Tottering Virgin Blue loses a wheel

Virgin Blue 737.jpg

It was a Monday filled with rich irony for Virgin Blue after a wheel fell off one of its Boeing 737 aircraft in the morning.

That came almost at the same time as the carrier’s announcement
that it plans to raise A$231.4 million ($190 million) in fresh equity to shore up its balance sheet, that it would likely post a net loss of A$160-165 million in the year to 30 June, and that co-founder Brett Godfrey was “retiring” as CEO.

It has been a tough year for Virgin Blue, which has been tottering under the losses at V Australia and deal with growing competition from other carriers. There is also increasing opposition to its proposed joint venture with Delta Air Lines.

One week ago, we asked Virgin Blue about its plans to raise fresh equity. All we got, despite numerous follow-up phone calls and emails, was silence from an airline that prides itself on being open and innovative. Now that the true state of affairs is out, we know why they preferred to be silent rather than transparent.

The reality is that Virgin Blue has helped Australian consumers and it would be a pity if it went under. The latest plans should ensure that it stays afloat. But it also appears to have somewhat lost its way, and Godfrey’s departure could help to ring in the necessary changes.

And those will be essential before the wheels really come off at Virgin Blue.

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