Treasury Outlook with Virgin Atlantic´s Giovanni Sinatra

Giovanni Sinatra, Front Office Treasury Manager, Financial Risk and Fuel Management at Virgin Atlantic Airways Ltd shares views and visions in an interview with Reval.

1) What was the most challenging project in your treasury department in 2013?

    Increasing regulatory requirements kept our treasury team busy in 2013. As an airline company, we have a huge commodity and FX portfolio and, hence, reducing P&L volatility and potentially moving away from exotic options have been the main challenges in hedge accounting under IFRS 13.Attending many webinars and events, we have followed regulatory updates on Dodd Frank and EMIR on an ongoing basis last year.
    However, it is quite difficult to understand the new requirements for the little guidance the regulators provide.

2) What is the biggest risk treasury is facing today?How are you mitigating this risk?

    There are three types of risks our treasury function is managing and mitigating:

    • Financial market risks such as FX, commodity and interest rate risk, are managed and hedged according to our policies on a daily basis.
    • Credit risk management is becoming increasingly important and complex as, for example, country exposures have to be considered. At Virgin Atlantic, credit risk is monitored ad hoc and on a monthly basis.
    • Although our company is cash rich, we “look at the money first” and thoroughly manage liquidity risk on a daily basis. Money can disappear quite quickly in today´s volatile markets.

3) What will be the biggest drivers for change in treasury in 2014?

    Dodd Frank and EMIR will continue to be big drivers for change in treasury. We still have a lot of work to do by EMIR’s February deadline. At the moment, we are evaluating trade repositories. IFRS regulation will also be a hot topic in 2014 and will impact our derivative management.

4) Which strategic initiatives will you focus on in 2014? How will technology support you to reach your goals?

    Our priority in 2014 will be on improving exposure management and reporting. Our goal is to further increase the speed and accuracy of risk and compliance reporting. Therefore, we work closely with our technology partners to develop company-specific reports that can be created efficiently. However, our scattered IT landscape complicates this process.

5) What technological innovations would help you to evolve your treasury function in the next 3 years?

    I would like to see all financial data on one single solution that integrates all treasury and risk workflows and provides in-depth analyses and reporting. Using several platforms leads to compromises and duplication of work. An all-in-one solution for cash, treasury and risk management would increase efficiency, free resources from operational routines and provide us with time for more strategic tasks.