Virgin Blue this morning confirmed a loss of $160 million for the year to June 30 while the guessing game about its recent strong share price performance continues.
This morning’s price of 34.5 cents, while down half a cent, still defies the gravity that usually drags down value after a capital raising, in Virgin Blue’s case, at a price of 20 cents a share made at the end of July.
The filing of its audited results, in line with its forecast at the time of the equity raising, also confirms a break-even profit guidance for this financial year.
The results include a loss of $124 million EBIT on the first four months of operations to the US by V Australia, its long-haul subsidiary.
In parallel to the Virgin Blue filing, the respective traffic figures on domestic routes for the year to the end of June show that the Qantas line-in-the-sand of 65% market share was breached by the combined effects of growth in Virgin Blue and Tiger Airways traffic, coming in at 64.8% in total for Qantas mainline, Qantaslink and Jetstar domestic services.
The Virgin Blue share of the total domestic lift was 30.3%, with the balance carried by Rex, Tiger and other regional operations.
Jetstar is now carrying about one third of the Qantas group’s total domestic traffic and growing strongly compared to declining shares by its CityFlyer and regional full-service brands.
Inevitably, the maths of continued Jetstar growth would see it gain about half of the total Qantas group share of domestic and conceivably become the first or second largest domestic brand, before or after Virgin Blue, and ahead of Qantas and Tiger.
This would have been unthinkable a year ago. But the needs of domestic travellers have changed, full service and high fare products are in decline and there are new lines in the sand for all the carriers.
Qantas management still has the problem it’s always had – the customer service staff and cabin crew (with some exceptions) behave like public servants who think they are doing passengers a favour by turning up for work. Ben, you will recall years ago, the then C’wth Dept of Transport was known around the traps as the ‘Dept of Qantas’. It’s role was to protect Qantas from competitors. We now have a completely different ballgame. VirginBlue arrives with nice new planes and cabin crew who present as Pamela Anderson lookalikes. Sure, you have to buy a snack but the Qantas food has become crap anyway. Even though I’m a Qantas Club member, I still fly Virgin regularly and pay to use their lounge on occasions as many business people now do. Jetstar is just OK, fine for the budget holiday traveller but that seat pitch is so cruel on Sydney or Mel-Perth! My recent trips on Qantas domestic have seen demoralised and uninterested cabin crew who provide the minimum of service for a so-called full-service airline. Apart from some of the B737-800s and a few A330s, the QF domestic fleet is old and tired looking. With Tiger trying to steal it’s prime domestic routes, QF is in big trouble. Alex