{"id":53172,"date":"2020-05-11T10:04:42","date_gmt":"2020-05-11T15:04:42","guid":{"rendered":"https:\/\/olduvai.ca\/?p=53172"},"modified":"2020-05-11T10:04:48","modified_gmt":"2020-05-11T15:04:48","slug":"how-the-first-phase-of-peak-oil-brought-virgin-australia-into-minus-after-2008","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=53172","title":{"rendered":"How the first phase of peak oil brought Virgin Australia into minus after 2008"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"http:\/\/crudeoilpeak.info\/how-the-first-phase-of-peak-oil-brought-virgin-australia-into-minus-after-2008\">How the first phase of peak oil brought Virgin Australia into minus after 2008<\/a><\/h3>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"http:\/\/crudeoilpeak.info\/wp-content\/uploads\/Conventional_oil_plateau_Brent_2005_2018.jpg\" alt=\"\" class=\"wp-image-10456\"\/><\/figure>\n\n\n\n<p>Fig 1: The conventional crude oil plateau started in 2005<\/p>\n\n\n\n<p>At the end of the high oil price period in June 2014, Virgin Australia had liabilities of $ 4.7 bn. Despite lower oil prices it never got rid of that debt. Instead it increased by another $ 2.1 bn.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"http:\/\/crudeoilpeak.info\/wp-content\/uploads\/Virgin_liabilities_vs-Brent.jpg\" alt=\"\" class=\"wp-image-10493\"\/><\/figure>\n\n\n\n<p>Fig 2: Virgin liabilities vs Brent oil price<\/p>\n\n\n\n<p>This post is an update of:<\/p>\n\n\n\n<p>Despite growth in passenger numbers Virgin Australia can\u2019t make money since 2009<\/p>\n\n\n\n<p>12\/2\/2014 (with data up to 2013)<\/p>\n\n\n\n<figure class=\"wp-block-embed-wordpress wp-block-embed is-type-wp-embed is-provider-crude-oil-peak\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"wp-embedded-content\" data-secret=\"B0oXZN7Y33\"><a href=\"http:\/\/crudeoilpeak.info\/despite-passenger-growth-virgin-australia-cant-make-money-since-2009\">Despite growth in passenger numbers Virgin Australia can&#8217;t make money since 2009<\/a><\/blockquote><iframe loading=\"lazy\" class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;Despite growth in passenger numbers Virgin Australia can&#8217;t make money since 2009&#8221; &#8212; Crude Oil Peak\" src=\"http:\/\/crudeoilpeak.info\/despite-passenger-growth-virgin-australia-cant-make-money-since-2009\/embed#?secret=B0oXZN7Y33\" data-secret=\"B0oXZN7Y33\" width=\"600\" height=\"338\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe>\n<\/div><\/figure>\n\n\n\n<p>All airlines are hit by the impact of the Corona virus but Virgin had problems before travel restrictions were introduced. High debt \u2013 accumulated over more than 10 years \u2013 is among the main reasons why voluntary administration was unavoidable.<\/p>\n\n\n\n<p><strong>Virgin Australia owes almost $7 billion to more than 12,000 creditors<\/strong><\/p>\n\n\n\n<p><a href=\"https:\/\/www.abc.net.au\/news\/2020-04-30\/virgin-australia-owes-7-billion-creditors-meeting-administration\/12198130\">https:\/\/www.abc.net.au\/news\/2020-04-30\/virgin-australia-owes-7-billion-creditors-meeting-administration\/12198130<\/a><\/p>\n\n\n\n<p>We compare Virgin\u2019s profits and losses with oil prices:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"http:\/\/crudeoilpeak.info\/wp-content\/uploads\/Virgin-Australia_Profits_2003-1H20.jpg\" alt=\"\" class=\"wp-image-10495\"\/><\/figure>\n\n\n\n<p>Fig 3: Profit\/loss vs Brent oil price FY 2003-FY 2019<\/p>\n\n\n\n<p>It is clear that Virgin went into the red after the oil price shock in 2008.<\/p>\n\n\n\n<p>How have Virgin\u2019s losses come about? The next graph shows how operating expenditure consumed the revenue. The 3 main cost components are fuel, airport charges and staff expenses. All have increased over the years, more than the number of available and revenue seat kms.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"http:\/\/crudeoilpeak.info\/wp-content\/uploads\/Virgin-Australia_Profits_2003-2019.jpg\" alt=\"\" class=\"wp-image-10496\"\/><\/figure>\n\n\n\n<p>Fig 4: Virgin Revenue, Operating expenditure and profit\/losses<\/p>\n\n\n\n<p>Note that the irregularities in 2005\/06 were caused by changes in the reporting periods.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"http:\/\/crudeoilpeak.info\/wp-content\/uploads\/How-to-stack.jpg\" alt=\"\" class=\"wp-image-10497\"\/><\/figure>\n\n\n\n<p>Fig 5: Stacking on negative areas hides the losses<\/p>\n\n\n\n<p>At the bottom we start with profits and losses (1) then stack hedges (2), income tax (3) and fuel (4).<\/p>\n\n\n\n<p>The large loss in 2018 includes a tax expense of $m 452 resulting from a derecognition of deferred tax assets ($m 511) which had accumulated since 2009 (see note B5, Annual Report 2018, p62).<\/p>\n\n\n\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>How the first phase of peak oil brought Virgin Australia into minus after 2008 Fig 1: The conventional crude oil plateau started in 2005 At the end of the high oil price period in June 2014, Virgin Australia had liabilities of $ 4.7 bn. Despite lower oil prices it never got rid of that debt. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3],"tags":[588],"class_list":["post-53172","post","type-post","status-publish","format-standard","hentry","category-energy-2","tag-oil"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/53172","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=53172"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/53172\/revisions"}],"predecessor-version":[{"id":53173,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/53172\/revisions\/53173"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=53172"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=53172"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=53172"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}