Virgin Australia Announces Refocus, What It Means for the Share Price

Trading of Virgin Australia Holdings Ltd [ASX:VAH] shares still remain suspended, with the airline announcing its post-administration recovery plan.

Like many in the travel and airline industry, VAH shares were hit hard by the coronavirus pandemic.

Though they showed some recovery from the market crash in March, VAH was already in financial distress.

Ultimately this led to VAH going into administration.

The last traded price for VAH shares was 8.6 cents per share.

A far cry from their ~27-cent mark just two years ago.

ASX VAH Share Price Chart - Virgin Australia Shares


Can refocusing reinvigorate Virgin Australia?

This morning Virgin Australia, along with Bain Capital, announced their ambitious plan to reboot the airline.

VAH said it plans to focus on core strengths and re-establish itself as an iconic Australian airline.

In true corporate speak, VAH announced a plan for a ‘stronger, more profitable and competitive’ company post-administration.

And while the cynics may snarl, their ambitious plan is not overly unique.

That could be a good thing.

Four Well-Positioned Small-Cap Stocks: These innovative Aussie companies are well-placed to capitalise on post-lockdown mega-trends. Click here to learn more.

Don’t reinvent the wheel.

Yes, VAH has taken a look at Southwest Airlines Company’s [NYSE:LUV] playbook.

Southwest are smart with their money and are competitive because they keep costs low and pass the savings onto their passengers.

Like Southwest, VAH will operate just one type of aircraft.

The Boeing 737.

This can significantly reduce maintenance and logistical costs.

VAH said it will also focus investment towards digital and data technologies.

Southwest were early to the e-ticketing game.

Not overly relevant today, given how common e-ticketing is.

But the early investment in the technology paid dividends for the airline.

Southwest is also big on customer experience and value.

Accordingly, VAH said focus on customer value would be a key part of its strategy.

Though no specifics were given.

Will it save the VAH share price?

A major factor to VAH’s return will likely be COVID-19 restrictions.

However, while Virgin’s plan didn’t offer many specifics, it seems sensible.

That should give investors some hope at least.

VAH’s new owner, Bain Capital, also appear committed to the existing management team.

So hopefully, the airline can hit the ground running.



Lachlann Tierney,
For Money Morning

PS: If you want to get a better grip on trends in finance, our publication Money Morning is a fantastic place to start your investment journey. We talk about what’s driving the most innovative stocks on the ASX. Learn all about it here (for free).


Lachlann Tierney is an Analyst for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. Recently he has been working with Ryan Dinse. Lachlann is involved in two publications:

Money Morning Australia