Virgin Blue May Cut 5% Of Jobs

[Brad Myer]

http://business.smh.com.au/business/virgin-blue-chief-sharpens-his-axe-20081209-6uwj.html

Job cuts loom as Brett Godfrey sees a grim future for at least two years.

THE boss of Virgin Blue, Brett Godfrey, seems ready to wield the axe.

Having flagged the possibility of job cuts during Virgin's annual meeting just over a week ago, Godfrey said yesterday that Australia's second-largest airline had room to cut at least 5 per cent of its workforce (more than 275 staff).

But he said that Virgin did not "see redundancies on the table at the moment".

"We're planning for the worst; we're planning for this to go beyond two years," Godfrey told Bloomberg in Perth.

"[But] Australia is well-placed to ride this out. Fuel prices have come off, the Australian dollar is incredibly low and mortgage rates are heading south."

Virgin has so far withstood making big cuts to its workforce as it has been forced to redeploy aircraft from domestic routes to its New Zealand-centric carrier, Pacific Blue.

Shares in Virgin have slumped 86 per cent this year. Yesterday the stock was unchanged at 29.5c, a whisker away from the all-time low reached in October.

(thread title changed from 'to' to 'may' per article -mod)

[Michael Morrison]

I noticed JQ have basically had a hiring freeze where as DJ still seem to be hiring for a lot of positions. I would have thought recruiting would slow before starting to axe staff.

[D Chan]

I noticed JQ have basically had a hiring freeze where as DJ still seem to be hiring for a lot of positions. I would have thought recruiting would slow before starting to axe staff.

could be due to low retention rates I suppose. They have indeed been hiring quite a lot. In this climate, job cuts will happen everywhere and not only in the airline industry. I still see DJ as a great buy at sub 30cents share price. Imagine if it gets to 60cents in 2 or 3 yrs time. You'd double your money then.

[BradR]

Brett Godfrey stated in last week's AFR Magazine that they were overstaffed by about 400 people, principally due to the delay in the launch of V Australia.

Brad

[Greg McDonald]

I still see DJ as a great buy at sub 30cents share price. Imagine if it gets to 60cents in 2 or 3 yrs time. You'd double your money then.

Hmmmm...just thinking about buying some more VB shares. Should open today at about .265. Good idea or bad??

[Greg F]

isn't the recommendation to 'sell' at the moment?

[NickN]

Just about everything on the stock market has taken a battering recently. Buying from now onwards should reap rewards come the end of the economic downturn. The key is to buy shares in large firms which will still be around afterwards. You would think VB will have no issues coming out the other side of this downturn in a profitable position.

Their share price will more than likely rise once they announce more staff cuts and other safety measures to accommodate for the current financial climate. Just don't panic if their shares don't rebound to 60c for another 12-24 months.