Let’s reveal the big news Virgin Australia guests and Tigerair’s bargain shoppers weren’t told at today’s shareholder AGM.
In 2017 you will get wi-fi on Virgin flights, there will be some much anticipated cheap fares to new international destinations for the low cost brand’s customers, and there will be new wide body full service flights to China, oops, somewhere in Asia.
Maybe both in China and Asia? That’s the stuff the punters want to hear. The AGM was however resolutely focused on what shareholders wanted to hear, which was more efficiency, lower costs, and fleet rationalisations worth in total ‘net free cash flow savings increasing to $300 million a year by the end of financial year 2019.’
It was a focus that didn’t quite click with some of the questioning speeches from the floor, however there was an uptick in the VAH share price as the AGM proceeded, no doubt encouraged by this slide entitled Better Business Program.
If that $300 million a year in savings had occurred in financial year 2016 this somewhat restrained AGM might have been a riot of colour and motion. And to be serious for a moment, the fundamentals that Virgin Australia CEO John Borghetti emphasised are very strong, provided the externals, like business sentiment, consumer confidence and fuel all do the right things, not to mention the “the competitor” in the cages labelled Qantas and Jetstar.
After the AGM Mr Borghetti said the international expansion of single aisle Tigerair Australia services was an important part of Virgin Australia’s immediate future. He said there was clear evidence of rising consumer demand for low fare flights abroad. While he wasn’t of the view that there was quite the same pressure for more budget flights domestically he said Tigerair was now providing the Australian market with low cost air travel that was genuinely low fare and delivered with a smile.
“Low cost air travel is growing and Tigerair will participate in that growth,” Mr Borghetti said.
He said there had been no adverse effects on Virgin Australia’s 777 services to the US in the run-up to the Presidential election. An argument could be mounted that a need for business travellers to fly even more to America next year to ‘meet the new players’ would stimulate demand on the Pacific routes, including the nonpstop flights Virgin would re-introduce to the Melbourne-Los Angeles sector from April.