Competition & Consumer Commission (ACCC) is seeking feedback on its tentative decision to re-authorize Virgin Australia (VOZ) and Etihad Airways (EHD)’s commercial cooperation.
In its “draft determination,” released on October 30, the (ACCC) proposed the partners should be allowed to continue joint pricing and scheduling between Australia and the Middle East for a further five years.
Interested parties have until November 16 to submit comments to the regulator, which will then make a final decision. The (ACCC) last authorized the partnership on February 3, 2011, and this latest clearance is needed for it to continue beyond February 25, 2016.
Etihad Airways (EHD) welcomed the provisional ruling, which would allow it to continue code sharing with Virgin Australia (VOZ) on Australia - Abu Dhabi, a route the (ACCC) said would not be viable for (VOZ) without the partnership and its onward connections.
The two airlines code share to 39 destinations in Europe, the Middle East, Africa and Pakistan (and to 52 destinations in Australia and Asia). “Our intention over the next five years is to expand our global reach and to enhance the guest experience for our shared customers,” (EHD) President & (CEO), James Hogan said.
(EHD) holds a 24.2% equity stake in Virgin Australia (VOZ) Holdings.
December 2015: News Item A-1: "Australia Re-authorizes Virgin Australia (VOZ) - Etihad Airways (EHD) Alliance" by (ATW) Victoria Moores, December 7, 2015.
The Australian Competition & Consumer Commission (ACCC) has reauthorized the commercial cooperation between Etihad Airways (EHD) and Virgin Australia (VOZ) for a further five years.
This final clearance builds on a tentative approval, which the (ACCC) released for consultation on October 30. It grants the two airlines antitrust authority, covering joint pricing and scheduling between Australia, the Middle East and beyond, although it does not extend to revenue sharing.
In its ruling, the (ACCC) said the partnership is in the public benefit, as it promotes competition and better products on the routes. “The (ACCC) accepts that (VOZ) would not operate services to Abu Dhabi if this partnership with (EHD) did not exist. (VOZ) could not offer a viable service on the route without offering the connections available on (EHD)’s network within the alliance,” (ACCC) Chairman, Rod Sims said.
The (ACCC) last authorized the partnership on February 3, 2011, and the clearance was needed for it to continue beyond February 25, 2016. This latest approval runs until December 30, 2020.
Etihad Airways (EHD) has a 25.1% equity stake in Virgin Australia Holdings, which it has gradually built up over the past few years.
“Over the next five years, our focus will be on new areas of commercial cooperation with Virgin Australia (VOZ) and opportunities for increased public benefit,” Etihad Airways (EHD) President & (CEO), James Hogan said.
(EHD) and (VOZ) offer code share services to 38 destinations in Europe, the Middle East, Africa, and Pakistan (and to 52 destinations in Australia and Asia). They also cooperate extensively on sales & marketing, purchasing & procurement, flight & cabin crew secondments, and reciprocal frequent flyer benefits.
News Item A-2: Discussions between All Nippon Airways (ANA) and Virgin Australia (VOZ) could lead to a new code share agreement covering domestic Australian routes.
(ANA) started daily service to Sydney on December 11, and is looking for a code share partner in this market. (ANA) already has an interline agreement that allows it to feed passengers to (VOZ) domestic flights, but (ANA) apparently wants a stronger relationship than interlining provides.
Virgin Australia (VOZ) is believed to be amenable to such an arrangement, though no deal has yet been reached. (VOZ) is not looking to put its code on (ANA)’s flights from Sydney to Tokyo, since the Japanese market is already covered under its partnership with Singapore Airlines (SIA).
(ANA) has extended its existing code share relationship with Air New Zealand (ANZ) to include its new Australia flight. In this case, the agreement is reciprocal, as (ANA) puts its code on (ANZ)’s Tokyo flight.
Meanwhile, (ANA) executives have said they may consider adding more Australian routes, with Melbourne and Perth the next most-likely destinations. However, (ANA) stresses that it has no firm plans yet, and it is focused on ensuring the Sydney route is successful. Other destinations will only come into consideration, once the first route is well established.
Early signs are certainly promising. First flights were full in both directions, and they have 90% booked load factors through the rest of December. About 60% of ticket sales on the route for December and January have originated in Japan, (ANA) said.
News Item A-3: "Actor Russell Crowe Surprised by Airline Hoverboard Ban, - May be a Good Thing" in (ATW) Editor Karen Walker's Blog, December 29, 2015.
Australian actor, Russell Crowe is in the news this Christmas week after getting in a huff because he was not allowed to take check in his sons’ hoverboards when they arrived on a Virgin Australia (VOZ) flight.
According to multiple news reports, Crowe was told of the ban on carriage of hoverboards (the hot (literally) Christmas gift of 2015) when he arrived at the airport check-in desk. Lots of airlines have banned hoverboards because of instances of them catching fire, likely related to their powerful lithium batteries.
(IATA) execs briefed journalists on the subject earlier in December, saying that some airlines had reported fumes and small fire incidents related to hoverboards and, understandably, there is growing concern. (IATA) is developing guidelines on how to manage the problem.
While I can understand Crowe’s surprise, it was unfair of him to use his name and Tweet disparaging things about (VOZ), knowing it would go global. The airline responded well, with polite and apologetic Tweets, making clear that safety is the top priority. Even if he knew nothing about the fire reports related to hoverboards or the airline bans, the proper and gracious thing to have done was to have expressed surprise and maybe asked for assistance in getting the toys shipped by other means.
However, the thought also occurs to me that Crowe has done the airline industry and the traveling public a huge favor, albeit inadvertently. By Tweeting his displeasure, he has brought attention to the fact that many airlines have banned hoverboards from their aircraft. That may prevent a lot of hassles for passengers and airlines alike. So, good on ya, Russ!
Meanwhile, take note. If Santa delivered a hoverboard to your home this Christmas/New Year season, leave it at home, if you plan to fly. (And you might want to leave it in a fireproof box at the bottom of the yard)!
News Item A-4: Delta (DAL) TechOps has a 13-year, Virgin Australia (VOZ) contract to provide (CFM56-7B) maintenance/repair.
January 2016: See attached - "VOZ-777 Business Lounge-2016-01.jpg."
February 2016: "Virgin Australia (VOZ) Returns to Profit" by (ATW) Adrian Schofield, February 11, 2016.
Virgin Australia (VOZ) reported a +A$62.5 million/+$43.8 million net profit for the 6 months through December 31, 2015, representing a turnaround from an -A$47.8 million loss a year earlier. It was (VOZ)'s strongest half-year profit since 2010.
(VOZ) reports that all parts of its business improved during the period, which was its fiscal 1st half. Most notably, wholly owned low-cost carrier (LCC) Tigerair Australia (TAU) achieved underlying earnings before interest and taxation (EBIT) of A$13.9 million, its best-ever half-year performance and a turnaround from losses of -A$24.8 million a year earlier. The (LCC)’s unit revenue rose +9.2%, and yield was up +12%.
For the international operation, (EBIT) losses shrank -$A8.7 million to A$30.8 million. The deficit would have been narrower if not for the A$20 million cost of flight cancellations caused by volcanic activity in Bali. The international business is on track to meet its target of achieving profitability by the end of the 2017 fiscal year.
(VOZ)’s core domestic business saw an underlying (EBIT) profit of +A$130 million in the fiscal 1st half, up +A$60.3 million versus the previous year. Domestic unit revenue rose +7.1%, with yield increasing +9.1%. This indicates Virgin (VOZ)’s goal of attracting more business and corporate traffic is succeeding, (CEO) John Borghetti said.
(VOZ) had previously set a target of achieving domestic (EBIT) margin of 6% to 9% by fiscal 2017, and (VOZ) has already reached that level after its margin rose +3% to 7.1% in the half year.
Overall, the Virgin group recorded its 4th consecutive quarter of year-on-year unit revenue growth and its 6th consecutive quarter of unit cost reduction. While (VOZ) did benefit from lower oil prices, Borghetti notes that much of the savings was offset by losses related to a weaker Australian dollar.
The net benefit of fuel and foreign exchange rate movements was A$33.8 million.
March 2016: News Item A-1: "Virgin Australia, Air New Zealand to Partner on Biofuel Purchase" by (ATW) Adrian Schofield, March 14, 2016.
Virgin Australia (VOZ) and Air New Zealand (ANZ) have joined forces in their quest to start using biofuel, and the new arrangement could result in a combined supply deal.
The 2 carriers (who already have an extensive air service partnership in the Australia - New Zealand market) have agreed to jointly “investigate options for locally produced aviation biofuel.” The pair are issuing a request for information (RFI) to the biofuels industry “to explore the opportunity to procure” biofuel.
Any companies interested in responding to the (RFI) must do so by May 30. The airlines are not revealing details of the (RFI), such as the quantity sought or timelines. A (VOZ) spokeswoman described this as commercially sensitive information.
The 2 carriers have already been active in aviation biofuel development. (ANZ) was a leader in demonstration flights using biofuel produced from the plant Jatropha, and (VOZ) is involved in projects to develop various biomass sources. They both signed memoranda of understanding (MOU) with Australia-based biofuel company Licella in 2011.
As well as helping the airlines’ own carbon reduction programs, the new joint initiative is aimed at supporting the growth of this industry in Australasia. “We are seeing the development of the aviation biofuel industry accelerate internationally, but that is not yet the case for our region,” (VOZ) Head of Sustainability, Robert Wood said. “We are confident that our collaboration with (ANZ) to procure a large volume of aviation biofuel will de-risk investment in the sector, creating high-tech, high-skilled jobs in the region.”
Likewise, (ANZ) “hope[s] we can stimulate the local market, drive innovation and investment, plus potentially uncover a sustainable biofuel supply suitable for our respective operations,” said Captain David Morgan, (ANZ)’s Chief of Flight Operations.
News Item A-2: "Australian Customs & Immigration Workers Begin Strikes" by (ATW) Adrian Schofield, March 30, 2016.
Australia’s Customs & Immigration workers have launched strikes at Australian airports, following a postponement over the Easter travel period due to security concerns. A series of short strikes at major international gateways began March 30.
The Community & Public Sector Union had previously planned industrial action before and during Easter, including a 24-hour walkout at all international airports on March 24. However, the union heeded calls from Australian Prime Minister, Malcolm Turnbull to cancel the strikes over Easter, in order to boost airport security in the wake of the Brussels Airport bombing.
News Item A-3: Amadeus and Virgin Australia (VOZ) have signed a new multi-year agreement, extending their longstanding partnership. The new agreement provides Amadeus travel agents with worldwide continued access to Virgin Australia (VOZ)’s full range of fares, seats and schedules under the same conditions as that offered through all other channels.
News Item A-4: Virgin Australia (VOZ)’s largest stakeholder, Air New Zealand (ANZ), is considering selling its share of (VOZ).
May 2016: News Item A-1: "China’s HNA Group to Buy a 13% Stake in Virgin Australia" by (ATW) Katie Cantle, May 31, 2016.
China’s (HNA) Group is expected to make an investment of A$159 million/$114 million) to buy a 13% stake in Virgin Australia (VOZ) for A$0.3 per share in an effort to enhance its position in the fast growing Sino-Australia market.
The (HNA) Group would nominate a Director to the Virgin Australia Group board after the deal is complete at the end of June. The deal still needs approval from Chinese aviation authorities and the Australian Competition & Consumer Commission.
In addition to equity investment, both carriers also signed an agreement to form a strategic alliance to cooperate on code sharing, frequent flyer programs, lounge access, and promotion of tourism and business travel.
According to a written statement released by (VOZ), the (HNA) Group intends to increase its stake to 19.99% in the coming days. “We are excited to support the Virgin Australia Group through our investment and the strategic alliance. We look forward to working together to create a seamless travel experience between Australia and China, and to deliver further choice, value and excellence to travelers worldwide,” the (HNA) Group noted.
Virgin Australia Group (CEO) John Borghetti said: “In 2015, over 1 million Chinese travelers visited Australia, spending approximately A$8.3 billion in total on their journeys. By 2020, almost 1.5 million Chinese travelers are projected to visit Australia in a market expected to be worth up to A$13 billion. We are pleased to welcome (HNA) as a new shareholder and strategic alliance partner. The alliance will see us leverage the opportunities offered by China, as well as the synergies of (HNA)’s comprehensive aviation supply chain.”
China Southern (GUN) is the biggest carrier on Sino-Australia routes. China Eastern (CEA) established a strategic alliance with Qantas (QAN) to coordinate pricing and scheduling on Sino-Australia routes. Hainan Airlines (HNA), the subsidiary of the (HNA) Group opened a seasonal Xi’an - Sydney route and plans to add new Xi’an - Melbourne and Changsha - Melbourne services this year. Another subsidiary, Qingdao Airlines, also plans to open a new Qingdao - Melbourne route.
Launched in 2000, Virgin Australia (VOZ) is the 2nd largest carrier in Australia with close to a 36% share of the Australia market. Singapore Airlines (SIA) received the green light from the Foreign Investment Review Board to boost its stake to 25.9% in Virgin Australia (VOZ), while Etihad Airways (EHD) holds a 25.1% stake in (VOZ). Air New Zealand (ANZ) is the largest shareholder with 25.9%, but is looking to sell its shares in (VOZ).
The (HNA) Group is accelerating its international expansion pace. It agreed to buy a 23.7% stake in Azul Brazilian Airlines (AZL) for $450 million in November 2015. Earlier in May 2016, the (HNA) Group announced it would buy an initial 7% stake in Atlantic Gateway, a private consortium that owns 50% of (TAP) Portugal. This could raise a stake that could reach up to 20% in (TAP).
News Item A-2: Virgin Australia (VOZ) will resume scheduled services to Bauerfield International Airport, Port Vila, Vanuatu, from the end of May, despite continuing concerns about the condition of the runway.
In January 2016, Qantas (QAN), Air New Zealand (ANZ) and (VOZ) all stopped flying to the Pacific island hub following deteriorating surface quality at the airport’s single 8,500 ft runway. (ANZ) said it would not resume flights until a complete $55 million upgrade, funded by the World Bank, was finished.
Reports describe the surface as needing continual sweeping to remove foreign object debris, partly through deterioration of the top bitumen layer.
Airport operator, Airports Vanuatu Ltd has undertaken a temporary fix for the problems by applying a $1.2 million bitumen surface respray in February, and also by increasing the runway sweep frequency to 3x-weekly.
Although (ANZ) and (QAN) are maintaining their block on flights to the airport, national carrier Air Vanuatu (VAN) has said it will leave the decision to use the runway to “the final say [of our captains] should the extra safety measures, not meet our standards.” However, a recent report from Australian contractors recommended keeping up the increased sweep frequency “until such a time as surface rejuvenation is undertaken,” Air Vanuatu (VAN) said.
It also recommended “contingency safety plans,” including the removal of excess water from the runway prior to landing in heavy rain conditions.
June 2016: News Item A-1: China’s privately run Nanshan Group which owns Qingdao Airlines (QDO) has purchased a 19.98% stake in Virgin Australia (VOZ) from Air New Zealand (ANZ). (ANZ) will sell the stake in (VOZ) at 0.33A$ a share to the Nanshan Group. This transaction makes Nanshan the second Chinese company within a month to invest in (VOZ).
“We believe the Nanshan Group will be a very strong, positive and complementary shareholder for Virgin Australia (voz),” (ANZ) Chairman, Tony Carter said. “The sale will allow (ANZ) to focus on its own growth opportunities, while still continuing its long-standing alliance with Virgin Australia (VOZ) on the trans-Tasman network.”
(ANZ) holds a 25.9% stake in (VOZ) and is considering options on the rest of its (VOZ) shares. Other stakeholders include Singapore Airlines (SIA), which received approval from the Foreign Investment Review Board to boost its stake in (VOZ) to 25.9% and Abu Dhabi-based Etihad Airways (EHD), which holds a 25.1% stake in (VOZ).
At the end of May, the (HNA) Group announced it would invest A$159 million/$114 million to buy a 13% stake in (VOZ) for A$0.3 per share and plans to increase the stake to 19.99%. (VOZ) noted the tie-up would boost access to the “rapidly growing Chinese travel market” and has applied to introduce direct flights between Australia and China.
(VOZ) said it expects Nanshan to seek a seat on its board. “We look forward to meeting with the Nanshan Group over the coming weeks to discuss the proposed acquisition,” it said. The deal still needs approval from Chinese regulators.
News Item A-2: Australian regulators have approved Virgin Australia (VOZ)’s request for daily flights to Hong Kong and Beijing, which will be a key part of (VOZ)’s new partnership with China’s (HNA) Group.
July 2016: Singapore Airlines (SIA) is to launch a direct 4x-weekly nonstop service from Singapore to Canberra, Australia, in September. The flights will be the 1st-ever regular international schedules to the Australian capital city’s airport.
The flight (using Boeing 777-200 airplanes in a 266-seat, 2-class configuration) will operate a triangular route from Singapore’s Changi Airport to Canberra Airport, then to Wellington International Airport, New Zealand, before returning to Singapore.
Canberra Airport recently upgraded its facilities to attract international carriers, and has spent AUD2 billion/$1.5 billion on upgrades over the past 2 decades. It has also invested AUD18 million in new international terminal facilities over the last 2 years, designed to handle up to 1 million international passengers a year.
(SIA) (CEO) Goh Choon Phong said the new service would “appeal to leisure, government and corporate travelers” between the 3 seats of government. Canberra Airport spokesman Terry Snow said the new service was vindication of the airport’s long-term vision for international service provision. “As [operators] committed to the prosperity of the capital region, our campaign to see Canberra linked directly to the rest of the world has been constant,” he said.
The new service will add to (SIA)’s existing Australian destinations of Adelaide, Brisbane, Melbourne, Perth, and Sydney, and will see a code share agreement with Virgin Australia (VOZ) on the Canberra - Singapore leg of the new schedule.
September 2016: Virgin Australia (VOZ) plans to add 2 international routes to its network in 2015, using aircraft freed up from domestic changes, as well as the switching of some long-haul services to its partner Etihad Airways (EHD).
In a series of changes announced September 20, (VOZ) said it will
reintroduce service between Melbourne and Los Angeles, and launch new flights between Perth and Abu Dhabi. (VOZ) will withdraw from the Sydney – Abu Dhabi route on February 4; (EHD) will increase its own flights on this route to compensate.
(VOZ) plans to introduce the 5x-weekly Melbourne – Los Angeles flights on April 4. (VOZ) will use 777-300ERs on this flight.
(VOZ) operates 5 of these 777s, and recently completed a cabin upgrade on them. It has previously served this route with 3x-weekly flights, but suspended them in October 2014. At that time, (VOZ) said it wanted to switch capacity to its Brisbane – Los Angeles route. The cut also coincided with United Airlines (UAL)’s entry
onto this route.
The additional 777 capacity for the Melbourne - Los Angeles service will come from the suspension of (VOZ)’s 3x-weekly Sydney – Abu Dhabi flights, and from cutting 1 of its 7x-weekly Brisbane – Los Angeles flights. In addition to the Brisbane and planned Melbourne services, (VOZ) operates a daily flight to Los Angeles from Sydney. It partners with Delta Air Lines (DAL) in the transpacific market.
New Flights: (VOZ) will launch its new Perth – Abu Dhabi flight on June 9. The 3x-weekly services will use Airbus A330-200s. This will be the 1st long-haul deployment of (VOZ)’s A330s, which it mainly
uses on domestic transcontinental flights from the major eastern
cities to Perth, and for some peak-period flights to Fiji.
(VOZ) will free up A330 capacity for the Abu Dhabi flight by switching the equivalent of 3 – 4 weekly return transcontinental flights to 737-800s. This is in line with a decrease in transcontinental demand.
(EHD) will expand its service on the Abu Dhabi – Sydney route to replace the suspended (VOZ) service. This will give (EHD) 2x-daily flights on the route, compared to the current 11x-weekly. (EHD) uses Airbus A380s and 777-300ERs on these flights. (EHD) will retain its daily Abu Dhabi – Perth 787-9 flights after (VOZ) enters the route, giving the carriers a combined 10 flights per week.
(EHD) also offers daily 787 flights to Brisbane, and 2x-daily flights to Melbourne using A380s and 777s. Combined with (VOZ)’s Perth service, (EHD) will offer 45x-weekly to Australia after the changes.
Adrian Schofield, firstname.lastname@example.org
October 2016: News Item A-1: Air New Zealand (ANZ) sold its remaining stake in Virgin Australia (VOZ) to various investors, including the Nashan Group for A$65.7 million.
January 2017: E190-100AR (0148, VH-ZPA) end of lease ferried Brisbane to Nashville.
February 2017: News Item A-1: Virgin Australia (VOZ) announced details of its alliance agreement with (HNA) Aviation, Hong Kong Airlines (CRY) and HK Express, with the airlines submitting an application for authorization of the proposed alliance to the Australian Competition & Consumer Commission.
Subject to authorization, the airlines plan to:
• Introduce new direct services between Australia and the Hong Kong Special Administrative Region of the People's Republic of China (Hong Kong), as well as Australia and The People's Republic of China (mainland China) operated by Virgin Australia (VOZ);
• Code share on each other's flights between Australia and Hong Kong, between Australia and mainland China and on each other's domestic networks; and
• Co-operate in relation to route planning, sales, distribution and marketing, frequent flyer programs, lounge access and other activities.
As part of the 1st stage of the alliance, Virgin Australia (VOZ) plans to introduce flights between Australia and Hong Kong in mid-2017. The airlines are seeking interim authorization of the proposed alliance to enable the introduction of these services as well as the commencement of code share arrangements.
(VOZ) Group (CEO) John Borghetti said: "This new alliance will be a game changer for travel between Australia and China, providing significantly more competition and choice for travelers. "We are excited about introducing direct Virgin Australia flights to Hong Kong, together with access to destinations across China. "The alliance will accelerate and support our access to the Chinese market, which is Australia's fastest growing and most valuable inbound travel market.
"(HNA) Aviation fly nearly 100 million passengers each year and we look forward to working collaboratively with them to drive inbound visitation to Australia, resulting in significant benefits for the Australian tourism industry and broader economy. "Importantly, this strategic alliance with (HNA) Aviation, Hong Kong Airlines (CRY) and HK Express is a key plank in Virgin Australia's International strategy and will help our business deliver long-term growth and success."
* Direct services
(VOZ) services to Hong Kong will be operated using Airbus A330 aircraft, which feature the airline's award-winning Business Class, "The Business". The alliance will offer guests on these services onward connections to destinations in mainland China on services operated by Hong Kong Airlines (CRY). Further details, including departure port/s in Australia, schedule and pricing, will be released in coming months, and the flights are subject to regulatory approvals. (VOZ) also plans to introduce direct flights between Australia and mainland China in further stages of the agreement.
* Code share Services
Subject to regulatory approval, (VOZ) will implement code share on services operated by Hong Kong Airlines (CRY), Hainan Airlines (HNA) and other (HNA) Aviation airlines on journeys between Australia and mainland China and between Australia and Hong Kong.
Customers of Beijing Capital Airlines (DER), (HNA), (CRY) and Tianjin Airlines will be able to book travel on Virgin Australia (VOZ)'s domestic and trans-Tasman network.
* Loyalty Program Benefits
Velocity Frequent Flyer's 7 million members will enjoy a frequent flyer partnership with "Fortune Wings Club," including:
• The opportunity to earn Points and Status Credits on alliance routes; and
• Reciprocal access to tier status benefits including lounge access, priority check-in, priority boarding and additional baggage allowances.
News Item A-2: Virgin Australia (VOZ) will defer its Boeing 737 MAX orders for 1 year as it confronts weaker demand in the Australian domestic market. (VOZ) was supposed to take delivery of the airplanes beginning in the 2nd half of 2018. However, it pushed 1st delivery out to the last quarter of 2019, (VOZ) revealed during its latest earnings call. This move will also defer more than >A$350 million/$269 million in capital spending beyond the fiscal year ending June 30, 2019.
March 2017: Virgin Australia (VOZ)’s launch of a flight to Hong Kong will dramatically expand its Chinese mainland network thanks to its prospective partnership with China’s (HNA) Group. (VOZ) will add 9 new Chinese destinations to the 10 it already offers through its alliance with Singapore Airlines (SIA). It will do this through planned connections to flights by (HNA) and its affiliates, via Hong Kong.
June 2017: Embraer E190-100AR (00220, VH-ZPL), returned to Aldus Aviation after lease.
July 2017: Virgin Australia (VOZ) ventured into the Hong Kong (HKG) market on July 5. It will operate 5x-weekly on its 275-seat A330-243s from Melbourne (MEL). Chief of Aviation at Melbourne Airport, Simon Gandy, said of the new service: “We are delighted (VOZ) has chosen Melbourne to expand its international services creating more opportunities for Victorians to travel for business, leisure, education and renewing family ties. Hong Kong is one of our top 10 international outbound destinations with around 115,000 people traveling between Melbourne and Hong Kong each year.” The route will face substantial competition, with Cathay Pacific Airways (CAT) (3x-daily) and Qantas (QAN) (daily) both offering services on the 7,406 km sector.
See attached photo of non-other than Virgin Founder Sir Richard Branson celebrating the start of the new 5x-weekly service:
"VOZ-2017-07 - Melbourne to Hong Kong.jpg."
737-800 (41016, VH-VFY), delivery.
August 2017: News Item A-1: Virgin Australia (VOZ) added its 10th route from the Australian capital city of Canberra (CBR) on August 6th, commencing a 2x-weekly (Thursdays and Sundays) operation to Perth (PER). (VOZ) will utilize its 737-800 fleet on the 3,082 km city pair.
Canberra Airport Managing Director Stephen Byron, said: “Canberra is attracting increasing numbers of inbound tourists. In the past year, 208,000 international visitors visited the capital and the wider region, and spent A$452 million.
Perth is not only a key national destination, but a gateway to Africa and beyond, and we expect the new service to become highly attractive to our region’s population of around 1 million.” Virgin Australia (VOZ) General Manager Network Management Hope Antzoulatos said: “This service will be particularly welcomed by West Australian parliamentarians and their staff, who will have the opportunity to fly directly from Perth to Canberra during sitting weeks, as well as passengers wishing to travel between the 2 cities. The introduction of this service is part of our commitment to bring greater competition to the industry and more choice to Australian travelers.”
Qantas (QAN) provides the competition on the route, offering a daily service.
News Item A-2: Virgin Australia (VOZ) has successfully amended its determination with Australia's International Air Services Commission to include its wholly owned low-cost subsidiary Tigerair Australia (TAU) on its USA route authority. 3 other applications to include Tigerair on New Zealand, Fiji, and Vanuatu routes were withdrawn.
"From information available to the Commission, it has reached the view that (TGR) is reasonably capable of obtaining the necessary approvals to operate on the USA route and of implementing the service in accordance with the Australia - USA air services arrangements," the Commission's Determination said.
Tigerair (TAU) currently operates within Australia domestically, with a fleet of 14 A320-200s and 3 737-800s. It previously provided services internationally to Denpasar, Indonesia, but these were suspended in early 2017 over regulatory issues.
(VOZ), for its part, currently offers services from Brisbane International, Melbourne Tullamarine and Sydney Kingsford Smith to Los Angeles International.
News Item A-3: Virgin Australia (VOZ) is starting the fleet-wide rollout of its onboard Wi-Fi service, and plans to have a large proportion of its domestic and international jet fleet retrofitted by the end of 2018. Following a 3-month trial period on 1 of its Boeing 737-800s, (VOZ) essentially began the broader installation by deploying Wi-Fi on a 2nd 737. While (VOZ) is not revealing the timing for the 3rd airplane, it will progressively work on the rest of its 737 fleet.
October 2017: Virgin Australia (VOZ) is spearheading an effort to provide biofuel for airlines at 1 of Australia’s major airports, which could eventually spawn a local jet biofuel industry. The 2-year trial project will use a biofuel blend at Brisbane International Airport. This will be the 1st time biofuel has been supplied through the regular fuel system at an Australian airport, rather than being added to aircraft tanks on a one-off basis, (VOZ) said.
November 2017: "Virgin Australia Eyes More Asian Services in 2018" by
Adrian Schofield (ATW) Plus November 8, 2017.
Virgin Australia (VOZ) intends to start operating at least 1 new Asian route next year, as (VOZ) continues to seek access to slot-constrained airports. (VOZ) already operates 1 Asian service to Hong Kong, and has often said it wants to add more routes there and to mainland China. (CEO) John Borghetti said (VOZ) is “working hard” to gain additional slots in Hong Kong and elsewhere in Asia, although he would not name specific routes.
February 2018: Virgin Australia (VOZ) reported a net profit of +A$4.4 million/+$3.4 million for its fiscal 1st-half ended December 31, 2017, signaling its multi-year transformation plan is gaining traction. This represents a turnaround from a net loss of -A$21.5 million a year earlier. (CEO) John Borghetti said the result “demonstrates the success of our long-term strategy to reposition the business and strengthen its financial foundation,” although he added there is “more work ahead.
April 2018: News Item A-1: "Virgin Australia to Launch New Flights to Hong Kong" by Adrian Schofield, (ATW) Daily News, April 03, 2018.
Virgin Australia (VOZ) will begin flights from Sydney to Hong Kong on July 2, which will join its existing service from Melbourne to Hong Kong. (VOZ) had previously signaled it wanted to start the Sydney flights this year as it expands its reach in the Greater China market.
(VOZ) regards Hong Kong as its gateway to mainland China, thanks to existing connections with partner Hong Kong Airlines (CRY). (VOZ) has also revealed it will be adding an interline agreement with HK Express (HKE), which like (CRY) is an affiliate of the (HNA) Group. (HNA) is a major shareholder in Virgin Australia (VOZ).
The HK Express (HKE) interline flights will be sold by (VOZ) starting later this month, and will allow passengers from Sydney and Melbourne to connect to other Asian destinations beyond Hong Kong. (VOZ) also connects with Virgin Atlantic (VAA) flights in Hong Kong.
The new Sydney to Hong Kong route will use Airbus A330-200s. "Greater China is a key pillar of our strategy and the addition of Sydney services to our already popular Melbourne flights to Hong Kong strengthens our proposition immensely," (VOZ) group executive Rob Sharp said.
News Item A-2: Virgin Australia (VOZ) appointed Merren McArthur as (CEO) of Tigerair Australia (TAU).
News Item A-3: "Virgin Australia Expands New Zealand Network After Partnership Breakup" by "Aviation Week" Adrian Schofield (email@example.com), April 16, 2018.
Virgin Australia (VOZ) is increasing routes and frequencies to New Zealand following the termination of its alliance with Air New Zealand (ANZ), which becomes effective in October.
The new flights are needed because (VOZ) is losing services currently provided by Air New Zealand (ANZ) under their joint venture (JV) agreement. (ANZ) sparked the breakup by deciding not to renew the partnership when its authorization expires in October. Under the (JV), the pair coordinated scheduling and shared revenue on routes between the 2 countries.
(VOZ)’s move to add flights, follows a similar step by (ANZ) as the airlines prepare to transition from partners to rivals. (ANZ) recently announced it will introduce 2 new routes as well as adding frequencies on others, which will boost its capacity by 15% in the Australia to New Zealand market.
The 2 routes being added by (VOZ) are between Sydney and Wellington, New Zealand with 5x-weekly, and between Melbourne, Australia and Queenstown, New Zealand with 4x-weekly flights. They will be operated by Boeing 737-800s from October 28. (ANZ) already serves both these routes, and they are also contested by Qantas Group carriers.
(VOZ) is increasing capacity on 3 of its existing routes into the key Auckland market. It will add 8x-weekly Sydney to Auckland flights, giving it a total of 19. Melbourne to Auckland flights will increase from 10x- to 14x-weekly, and Brisbane to Auckland will rise from 12x- to 14x-. In comparison, (ANZ) has up to 6x-daily on Auckland to Sydney, and up to 5x-daily flights on Auckland to Melbourne.
(VOZ) is also reducing frequencies on some routes as it reshuffles its Australia to New Zealand network, cutting Melbourne to Christchurch flights from 11x- to 7x-weekly, and Brisbane to Wellington flights from 14x- to 9x-. However, (VOZ) stressed its commitment to both these markets. Other flights are being retimed.
(VOZ) noted it has had a presence in New Zealand since 2004, and signaled that it will be announcing further initiatives in this market soon.
June 2018: Virgin Australia (VOZ) Group (CEO) John Borghetti has announced he will leave (VOZ) in 2020, which sharpens the focus on who will succeed him.
September 2018: "Virgin Australia Completes Biofuel Trial at Brisbane Airport" by (ATW) Adrian Schofield (firstname.lastname@example.org), September 11, 2018.
Virgin Australia (VOZ) has just completed a major biofuel trial at Australia’s Brisbane Airport, and (VOZ) is planning further tests in the near future.
Along with its partner organizations, (VOZ) arranged to have a biofuel blend supplied through Brisbane Airport’s aircraft refueling infrastructure. (VOZ) said this was the 1st time a sustainable fuel type has been delivered through the traditional fuel system at an Australian airport.
The blend of biojet fuel and jet fuel was supplied to a range of airlines using Brisbane Airport. All flights departing the airport during the trial period were fueled with the blend, totaling 195 domestic and international flights.
(VOZ) is expecting more shipments of the biojet fuel over the next 12 to 18 months, with allow it to conduct another trial at Brisbane Airport, an airline spokeswoman said. While the carrier and is focused on “consolidating the trial process” at Brisbane, it will also “look for other opportunities across our network.”
The trial used biojet fuel produced in the USA, as there is currently no production of advanced sustainable aviation fuel in Australia. However, (VOZ) noted that “there is potential” for these fuels to be produced in Australia, and 1 of the goals of the trials is to support the development of such an industry.
The Brisbane trial also represented “an important step in readying the supply chain for the use of [biofuels],” the spokeswoman said. The fuel blend used in the airport’s infrastructure was “subject to extensive testing and re-certification.”
Brisbane is 1 of just a handful of airports globally to have hosted an extensive biofuel trial. Such programs have already been run at airports in Oslo and Los Angeles.
(VOZ)’s partners in the Brisbane trials were the Queensland state government, the Brisbane Airport Corporation, USA-based biofuel producer Gevo, and supply chain companies Caltex and (DB) Schenker.
Queensland Premier Ms Annastacia Palaszczuk said the trial marks “another step forward in a homegrown biofuels industry” that is being supported by the state government. “Our own biofuels producers have a ready customer in Virgin Australia (VOZ) and I look forward to their cooperation growing,” she said.
November 2018: "Virgin Australia on Track for 2019 737 MAX Delivery"
by Adrian Schofield (email@example.com), November 7, 2018.
Virgin Australia (VOZ) is on track to receive its 1st Boeing 737 MAX airplane in November 2019 and is not considering further delays to the delivery date. In early 2017 (VOZ) postponed the 737 MAX deliveries, which were originally scheduled to begin in September or October of this year. (VOZ) now believes the revised 737 MAX timetable is appropriate and will not delay deliveries to boost its financial position, (CEO) John Borghetti said during a teleconference following (VOZ)’s annual general meeting.
(VOZ) is scheduled to receive 30 737-8s and 10 737-10s. The 737 MAX airplanes will primarily be for fleet replacement, although some will also be for growth, Borghetti said.
The “economics don’t make sense” to delay retirement of (VOZ)’s 737-800s any further, Borghetti said. (VOZ) does not want to be in a position of operating 25-year-old airplanes and then facing a “tidal wave of capital expenditure” Higher fuel burn and increased maintenance boost the cost of operating older airplanes, he said.
However, (VOZ) continues to upgrade its fleet of >80 737-700s and 737-800s. (VOZ) has installed onboard Wi-Fi on >60% of the domestic 737s, and the remainder are scheduled to receive the upgrade by the end of February 2019, Borghetti said. Installation on (VOZ)’s Airbus A330 fleet will be completed by September 2019.
Regarding subsidiary Tigerair (TGR), Borghetti said the (LCC)’s transition from A320s to 737s will take 3 to 4 years. (TGR) operates 12 A320s, and 4 737s have been transferred from (VOZ) since 2016. Despite the transition, (TGR)’s passenger demand and yields have been relatively strong, and the (LCC) is demonstrating “good fundamentals going forward,” Borghetti said.
(VOZ) has not changed its previous position that it has no plans to privatize, board chair Elizabeth Bryan said during the (AGM). The company has a relatively small free share float because of majority ownership by overseas airlines. (VOZ)’s board had considered full privatization but decided against such a move.
Click below for photos:
VOZ-737 MAX - 2017-02.jpg
VOZ-737-800 - 2015-03
VOZ-737-800 VIRGIN AUSTRALIA-2011-05
VOZ-737-8FE - 2011-12
VOZ-777-300ER - 2017-03.jpg
VOZ-777-300ER - 2017-10.jpg
VOZ-777-300ER - 2018-01.jpg
VOZ-A330-243 - 2013-10
0 737-2Q8 (JT8D) (2355-26282, VH-TAB), EX-(PLY), (ILF) LEASED 2001-10, RETURNED.
0 737-33A (CFM56-3) (1833-24461, VH-CZQ), EX-(ANS), (TCI) LEASED 2001-11. RETURNED 2003-10.
0 737-3M8 (CFM56-3) (2037-25070, /91 OO-LTM), (EBA) LEASED 2000-05 RETURNED.
0 737-4Q8 HGW (CFM56-3C1) (2461-25740, /93 VH-VGB), EX-(PHR), (ILF) LEASED 2000-08, RETURNED.
0 737-4Q8 HGW (CFM56-3) (2620-26302, /94, VH-VOZ), EX-(THY), (ILF) LEASED 2000-06, RETURNED.
0 737-4YO (CFM56-3) (1667-23980, /89 VH-VGD), EX-(AAR)/(EBA), (BBB) LEASED, RETURNED.
0 737-43Q (CFM56-3) (2827-28489, /96 VH-VGA "BLUE BELLE"), EX-(CHI), (GEF) LEASED 2000-05, RETURNED.
0 737-43Q (CFM56-3) (2838-28493, /96 VH-VGE), EX-(VEI), (BOU) LEASED 2001-01, LEASED TO (EBA) 2003-02.
0 737-46M (CFM56-3) (2844-28549, /97 VH-VGC), RETURNED TO (EBA) 2002-02.
105/25/30 ORDERS 737-700/-800/-900 (CFM56-7B):
2 737-7BK (CFM56-7B24) (1322-30288, /03 VH-VBU "DARWIN DIVA;" 1384-33015, /03 VH-VBV "MOULIN BLUE"), (TCI) LEASED. WINGLETS. 144Y.
3 737-7BX (CFM56-7B24) (922-30743, /01 VH-VBP "DEJA BLUE;" 989-30744, /01 VH-VBQ "LA BLUE FEMME;" 1027-30745, /01 VH-VBR "MACKAY MAIDEN;" 1085-30746, /02 VH-VBS "BLUE BARONESS"), (BOU) LEASED. 30744; RETURNED. WINGLETS. 144Y.
0 737-7BX (CFM56-7B24) (776-30740, /01 VH-VBT "LAUNIE LASS"), EX-(MID), (GEF) LEASED 2003-01. RETURNED. 144Y.
3 737-7FE (CFM56-7B24) (1751-34323, /05 VH-VBY "VIRGIN-IA BLUE; 1777-34322, /05 VH-VBZ "MALIBLUE;" 3232-36609, VH-VUU "LADY BLUE-TIFUL" 2010-04), WITH WINGLETS. 144Y.
8 737-7Q8 (CFM56-7B24) (817-28238, /01 VH-VBA "BRIZZIE LIZZIE;" 832-28240, /01 VH-VBB "BAROSSA BABE;" 858-30638, /01 VH-VBC "BETTY BLUE;" 975-30707, /01 VH-VBD "SASSY SYDNEY;" 1032-30630, /01 VH-VBF "MELLIE MELBOURNE;" 1080-30641, /02 VH-VBH "SPIRIT OF SALTY;" 1107-30644, /02 VH-VBI "SMURFETTE;" 1159-30647, /02 VH-VBJ "PERTH PRINCESS;" 1171-30648, /02 VH-VBK "LADY VICTORIA;" 1220-30633, /02 VH-VBL, "VICTORIA VIXEN"), (ILF) LEASED. 30707; RETURNED. ALL 737-700S TO BE PHASED OUT BY END OF 2013. 30648; RETURNED TO (ILF). 144Y.
0 737-705 (CFM56-7B24) (230-29091, VH-VBT "BLUE TONGUE LIZZIE;" 260-29092, VH-VBX "SULTRY SAPPHIRE"), EX-(BRT), (BBB) LEASED 2003-07. 29091 RETURNED 2004-10. 29092 WFU 2004-10. 144Y.
3 737-76N (CFM56-7B24) (1090-32734, /02 VH-VBM "TASSIE TIGRESS;" 1134-33005, /02 VH-VBN "SOUTHERN BELLE;" 1226-33418, /02 VH-VBO "TROPICAL TEMPTRESS"), (GEF) LEASED, WITH WINGLETS. 144Y.
6 737-8BK (CFM56-7B26) (2414-29675, /07 VH-VUM;* 2342-29676, /07 VH-VUN "MADELAIDE;"* 991-30620, /01 VH-VOA "BLUE BELLE;" 1108-30622, /02 VH-VOB "MATILDA BLUE;" 1136-30623, /02 VH-VOC "SKYE BLUE;" 1193-30624,/02 VH-VOD "BLUE MOON"), (TCI) LEASED. *FOR (PBI) OPERATIONS. 8PY, 168Y.
1 737-8BK (CFM56-7B26) (1446-33017, /04, VH-VOX "MISSY MAILANDER), (TCI) LEASED. FOR "PBI) OPERATIONS. 8PY, 168Y.
42 +7 OPTIONS 737-8FE (CFM56-7B26) (29676, VHVUN "CARRICKALANGA BEACH;" 1359-33758, /03 VH-VOK "SMOOCHY MAROOCHY;" 1364-33759, /03 VH-VOL "GOLDIE COAST;" 1373-33794, /03 VH-VOM "LITTLE BLUE PEEP;" 1375-33795, /03 VH-VON "SCARLETT BLUE;" 1377-33796, /03* ZK-PBA "BONNIE BLUE;" 1389-33797, /03* ZK-PBB "WHITNEY SUNDAYS;" 1391-33798, /03* VH-VOQ "PETA PAN;" 1462-33799, /04 ZK-PBF "TAPU'ITEA;" 1483-33800, /04 VH-VOS "KIMBERLEY CUTIE;" 1504-33801, /04 VH-VOT "SCARBOROUGH BEACH;" 1551-33996, /04* ZK-PBD; 1559-33997, /04 VH-VUA "VIRGINIA BLUE;" 1573-34013, /04 VH-VUB "BILLIE BLUE;" 1582-34014, /04 VH-VUC "PEREGRIAN BEACH;" 1594-34015, /04 VH-VUD "BEWITCHING BROOME;" 1676-34167, /05 VH-VUE "PRUE BLUE;" 1697-34168, VH-VUF, 4/05; 1948-34438, /06 VH-VUG "JASMAN TASMAN;" 2003-34440, /06 VH-VUH "TICKLED BLUE;" 2015-34441, /06 VH-VUI "BRANDI BLUE;" 2056-34443, /06 VH-VUJ; 2353-36602, /07 VH-VUK; 2356-36603, VH-VUL, 2007-08; 2525-36621, VH-VUO, 2008-03; 2650-36604, VH-VUP, 2008-08; 2710-36605, ZK-PBL*, 2008-08; 3059-36606, VH-VUR, 2009-10; 3082-36607, VH-VUS, 2009-11; 3132-36608, VH-VUT "YABBA DABBA BLUE, 2009-12; 36609, VH-VUU "LADY BLUE-TIFUL" 2010-04; 3288-37821, VH-VUV "RUBY BLUE" 2010-05; 37823, VH-VUX "SYDNEY SIREN" 2010-09; 3536-39921, VH-VUZ, 2011-01; 3921-38711, VH-YIG, 2012-02; 38713, VH-YIL "SEVENTY FIVE MILE BEACH;" 38716, VH-YIM "BRIDGEWATER BAY;" 39924, VH-YIJ "PENNINGTON BAY;" 40700, VH-YIW 2014-08; 40702, VH-YIZ 2014-08; 3941-40999, VH-YFG 2012-02; 40996, VH-VYF "MINDIL BEACH" 2011-10; 41029, VH-YFU "EMU BAY;" 41030, VH-YFV "PRINCESS CHARLOTTE BAY"), WITH WINGLETS. *"PACIFIC BLUE" TITLE & OPS. 33796 TRANSFERRED TO (PBI) 2004-01. 33996, ZK-PBD, 2004-08 TRANSFERRED TO (PBI). 36605; WET-LEASED TO (PBI) 2008-08. 8PY, 168Y.
2 737-8FE (CFM56-7B24) (1751-34323, VH-VBY, 2005-07; 1777-34322, VH-VBZ, 2005-08). IN SPECIAL "TRUE BLUE" LIVERY. WINGLETS. 8PY, 168Y.
2 737-8FE (CFM56-7B24) (41010, VH-YFQ "WHITING BEACH;" 41011, VH-YFP "NOBBY'S BEACH), 2013-06. 8PY, 168Y.
1 737-8KG (CFM56-7B) (39449, VH-VUW "BELLINA BALLERINA"), (DAE) LEASED 2010-09. 8PY, 168Y.
1 737-8KG (CFM56-7B) (3494-39450, VH-VUY "BYRON BEAUTY")), 2011-01. 8PY, 168Y.
2 737-8Q8 (CFM56-7B26) (1437-30665, /04 VH-VOU "BLUE BILLIE;" 1470-32798, /04 VH-VOW "JILLAROO BLUE"), (ILF) LEASED. 8PY, 168Y.
1 737-800 (CFM56-7B26) (41016, VH-VFY), 2017-07. 8PY, 168Y.
1 +2 ORDERS 737-800 (CFM56-7B26), (ILF) LEASED 2013-05. 8PY, 168Y.
2 +2 ORDERS 737-81Q (CFM56-7B26) (1138-30786, /02 VH-VOI "BLUE BAMBINO;"; 1234-30787, /02 VH-VOJ "LULU BLUE"), (TOM) LEASED. 8PY, 168Y.
1 737-82R (CFM56-7B26) (1325-30658, /03 VH-VOV "ALLURING ALICE"), (ILF) LEASED. 8PY, 168Y.
2 737-86N (CFM56-7B26) (839-28644, /01 VH-VOG "MISTY BLUE;" 1094-29884, /02 VH-VOH "JAZZY BLUE"), EX-(CBD), (GEF) LEASED. 8PY, 168Y.
1 737-86Q (CFM56-7B26) (824-30272, /01 VH-VOE "PEAKA BLUE;" 845-30274, VH-VOF "BABY BLUE"), EX-(CBD), (BOU) LEASED. 30274; RETURNED, LEASED TO (SNS) 2005-04. 8PY, 168Y.
40 ORDERS (2019-10) 737 MAX 8 (LEAP-1B):
2 777-3ZGER (GE90-115B) (756-37938, /09 VH-VPD "DIDGEREE BLUE;" 764-37939, /09 VH-VPE), 33C, 40 PY, 288Y.
1 777-3ZGER (GE90-115B) (801-37940, /09 VH-VPF), (ILF) 148 MONTH LEASED 2009-09. 33C, 40 PY, 288Y.
1 777-3Q8ER (GE90-115B) (745-35302, /09 VH-VOZ), (ILF) LEASED, 33C, 40 PY, 288Y.
7/6 ORDERS 777-300ER (GE90-115B):
2 A330-243 (TRENT 772B-60) (365, /00 VH-FXA, 2011-02; 372, /00 VH-FXB), EX-(A6-EAB & A6-EAC). 24C, 255Y.
4 A330-243 (TRENT 772B-60) (1293, /12 VH-XFC; 1306, /12 VH-XFD; 1319, /12 VH-XFE; 1407, /13 VH-XFG), 24C, 255Y.
0 EMBRAER E170 (00180, /07 VH-ZHA; 00187, /07 VH-ZHB; 00191, /07 VH-ZHC "IRRESISTO BLUE;" 00227, VH-ZHD, 2008-06; 00247 VH-ZHE; 00250 VH-ZHF "LITTLE MISS SUNSHINE COAST" 2008-12), ALL RETURNED. 78Y.
16 EMBRAER E190 (00148, /08 VH-ZPA "APOLLO BEACH;" 00162, /08 VH-ZPB; 00170, /08 VH-ZPC; 00176, /08 VH-ZPD "TICKLED BLUE; 00187, /08 VH-ZPE "COOGEE BEACH;" 00193, /08 VH-ZPF; 00195, /08 VH-ZPG; 00199, /08 VH-ZPH; 00202, /08 VH-ZPI; 00209, /08 VH-ZPJ; 00218, /08 VH-ZPK; 00220, /08 VH-ZPL; 00262, /09 VH-ZPM "EMMA-BRAER;"* 00312, /09 VH-ZPN "KANGA BLUE;" 00412, /11 VH-ZPQ; 00424, /11 VH-ZPR; 00451, /11 VH-ZPT "LITTLE BEACH"), *FOR (PBI) OPERATIONS. 00148, END OF LEASE FERRIED BRISBANE TO NASHVILLE END OF LEASE. 00220 RETURNED AFTER LEASE 2017-06. 6C, 92Y.
6 ATR72-500 (PW127) (954, /11 VH-FVH "FOUR-MILE BEACH;" 955, /11 VH-FVI "MISSION BEACH;" 974, /11 VH-FVL "PRESTON BEACH" - - SEE PHOTO - - "SKD-2011-08 - 1ST ATR;" 978, /11 VH-FVU; 979, /11 VH-FVM "WOOLAMAI BEACH;" 986, /11 VH-FVX), AVIATION (PLC) LEASED, EX-(SKD). IN VIRGIN AUSTRALIA COLORS AND TITLES. 68Y.
5 +5 OPTIONS ATR72-600 (PW127) (1025, /12 VH-FVP; 1039, /12 VH-FVN; 1053, /12 VH-FVP; 1058, /12 VH-FVQ; 1073, /13 VH-FVY), AVIATION (PLC) LEASED 2012-08, EX-(SKD). IN VIRGIN AUSTRALIA COLORS & TITLES. 68Y.
Click below for photos:
VOZ-1-SIR RICHARD BRANSON-2014-07
VOZ-2-JOHN BORGHETTI - 2013-11
VOZ-9-JUDITH CROMPTON - 2013-12
VOZ-9-JUDITH CROMPTON - 2013-12-A
SIR RICHARD BRANSON, FOUNDER.
NEIL CHATFIELD, INDEPENDENT NON-EXECUTIVE CHAIRMAN (2007-06).
Neil is an established executive and non-executive director with experience across a range of industries. He has extensive experience in financial management, capital markets, mergers and acquisitions and risk management, and was most recently an Executive Director and Chief Financial Officer of Toll Holdings Limited.
Other directorships of (ASX) listed companies are Seek Ltd since 2005, Whitehaven Coal Limited since 2007, Transurban Group and Grange Resources Ltd since 2009.
JOHN BORGHETTI, CHIEF EXECUTIVE OFFICER (CEO) (VOZ)/(VAZ)/(PBI), EX-(QAN) (2010-05).
John has >37 years experience in the aviation sector having previously held a number of senior positions at Qantas (QAN), including the role of Executive General Manager for 6 years prior to leaving the company in May 2008.
He is a director of Care Australia and The Australian Ballet and was previously a director of Piper Aircraft and an Investment Committee Member of Investec Global Aircraft Fund.
MERREN MCARTHUR, CHIEF EXECUTIVE OFFICER (CEO) TIGERAIR AUSTRALIA (TAU) (2018-04).
NEIL THOMPSON, (CEO) VELOCITY FREQUENT FLYER DIVISION (2012-08).
TONY MARKS, (CEO) PACIFIC BLUE (PBI), EX-(ANZ) (2003-11).
MARTIN DALEY, GROUP EXECUTIVE PRODUCT & GUEST SERVICES.
Martin Daley has responsibility for all aspects of customer service and product development across the Group including: Product, Group Service Training, Cabin Crew (Domestic and International), Premium Guest Services and Lounges.
SEAN DONOHUE, GROUP EXECUTIVE OPERATIONS, EX-(UAL) (2010-10).
Sean Donohue is responsible for Engineering Operations, Ground Operations, Flight Operations, Group Flight Standards, Operations Planning, Safety Systems, Pacific Blue and V Australia (VAZ) Operations.
ANDREW DAVID, CHIEF OPERATIONS OFFICER (COO) (2004-11).
SANKAR NARAYAN, CHIEF FINANCIAL OFFICER (CFO).
Sankar Narayan oversees all Group Investor Communications, Finance, Information Technology, Business Transformation, Property, Forecasting, Internal Audit, Risk Office and Fleet.
MS DANIELLE KEIGHERY, GROUP EXECUTIVE CORPORATE COMMUNICATIONS
Danielle Keighery is responsible for the Group’s Corporate Communications, Public and Media Relations, In-flight Media, and Community Sponsorships.
MS MERREN MCARTHUR, GROUP EXECUTIVE, REGIONAL AIRLINES (2013-04), AND VIRGIN AUSTRALIA CARGO (2015-07).
Merren McArthur had previously overseen all Group Special Projects, Strategic Alliances, Corporate Governance, Legal, Environmental/ Sustainability and was the in-house Economist.
Merren McArthur, who has been Virgin Australia (VOZ) Group Executive Alliances, Network & Yield since 2011, will take on the new position of Virgin Australia (VOZ) Group Executive Regional Airlines. She will be based in Western Australia and has been tasked with ensuring a smooth integration of the two businesses.
Merren has been with Virgin Australia (VOZ) for more than >5 years and has previously held roles including Group Executive Corporate Advisory, General Counsel & Company Secretary. “We believe there is a need for more competition on regional routes and our plan is to grow the current operations and expand our network to new destinations throughout Australia,” McArthur said.
Virgin Australia (VOZ) is in the process of creating a new brand: "Virgin Australia Regional" by acquiring Perth based Skywest (SKD).
MS JANE MCKEON, GROUP EXECUTIVE GOVERNMENT RELATIONS
Jane McKeon has responsibility for the Group’s Government Affairs and Industry Representation.
MS LIZ SAVAGE, GROUP EXECUTIVE COMMERCIAL
Liz Savage has strategic oversight of the Group’s commercial operations including: Marketing and Sponsorships, Sales, Revenue Management, Network Management, Velocity and Customer Relationship Management, eCommerce, Alliance Management, Ancillary Revenues, and holiday arm Blue Holidays.
RICHARD TANNER, GROUP EXECUTIVE PEOPLE
Richard Tanner is responsible for the Group’s Leadership Advisors, Workplace Relations, Remuneration and Services, Recruitment, Staff Travel and the company’s central training function, The Academy.
CAPTAIN JOHN RABY, HEAD FLIGHT OPERATIONS, (firstname.lastname@example.org).
MAURIE BASTON, GENERAL MANAGER TECHNICAL & REGULATORY SERVICES.
HOPE ANTZOULATOS, GENERAL MANAGER NETWORK MANAGEMENT.
NICK BRANT, HEAD OF INFORMATION TECHNOLOGY (IT) (2001-09).
RON SALTER, HEAD ENGINEERING, (email@example.com).
MS JUDITH CROMPTON, CHIEF COMMERCIAL OFFICER (CCO).
ANDREW LILLYMAN, HEAD VIRGIN TECHNICAL (2002-12).
ROBERT WOOD, HEAD SUSTAINABILITY.
DAVID HUTTNER, HEAD OF COMMERCIAL.
MANNY GILL, HEAD OF FINANCE.
TIM JORDAN, HEAD OF COMMERCIAL DISTRIBUTION.
SCOTT SWIFT, HEAD OF CORPORATE AFFAIRS.
BRUCE HIGHFIELD, HEAD OF HUMAN RESOURCES (HR).
PHIL SCANLON, HEAD OF SECURITY.
MARK CLARK, SYSTEM MAINTENANCE MANAGER (2000-12).
IAN MACCALLUM, SAFETY MANAGER, (firstname.lastname@example.org).
KARAM CHAND, MANAGER COMMERCIAL PLANNING & STRATEGY.
Karam moved to Royal Brunei Airlines (RBA) in 2013 and was recently made its Chief Executive Officer (CEO) (2016-04).
JOHN SAUNDERS, QUALITY ASSURANCE (QA) MANAGER.
RON LANGDON, AIRWORTHINESS MANAGER (2002-12).
KEVIN MAIZEY, PLANNING MANAGER.
MS DEE FOSTER, DOCUMENTATION MANAGEMENT UNIT MANAGER.