Is it Time to transfer/withdraw points from Velocity?

[Bibendum]

Hi All,

I need some advice from the brains trust on this forum.

I, like many on here, have hundreds of thousands of points sitting with velocity. With the current COVID-19 situation and virgins financial position I’m concerned that if the airline was declare bankruptcy points may disappear..

What’s the likelihood of this happening and should I withdraw my points by purchasing gift cards to get some cash value at what I have..?

am I making a mountain out of a mole hill.. or is there a real threat to my velocity points been wiped out..?

 

[Dr Ralph]

Do I pull the trigger or not.

Like last week!

Bird in the hand type stuff!

 

[hada88]

Query: would VA's shareholders actually sit idly allowing it to fail and their investment be zeroed? I understand that given where we are with the corona virus and world travel, the usual rules don't apply: but what would the commercial sense be in having an investment such as VA collapse? This is also different to Ansett in that my understanding of Ansett is that it had one shareholder - not multiple.

Similarly this goes for VA's landlord(s), aircraft lessors, financiers, suppliers etc. Scurrah can obviously pull on every lever available to him to make this work.

 

[theblank]

- The government have so far refused to bail out Virgin, refusing their first request

Virgin didnt ask for a bail out, they asked for a loan.
By definition a bail out is a gift.

and VA has about 1 billion cash in their pocket, so they aint folding yet, nor any time soon.

on the other hand VFF is a seperate company, they havent asked for a loan, and I dont know how much cash they have, its a privately owned company i think?
VA was meant to buy it back, but I dont think they have yet.

 

[bigbadbyrnes]

Virgin didnt ask for a bail out, they asked for a loan.
By definition a bail out is a gift.

Not by my definition - any sort of loan or financial transaction as a result of direct government intervention in private enterprise is what I mean by 'bailout'. Care package, Equity provisioning, assurance deed, public investment; these are all spin terms. A loan which converts to equity if not repaid is a more complete description of what was requested and reportedly denied.

We do know they have a huge amount of fixed costs which will continue to fall due and payable during this industry shutdown - not all of which they will be able to negotiate some sort of hibernation or freeze on. The question is will they have enough cash in the pocket to weather the storm - unless there's something missing from original post, we don't know how likely that is.

As for VFF, I've got no idea how any of this would be affecting them as an entity.

 

[ozstamps]

VA has about 1 billion cash in their pocket, so they aint folding yet, nor any time soon.

Some of you folks crack me up. At XMAS they did allegedly have those funds. It is now April.

Experienced professional financial observers have pointed out, if you have bothered to READ this thread, that same money is all basically gone by June 30.

You may not have noticed but they have 100+ grounded planes they are paying lease fees in super pricey USD, and tarmac parking fees on, massive airport terminal and facilities rentals daily, and about 1000 paid staff creating almost no revenue.

Rivers of money OUT each day, and almost none in. I do not have an MBA but I suspect that kisses a billion down the dunny VERY fast over 3 months.

All 220 Tiger pilots are still on full wages etc for past weeks etc, etc, etc -

Sword poised to fall on 220 Tigerair pilots - Airline Ratings

The sword is expected to fall on 220 Tigerair pilots sooner than anticipated as Virgin Australia moves ahead with plans to make them redundant. The union representing many of the low-cost carrier’s pilots, the Australian Federation of Air Pilots, had expected the axe to fall by the end of April...

www.airlineratings.com

 

[bigbadbyrnes]

Some of you folks crack me up. At XMAS they did allegedly have those funds. It is now April.

Expeprienced professional financial observers have pointed out, if you have bothered to READ this thread, that same money is all basically gone by June 30.

You may not have noticed they have 100+ grounded planes they are paying lease fees in super pricey USD, and tarmac parking fees on, massive airport terminal and facilities rentals daily, and about 1000 paid staff creating almost no revenue.

All 220 Tiger pilots are still on full wages etc for past weeks etc, etc, etc -

Sword poised to fall on 220 Tigerair pilots - Airline Ratings

The sword is expected to fall on 220 Tigerair pilots sooner than anticipated as Virgin Australia moves ahead with plans to make them redundant. The union representing many of the low-cost carrier’s pilots, the Australian Federation of Air Pilots, had expected the axe to fall by the end of April...

www.airlineratings.com

We just don't have a lot of the info required to be fully informed about this. The billion dollars, and how long it will last, depends on how their going with their fixed costs. How much can they negotiate to 'freeze' or other negotiated concessions?

What impact does the jobkeeper payment scheme make?

For the lease fees payable in USDs, how much of the exchange rate has been hedged through instruments? Have they locked in an effective exchange rate much more favorable the current using derivatives or forward contracts? Or do they just roll the dice on forex risk?

At what point on the cash burn would they pull the plug voluntarily if at all? Lets say they started with a billion in Feb, and after 2 months of impact, it's down to $500m. Do they pull the plug now if they can't make an arrangement for some sort of govt intervention? Do they try to wait out another month losing another $200m, down to $300m then re-assess? Do they just let it burn down completely, holding out hope as every day that passes brings us another day closer to resumption of trade?

Seems to me we don't know all the important stuff - unless they've leaked it or it's been reported.

 

[Icy]

Yep, just pulled the pin as well. 600K VFF points to KF. I was holding out but we're planning to do some trips in the next few years so would hate to have to start again from scratch. Will keep other points parked in CCs until we see what happens.

Really hoping VA make it through as I have always enjoyed their product and service.

 

[Plutonus]

Seems to me we don't know all the important stuff - unless they've leaked it or it's been reported.

They are a listed company and have continuous disclosure requirements. They can't just spend all their money and one day end up with a nil balance in their bank account without telling the market, despite what some seem to think.

 

[bigbadbyrnes]

They are a listed company and have continuous disclosure requirements. They can't just spend all their money and one day end up with a nil balance in their bank account without telling the market, despite what some seem to think.

Exactly, they have disclosure requirements to protect shareholders - but that doesn't mean they need to disclose much of the above, so we don't know a lot of things which would be significant right now - the same stuff the execs might be pouring over trying to work out what to do next (I have no idea).

 

[kt_kez]

no travel plans, so I've just redeemed some JB vouchers and headphones for a friend. I really hope Virgin survives this, they have a great product!

 

[Matt_01]

There seems to be a herd mentality to get points to KF and would caution not all follow suit unless you have a plan to use the points or can top up points if required. KF miles expire! I like a few others here have a healthy KF miles balance and fly SQ regularly so expiry is not an issue. If more points are needed for redemptions I also have a few hotel programs and AMEX as a backup plan. Although gift cards may not be the best use of points it may be the best option for some, @Dr Ralph states above Bird in the hand type stuff!

For the record I have moved all my VA points to KF but have done so for years.

 

[amaroo]

What's your take on why the game will change so much afterwards? On one hand, airlines will be so cash-strapped, that they will look to regain ground anyway they can, but on the other hand, they will want to encourage people to fly, but possibly the emphasis will be on cash fares rather than points?

After reading yesterday's news, I just can't see VA surviving - the government doesn't seem likely to step-in financially to prop VA up - it seems VA's unlikely hope is that somehow this pandemic abates more quickly than expected so it can get its planes up in the air again sooner - otherwise, it sounds like it will burn through its cash reserves too quickly - I'm not sure what impact, however, the Job Keeper / commercial lease / related stimulus changes will have to extend their cash reserves.

I'm torn on my personal situation - I REALLY want VA to survive and want to support them, but I have $1250 about to land in my VA travel bank that I'm pretty sure I could get back via charge back / travel insurance.

Wild guess - 50% reduction of balance, and or redemption would be good result. Of course some will suffer a 100% loss.

 

[Clause]

There seems to be a herd mentality to get points to KF and would caution not all follow suit unless you have a plan to use the points or can top up points if required. KF miles expire! I like a few others here have a healthy KF miles balance and fly SQ regularly so expiry is not an issue. If more points are needed for redemptions I also have a few hotel programs and AMEX as a backup plan. Although gift cards may not be the best use of points it may be the best option for some, @Dr Ralph states above Bird in the hand type stuff!

For the record I have moved all my VA points to KF but have done so for years.

I have close to 1m points and I'm not 100% sure of travel plan yet, as I flew a lot in domestic, unsure of international travel at this point.

What are people doing? Splitting half half?

Really the frustrating part is the expiry of 3 years in KF.

 

[hydrabyss]

I have close to 1m points and I'm not 100% sure of travel plan yet, as I flew a lot in domestic, unsure of international travel at this point.

What are people doing? Splitting half half?

Really the frustrating part is the expiry of 3 years in KF.

I only have 180 000 so have not bothered to do anything and will just wait and see.

 

[glasszon]

There seems to be a herd mentality to get points to KF and would caution not all follow suit unless you have a plan to use the points or can top up points if required. KF miles expire! I like a few others here have a healthy KF miles balance and fly SQ regularly so expiry is not an issue. If more points are needed for redemptions I also have a few hotel programs and AMEX as a backup plan. Although gift cards may not be the best use of points it may be the best option for some, @Dr Ralph states above Bird in the hand type stuff!

For the record I have moved all my VA points to KF but have done so for years.

I hear where you are coming from, but is it really a bad idea?

What I see is very little upside in holding VA points: At best, your points balance will remain intact if VA survive this crisis, but if things goes wrong, all your points are gone.

If someone want to take a bet that VA will survive, they might as well buy VAHHA, the ASX-listed VA bond, for 40 cents per dollar and double your money if VA survives, surely that's a better bet than holding VA points?

 

[pksw]

I have close to 1m points and I'm not 100% sure of travel plan yet, as I flew a lot in domestic, unsure of international travel at this point.

What are people doing? Splitting half half?

Really the frustrating part is the expiry of 3 years in KF.

I'm in the same situation. I had a look what I could buy in the store, and the Sony 75" TV is worth about $2k, and around 700k points. I figured moving 1M points to KF would at least get my family of 4 return economy flights to Singapore twice, which is worth much more than that.

It's too many points to potentially lose, and I'd rather get something, even if it means they expire in 3y. I have even more points in QF, but will leave those for now... some of my friends are converting everything they have.

 

[kyle]

There's now a limit of 1 gift card per day on velocity store.

 

[ozstamps]

There's now a limit of 1 gift card per day on velocity store.

The cash conserving noose tightens .......................................

Threatening folks who have completed credit card disputes to hand it all back, and now this.

Any bets they will cap SQ transfers per week or month etc?

 

[Matt_01]

I am not the the points guru or profess to be, my earlier post is mealy an observation. There are some that think 1M points is a significant amount and to many onlookers it is. In reality for many business owners that pay the basics being GST, wages, super and then all the general business expenses 1M points is just a drop in the ocean.

Also I no longer own my rock show and my ability to generate an obscene amount points has reduced.

FF miles/ points have nothing to do with loyalty it is about revenue and profit. SQ/KF normally has great redemption availability but so did CX until 1-2 years ago. There are many on this site that will complain if SQ F or J saver rewards are not available,so be prepared to pony up for Advantage or god-forbid use cash.

I went a bit OT but each to their own.

 

[amaroo]

<snip>

be prepared to pony up for Advantage or god-forbid use cash.

<snip>

Pretty much concurs with my prediction. Advantage is the new saver - be thankful the result ends up this good.

IMO, international travel for the foreseeable future will return to being something the few do ... to very limited destinations.

STOP BUYING POINTS!