An interesting story in the news today puts Virgin Blues value at less than the value of a new Boeing 777. Ironically Virgin Blue took delivery of a brand new 777 earlier this month, which in my mind at least is comedy gold. Basically if you were Qantas or any other large airline and you in the market for some additional planes, you would be better off purchasing Virgin Blue lock stock and barrel to gain access to their fleet, then purchasing a new 777 from Boeing. Its not such comedy gold for the poor old Virgin Blue shareholders but this thin glimmer of hope should give them some sort of comfort… that their business isn’t completely worthless…. nearly but not quite.

With a shareholder equity of 925 million dollars and a long term debt of 1,182 million dollars and a profit this year of 92 million Virgin can basically service their existing debt and have enough left over for a vegemite sandwich. They are indeed pregnant with debt! Couple this with a less than reliable earning history and less than excitable economic climate and it might be time to give this Virgin a wide berth.

Richard Branson’s old adage “How do you create a millionaire? You take a billionaire and sell him an airline business.” has never been truer. Kind of makes me wonder why he got into that business in the first place…. Oh now I remember, create a business with a lot of hype around it, pander to the market and media, sell out to a billionaire (the billionaire was Chris Corrigan and the market by the way) and leave behind an eaten out shell. I’m not saying there is anything wrong with this, it’s not illegal or anything, I am just surprised it happened.