Singapore Airlines discuss the A380 and Virgin

http://www.atwonline.com/news/story.html?storyID=11132

mmmm [:?]

David

[Nottingham Nick]

'"To be candid

Originally posted by Nottingham Nick
'To be candid, they are underperforming'

It would be nice to read his views on how they are doing this. We all have our own views on here. [;)][8D]

Nick

The irony of it all is that I have a good feeling that Singapore Airlines is to blame for Virgin's 'under-performance'. VS was fine before they came along.

[Decker]

good or gut?

I'd guess that VS playing with their figures between companies to keep profits lower is more likely to be the target of this statement.

[Scrooge]

Originally posted by Decker
good or gut?

I'd guess that VS playing with their figures between companies to keep profits lower is more likely to be the target of this statement.

Bingo [y]

I'd have to agree as SQ has had very little input to VS.

Originally posted by Decker
good or gut?

I'd guess that VS playing with their figures between companies to keep profits lower is more likely to be the target of this statement.

Could you explain? My brain with its lack of business knowledge doesn't understand. [:#]

Perhaps they're trying to shrug VS off so they can grab hold of their own TATL flights[:?]. They've said they would leap at any oppurtunity, but I don't beleive the slots are there.

[Decker]

Originally posted by VS-EWR

Could you explain? My brain with its lack of business knowledge doesn't understand. [:#]

Company A is based in a country with 10% tax
Company B is based in a country with 20% tax

Company A cross bills Company B for services rendered, bringing Company B's profit down to virtually nil but increasing Company A's profits. As both companies are part of the same group they effectively pay tax of 10% on their profit rather than 20%.

Another example.

Company A is only allowed to make a markup of 10% on their costs in their chosen market.
Company B (owned by the group but based in say Eire) supplies raw materials to Company A for £100 per tonne. They cost £1 a tonne to make.
Company A charges on at £110 and makes maximum profit of £10 but moves £99 off shore where even if taxed at the same rate as in the UK is still represents a much bigger gross margin.

Finally another example.

Company A is profitable and wants to start up another airline (Comnpany B) in another country. They have the choice, setup the airline and lease the aircraft on a commercial basis leaving profits in Company A OR use the profits in Company A to pay for creating the infrastructure of the airline in the other country. Company B is owned entirely by the majority shareholders of Company A. Thus when Company B moves into profit more quickly as it has no startup costs to defray the shareholders in Company A make more money as they don't need to split the profit with the minority shareholders in Company A.