Australia's second largest airline group sees all its components gaining altitude this financial year
Air New Zealand’s unhappiness with Virgin Australia has caused today’s ASX trading halt in VAH while the highly profitable NZ carrier decides whether to sell all or part of its minority 25.9 percent stake in Australia’s second largest airline group.
This is an awkward moment for Virgin Australia in that today’s announcement of a $425 million unsecured loan from its rich and powerful airline backers buys it more time to fix its finances.
In the big picture of its half yearly financial results released this morning Virgin Australia has managed to lift fares and operating efficiency to levels that go way above the net exchange rate adjusted benefits of cheaper fuel.
The consumer take away from this morning’s Virgin Australia first half financial briefing is that profitable competition will continue to rule on domestic routes, at least for the time being.
As the heat goes out of the apparently dying embers of a capacity war with Qantas, and fuel prices sag to levels no-one in the airline game dared dream about even a few months ago, Virgin Australia is cautiously optimistic about the future.
As a recipient of a number of regular proprietary financial institution bulletins they historically tend to be very weak at picking downtrends in consumer demand, and this could mean bad news for Qantas and Virgin Australia and their low cost brands.
The deeper concern about the Qantas infatuation with Jetstar is that it deluding itself if it thinks its full service customers will transfer their loyalties to Jetstar.
The weeks before Qantas reports financial results are usually a news vacuum which sucks in speculation, and this year’s preliminary full year results announcement on 28 August is no exception to the rule.
The use of the media to soften up the public, the shareholders and the employees in advance of bad financial results is a well established PR technique. In the case of the Qantas full year results, due 28 August, the informed speculation season is open!