The Risks and Rewards of Investing in Virgin Blue
1. Introduction
The purpose of this paper is to analyze the possibility of investing in Virgin Blue and to give recommendations on how to minimize risks when investing in this brand.
Virgin Blue is an Australian low-cost airline, which was founded in 2000. The company is a part of Virgin Australia and it uses the «Fly-by-night» business model, which implies providing low-cost services with a high level of customer service. The company has been operating profitably for the past few years, except for the 2009 financial year during the global financial crisis.
Nowadays, the company is one of the leading airlines in Australia and it has a strong market position. However, there are some risks associated with investing in Virgin Blue, such as high competition, seasonal nature of air transportation, and possible economic downturns. Despite these risks, Virgin Blue can be a good investment option for those who are willing to take risks and are looking for high returns.
2. Analysis of possible benefits of investing in Virgin Blue
Investing in Virgin Blue can be beneficial for several reasons. First of all, the company has a strong market position and it is one of the leading airlines in Australia. Secondly, Virgin Blue is a part of Virgin Australia, which is a well-known and respected brand. And thirdly, the company has been operating profitably for the past few years.
Virgin Blue has a strong market position due to its experience in the industry and its focus on customer service. The company was founded in 2000 and it is one of the first low-cost airlines in Australia. Since then, Virgin Blue has been constantly expanding its operations and today it serves 32 destinations within Australia and New Zealand. The company has a fleet of 79 aircraft and it carried more than 14 million passengers in the financial year 2015-2016.
The company’s focus on customer service is one of the key factors that contributes to its success. Virgin Blue’s «Fly-by-night» business model implies providing low-cost services with a high level of customer service. The company’s strategy is based on three pillars: price leadership, product differentiation, and customer experience. This focus on customer service has helped Virgin Blue to grow its customer base and to become one of the leading airlines in Australia.
Another reason why investing in Virgin Blue can be beneficial is that the company is a part of Virgin Australia. Virgin Australia is a well-known and respected brand that has a strong presence in various industries, such as aviation, hospitality, tourism, etc. Being a part of Virgin Australia gives Virgin Blue access to various resources and helps to create a positive image for the company.
Lastly, Virgin Blue has been operating profitably for the past few years, except for 2009 when the global financial crisis affected the airline industry. In the financial year 2015-2016, the company reported an operating profit of $76 million. This shows that Virgin Blue is a financially stable company that can generate good returns for investors.
3. Recommendations for minimizing risks when investing in Virgin Blue
Despite its advantages, there are some risks associated with investing in Virgin Blue. These risks include high competition from other airlines, seasonal nature of air transportation, and possible economic downturns. However, there are some recommendations that can help investors to minimize these risks.
First of all, it is important to diversify one’s portfolio when investing in Virgin Blue. This means that investors should not put all their eggs in one basket and they should invest in other companies as well. Diversification will help to reduce the risks associated with investing in Virgin Blue and it will also help to maximize returns.
Investors should also be aware of the seasonal nature of air transportation. The demand for air travel usually decreases during the winter months and this can impact Virgin Blue’s financial results. Therefore, investors should take this into account when making investment decisions.
Lastly, investors should monitor the global economic situation as it can affect the demand for air travel and Virgin Blue’s financial results. For example, the global financial crisis of 2008-2009 had a negative impact on the airline industry. Therefore, investors should be aware of possible economic downturns and they should make investment decisions accordingly.
4. Conclusion
In conclusion, Virgin Blue can be a good investment option for those who are willing to take risks and are looking for high returns. The company has a strong market position, it is a part of Virgin Australia, and it has been operating profitably for the past few years. However, there are some risks associated with investing in Virgin Blue, such as high competition from other airlines, seasonal nature of air transportation, and possible economic downturns. Despite these risks, Virgin Blue can be a good investment option for those who are willing to take risks and are looking for high returns.