Bain Capital takes Control of Virgin Australia

[Scarlett]

Installing the ex-boss of JQ and expecting a similar sort of result seems fanciful, given:
- present market conditions
- the fact that NSW or QLD are just a couple of less than scrupulous spreaders away from kicking off another 'wave'
- that ex-boss can't 'creatively' manage the books to have a parent cover certain costs this time around

But, hey whatever; they're the smartest guys in the room, so kick heads and rehire everyone on TT contracts and see where that gets you? Maybe a CASA grounding??? Maybe they'll stumble onto the magic formula and make plenty of money.

How do you make a million dollars in the airline industry again?

 

[jakeseven7]

Installing the ex-boss of JQ and expecting a similar sort of result seems fanciful, given:
- present market conditions
- the fact that NSW or QLD are just a couple of less than scrupulous spreaders away from kicking off another 'wave'
- that ex-boss can't 'creatively' manage the books to have a parent cover certain costs this time around

But, hey whatever; they're the smartest guys in the room, so kick heads and rehire everyone on TT contracts and see where that gets you? Maybe a CASA grounding??? Maybe they'll stumble onto the magic formula and make plenty of money.

How do you make a million dollars in the airline industry again?

By spending a billion

 

[antycbr]

I wonder if that would achieve anything at all except scare even more flyers away from VA2...

It wouldn’t but would make sure that if the crew go down Bain go with them.

 

[AustraliaPoochie]

Going slightly off topic: I guess that REX joining Star Alliance may not be that much of "a stretch" after all, with REX's proposal of taking over VA's "mid-market" position .

Seriously, can Rex be the mid service level carrier, or what VA2 had its sights on, seeing VA2 *now* wants to go or sneakily plans to go down the LCC route.
They (Rex) did say they plan to start their own FF system next year.

 

[ag4647]

Realistically, Jayne is probably better experienced to compete against Qantas. This could be good news. Nothing to do but sit back and see what happens LCC or not.

 

[antycbr]

Realistically, Jayne is probably better experienced to compete against Qantas. This could be good news. Nothing to do but sit back and see what happens LCC or not.

Last time VA employed an ex QF group person as CEO it didn’t end well...

 

[flyingfan]

Last time VA employed an ex QF group person as CEO it didn’t end well...

Indeed, knowing QF inside out didn't automatically lead to an effective and viable competitor. I agree with PS that VA became a good (great) airline but not a good business.

(Yes this is all spitballing... I don't think any of us are about to be called by Bain or Hrdlicka seeking counsel on running an airline )

 

[jakeseven7]

Realistically, Jayne is probably better experienced to compete against Qantas. This could be good news.

Probably better experienced to compete against Jetstar to be fair, she was in QF Loyalty for 5 minutes but Jetstar for a few years.

Jetstar is quite siloed from QF. She would have some level of insight into QF but certainly not deep experience.

And that was years ago.

JB flipped straight over from QF to VA1 and that didn’t really help them.

At all. Actually it sank them in the end.

 

[TiredOldFlyer]

Unfortunately their are predators who take advantage of
Virgin(s) in life be it business, politics or any other situation.

 

[UP4014]

If the Qantas board were smart, they would sack Joyce today (he has become too chummy with the labour, and not prepare to pitch fork them). Sack every single (over-paid) Qantas airline staff member, and have Jetstar operate all Qantas QF services (as a codeshare) off Jetstar's cost base - as Qantas Group rebuilds itself for a post-covid market.

BUT... they won't, so Bain wins!

I'm not sure where you get the chummy with the labour bit from, certainly it isn't from the labour itself. The line I hear is nobody liked Geoff Dixon until Alan Joyce turned up.

 

[UP4014]

Unfortunately their are predators who take advantage of
Virgin(s) in life be it business, politics or any other situation.

Agree, Bain will not care what they have promised, simply say it's worse than expected. Bain will employ one less person than is needed at every level and expect the remainder to step up to fill the gaps.

 

[BCons]

Dismal, dispiriting news for VA FF's. I suspect Bain have over-estimated the rate at which pax will return to flying, and Jayne's push, inside Bain, for an LCC model now better fits the emerging circumstances. So its going to be thumb screws for everyone, partic VA FF's who will have very good reasons to turn (or return) to QF. Meantime, anecdotes about rations on current VA flts (administrators being super tight on expenditure) will do the airline's image no good. The bubble has burst, flying will not be the same again. I said that after 9/11 and look what happened with security, partic in LOTFAP, it all became a very big pain which we complained about, but had to accept. Now it seems VA will be gunning for more ruthless, no-frills, efficiency. JQ mk.2.

 

[jakeseven7]

Dismal, dispiriting news for VA FF's. I suspect Bain have over-estimated the rate at which pax will return to flying, and Jayne's push, inside Bain, for an LCC model now better fits the emerging circumstances. So its going to be thumb screws for everyone, partic VA FF's who will have very good reasons to turn (or return) to QF.

Meantime, anecdotes about rations on current VA flts (administrators being super tight on expenditure) will do the airline's image no good. The bubble has burst, flying will not be the same again. I said that after 9/11 and look what happened with security, partic in LOTFAP, it all became a very big pain which we complained about, but had to accept. Now it seems VA will be gunning for more ruthless, no-frills, efficiency. JQ mk.2.

Hypothetically and we don't know for CERTAIN yet that this is going to happen - but if Bain/VA2 did square off more against Jetstar - would they win? Could they get their cost base as low as JQ? They would certainly be a smaller airline than JQ - would that be an advantage? Would the 'soft link' with QFF act as enough of a loyalty barrier for JQ to hold their customers from moving across?

 

[AIRwin]

They would certainly be a smaller airline than JQ - would that be an advantage?

Lack economies of scale...

 

[dajop]

This is all but speculation. We have no idea what VA will look like, other than less than full service. This was bound to happen. I am struggling to think of many countries that have 1, let alone 2 full service domestic carriers. I think China and Japan are the standouts. This depends on how you define full service...

Also I would expect the real value in 3-5 years time when Bain want to flip the airline lies in Velocity. You don’t need international code shares to make that increase in value but do need is a strong intentional partner network. Domestically, something like Southwest or Air NZ (which domestically/trans tasman is a LCC with a lounge network) would be good enough for the vast majority of the travelling public - even many corporates who if not wedded to QFF - would look at a carrier like Southwest as value for money offering.

 

[jakeseven7]

Also I would expect the real value in 3-5 years time when Bain want to flip the airline lies in Velocity. You don’t need international code shares to make that increase in value but do need is a strong intentional partner network.

I would argue you need both to be a serious contender here, Australia is a country of overseas travelers. Bain better not model VA2 too closely on the US domestic carriers because a lot of Americans don't travel overseas or even have a passport in comparison.

 

[dajop]

I would argue you need both to be a serious contender here, Australia is a country of overseas travelers. Bain better not model VA2 too closely on the US domestic carriers because a lot of Americans don't travel overseas or even have a passport in comparison.

They don’t need really need codeshares though to cater to international travel. What codeshares offered Velocity member was better earn. But if you wanted to make Velocity desirable you could increase the earn on the partners instead.

 

[dajop]

Oh, found this relevant article form several months ago .... Private Equity Only Loves Virgin Australia for Its Loyalty

 

[Cddc]

I love VA and it's sad that Bain are ripping apart the culture, staff bargaining agreements/numbers and elite passenger benefits. That being said the industry is very different today than it was 12 months ago. VA has not and will not be able to compete with QF for market share of corporate travellers who value frequency and lounges. JQ is entrenched with the budget market and mainly serves leisure routes. Rex is an unknown at this point but unless it can get some reliable/increased flight frequency and decent FF program will most likely fold taking taxpayer dollars with it.

This leaves VA... which desperately needs to differentiate itself from its competitors. I'm not as pessimistic as most on this thread, I think they will go down the Southwest path. It's different from the competitors and has the best of both worlds, appealing to both leisure and corporate markets. Perhaps the fee free changes until January 31 will become a permanent fixture?

 

[I love to travel]

I think we need to acknowledge corporate travel is dying and will not rebound to anywhere near where it was. This changes how VA will position themselves