DigDug.. first off, you can't compare the growth plan of a startup and a mature business... more over, you can't expect a startup, with the huge ramp up costs to turn a profit with in a few months of operations.

Think about it, VX started revenue service in August.. but has been accruing costs and ramp up costs for a year prior.. How on God's earth can they do anything but loose a lot of cash in the first few quarters until their fleet size reaches a level that makes sense to their overhead?

Finally, the $100M was a planned investment as part of the business plan. The fact that it was put in, rather than withheld tells me the investors have confidence in the company and decided to continue with their plans of growth. They could have done like the investors at SX and simply cut their losses and pulled the plug..

 

I've been rolling through this meatgrinder too long to be confused about the difference between start-up losses and an established carrier's ongoing financial performance.

You missed the point it seems. Different variables can determine your fate under different circumstances. While quality of customer service, giving great IFE, etc. can be the key to success, NOW ain't that time. Now, its cash to burn rate (CasBur), and time remaining until better economics land (TRUBEL). VA will be a ghost unless CasBur can see you through the TRUBEL.

You are right that the 100 mil thing sounds like impressive committment to the venture. With enough committment and money there is no limit to how long VA can stay in business. Obviously though, there are limits and I suggest that AFTER the blood race subsides THEN it will really be up to the quality of the product to play a role in carving out a future.

Look at Arpey at AMR, he just gleefully canceled thousands of flights because its better cash management in this disasterous environment to stop actually operating your airline if you can find an opportunity to duck out of a bunch of the otherwise unavoidable expenses. [cue the FAA]

 

In today's environment, any airline is better of liquidated for cash, and then re-invested in commodities.. but one has to take a long view if one is to remain in business. There will come pricing power, and the overly inflated cost of oil will re-stabilize... it's a lot of speculation that's keeping it above 60/70 per barrel, and as with the .com or real estate investment du jur bubble, it will also pop.

 

I hear that.

I'll add: You have to also be able to survive while taking that long view.

Perhaps the investors in VA figure they can see this through and have both the conviction and the dough to do it. I think it has so far shown style, enthusiasm, and a nice focus on a quality product and this industry can definitely use more of that - even if it is a hyper-competitive, overcrowded market. I'll go with style, enthusiasm, and quality any day.

 

Haha. This is ridiculous. I have friends at VA who would disagree with you.

Ha. You have quite a self-rightous attitude, assuming you deserve praise for your efforts. That's something you will have to earn from the american public. Good luck, I for one will be amazed if you're in business in 2010.

 

BTW Virgin Blue (Aussies) is one of the most profitable airlines in the world after Ryan Air and just aquired couple B777 for Auss-US flights , oh and Virgin Nigeria is doing pretty well so is Virgin Atlantic. Also Virgin Russia is on its way.

 

virgin blue is owned by Toll holdings, wich is a huge tranportation componay in Australia, the virgin group owns a minority stake of the airline and it is not involved on V-Blue, wich is the 777 operation. it has 55 airplanes, and their only real competition is quantas, hardly the same market as US and Europe.

Virgin Nigeria has 7 planes, and they came to replace the bankrrupted goverment owned nigerian airlines, so they have the same small goverment market monopoly, plus the cash came from nigerian investors ( oil I assume?)

Virgin Atlantic is 49% owned by singapore aielines, has 19 planes.when it started it was competing agains BA .

point is , the only time they had real comoetition (europe "domestic") they failed (virgin express). the US domestic has real competition too. I would not get too cocky.

 

VA can expect to get bled by the other established airlines. JetBlue, Alaska SWA and United have deeper pockets and will match intro fares and hold them down. This will make it tough for VA to raise ticket prices once it has market share and will result in low to negative cash flow. It will then just be a matter of who can bleed the longest. B6 survived Song but then fuel prices were a whole lot lower. This is not a good time IMHO to be starting up an airline.

 

"Their fares are great" We are Airline Pilots....NOT MANAGERS. we have a duty to uphold ( what is left ) of this profession. NO ONE should be working for any statups that pay crap wages. I know ya do what ya gotta do, but the more people take lesser paying jobs for the "Hope" of upgrading/expansion/pretty F/S'a, the harder it is for "The Profession" to negotiate wages even close to years gone by.

 

You are out in left field reino! I assume all VA's lawyers, insurance companies, airplane parts companies and health plan administrators all accept lower than normal pay just because VA is a startup. Since they are just a start-up everyone knows they cannot make industry wages. Or is it just the pilots subsidizing this effort?