Keep Virgin Australia in the Skies

[UP4014]

I don't know anyone who wants to see less competition or Virgin pack up, but perhaps the entities who would benefit from Virgins profits (ok no profits, but if there are ever profits) should be the ones pumping equity in right now. Yes they aren't in great shape themselves but they have their own large backers as well.

Should the current shareholders float it or part thereof and see what the market really says?

I think the issue is Virgin is just too leveraged and nothing put away or able to be borrowed for a rainy day. This seems to have been born out in the Virgin attitude of refunds this week versus QF just click here for your money back.

So I'm in two minds, there are many other businesses I'd like to see survive as well but that ain't going to happen either.

 

[samh004]

I agree that Australian aviation needs a decent-sized second-player, and a new entrant starting from scratch will take a lot longer to get to that point than Virgin Australia continuing on in the marketplace; but a company that hasn't turned a profit in years and is over 90% foreign owned asking for a government bailout loan with the proviso that if it can't pay it back the government gets to be a part of that loss-making business isn't a great selling point. I'm not sure how that could have been sold better, but it was obvious even to me that all that would have happened was the government essentially owning a stake in VA in the future, getting stuck with something they don't want.

I'm not even from the political persuasion that is against having state-owned companies – I think they help keep the private companies a little more honest. I just can't see partially nationalising the mess that VA is right now as a good business decision.

And don't get me wrong, I was a fan of Virgin Blue, I received some of the best customer service on Fly Pacific Blue as a mid-level member. There was nothing wrong with being a mix between LCC and full service, offering PE seats up the front and ultimately, keeping costs down. It all worked really nicely. If a second- or third-player joined the market at the end of this that was more like that entity, I know who I'd pick to fly any day (when not flying Qantas of course... I have status after all).

 

[Cubiscus]

Signed and shared. Regardless of ownership I think having VA fold now would do immense damage to the market for the next decade plus.

Have also been impressed with Paul S's leadership to date and would love to see him given more time.

Good luck guys.

 

[Icy]

I've just signed and shared also.

It would be a real tragedy to see VA disappear. Regardless of their financial issues, all well documented and discussed, I still feel the economic and competitive benefits of having them survive far outweigh the negatives. Ownership issues aside, what they bring to the Australian economy in the way of jobs, tourism, investment and even choice is critical to the recovery we will be facing, hopefully sooner rather than later.

 

[Captain Halliday]

Slightly OT, but given the background of @AviatorInsight his post count from his post above stuck me as a milestone worth calling out.

 

[odysseus]

I'm confused - the first link which I signed yesterday and had many more signing (close to 30k) has been pulled down. Not sure why?

The second link remains but has much fewer signatures.

 

[Bagpuss]

I'm not wanting to be negative, but there are lots of moving point to this.
Virgin Blue was originally a very profitable airline and then ventured into various markets and with very much a mixed fleet whilst making lease payments for unwanted aircraft.
On the surface I support Virgin Australia, but if the Australia Government is going to loan/bailout a company it ulitmately should be protecting Australian companies / supplies / markets and Australians themselves.
I don't support the Australian Governement to provide funding for a company to simply make aircraft lease payments to overseas private companies for grounded aircraft which are likely to become surplus. I don't support the Australian Government to provide licensing costs to a prviate entity (Yes I understand Virgin Group is currently not requiring its license fees).
What I do support is Australian Government is ensuring we have fair competition which I believe would be more along the times of supporting the ongoing operations of Virgin Australia should it go into Administration as no doubt there will be a buyer allowing it to "come out the other side". This approach means the company can start a fresh without its current unsecured debts, unneeded leased aircraft returned to lessors, maintaining the right fit of aircraft, employees etc.
To be clear in a government supported administration approach, the airline would not be grounded, the airline would be reformed likely still with the current CEO, using the same remaining aircraft on the same Airline Operating Certificate.

To add, supporting Virgin Australia with government funds also means the same has to be applied in other industeries which would include the likes of Foxtel, AFL, NRL, RU to name a very small number of others.

EDIT: Just to add, there needs to be some thought about how everything looks "come the other side". Employees working from home is highlightling some of the benefits, yes video coferencing works, all these tech tools work. So why do comapanies need these massive offices .. More hot desking and probably working in the office on a rotation system. Do people really need to travel (via air etc) for work meetings etc. Take away 25% business travel where does that even leave QANTAS? Plus, expect high unemployment so lack of lesiure travel and I'm sure people will want money in the bank.

 

[FlyerAus]

Good question. 30,000 signatures in just over 24 hours and last I checked 7000 donations. Big call making a donation when you have no income! Thanks again guys.

 

[FlyerAus]

Here is an article that explains what is going on better than I can.


Virgin can fly higher if helped to get past crisis: Paul Scurrah
The Australian - 8 April 2020
Glenda Korporaal

Virgin Australia would emerge “stronger than ever” from the COVID-19 crisis, if it was given financial assistance to help it get through, according to chief executive Paul Scurrah.

“We now have a reform plan in place to make sure we are going to be stronger than ever on the other side of this crisis,” Mr Scurrah told The Australian.

“It has taken some tough lessons to know how to do it. When we come out of the other side of this crisis, we will be a far leaner, and far stronger business.”

He made his comments in support of the airline’s argument for Virgin to be given a $1.4bn loan to allow it to get through the current crisis.

“Virgin is an excellent airline,” he said. “We outperform out competitors for reliability, for on-time running, we out perform for customer satisfaction. We significantly outperform on culture.”

 

[jakeseven7]

“Virgin is an excellent airline,” he said. “We outperform out competitors for reliability, for on-time running, we out perform for customer satisfaction. We significantly outperform on culture.”

You cut off the end sentence of this quote.

Continues ...", unfortunately this was all achieved while we lost hundreds of millions of dollars doing so, year after year after year - probably why we have a great culture - all fun, no accountability. I am here to change that!"

 

[glasszon]

I'm not wanting to be negative, but there are lots of moving point to this.
Virgin Blue was originally a very profitable airline and then ventured into various markets and with very much a mixed fleet whilst making lease payments for unwanted aircraft.
On the surface I support Virgin Australia, but if the Australia Government is going to loan/bailout a company it ulitmately should be protecting Australian companies / supplies / markets and Australians themselves.
I don't support the Australian Governement to provide funding for a company to simply make aircraft lease payments to overseas private companies for grounded aircraft which are likely to become surplus. I don't support the Australian Government to provide licensing costs to a prviate entity (Yes I understand Virgin Group is currently not requiring its license fees).
What I do support is Australian Government is ensuring we have fair competition which I believe would be more along the times of supporting the ongoing operations of Virgin Australia should it go into Administration as no doubt there will be a buyer allowing it to "come out the other side". This approach means the company can start a fresh without its current unsecured debts, unneeded leased aircraft returned to lessors, maintaining the right fit of aircraft, employees etc.
To be clear in a government supported administration approach, the airline would not be grounded, the airline would be reformed likely still with the current CEO, using the same remaining aircraft on the same Airline Operating Certificate.

To add, supporting Virgin Australia with government funds also means the same has to be applied in other industeries which would include the likes of Foxtel, AFL, NRL, RU to name a very small number of others.

EDIT: Just to add, there needs to be some thought about how everything looks "come the other side". Employees working from home is highlightling some of the benefits, yes video coferencing works, all these tech tools work. So why do comapanies need these massive offices .. More hot desking and probably working in the office on a rotation system. Do people really need to travel (via air etc) for work meetings etc. Take away 25% business travel where does that even leave QANTAS? Plus, expect high unemployment so lack of lesiure travel and I'm sure people will want money in the bank.

Agreed, what VA needs is something akin to a chapter 11 bankruptcy in US, so VA can cancel any onerous contract, with perhaps the government supplying a loan that ranks above all non-secured creditors to assist with the bankruptcy process and allow the airline to keep operating during the restructure. Obviously that would mean the equity of VA would be wiped out, with the creditors taking over the company.

Although if the above is not possible due to bankruptcy laws, then of course giving VA a cash injection is a clear preference to letting it fail. Whoever thinks a new airline can startup and operate in Australia as a competitor to QF domestically within the next few years is dreaming.

 

[hydrabyss]

You cut off the end sentence of this quote.

ontinues ...", unfortunately this was all achieved while we lost hundreds of millions of dollars doing so, year after year after year - probably why we have a great culture - all fun, no accountability. I am here to change that!"

I notice your wearing your limited edition Qantas underwear today.

 

[Bagpuss]

Agreed, what VA needs is something akin to a chapter 11 bankruptcy in US, so VA can cancel any onerous contract, with perhaps the government supplying a loan that ranks above all non-secured creditors to assist with the bankruptcy process and allow the airline to keep operating during the restructure. Obviously that would mean the equity of VA would be wiped out, with the creditors taking over the company.

Although if the above is not possible due to bankruptcy laws, then of course giving VA a cash injection is a clear preference to letting it fail. Whoever thinks a new airline can startup and operate in Australia as a competitor to QF domestically within the next few years is dreaming.

Voluntary administration: A guide for creditors | ASIC

asic.gov.au

KEY:

The purpose of voluntary administration

Voluntary administration is designed to resolve a company’s future direction quickly (the below table summarises the process). An independent and suitably qualified person (the voluntary administrator) takes full control of the company to try to work out a way to save either the company or its business.

 

[FlyerAus]

G’day guys both petitions are up and running again. Thank you for your support!

 

[simmomelb]

I have signed the petition but we all know here on AFF that VA has been very poorly run for a very long time so I do dispute some of the statements in the petition like the clearly PR sanitised wording of 'Beyond our door the obsession is customer service' - great PR words but actions in this area clearly demonstrate this isn't really the obsession... Pity couldn't be less 'marketing' and more from the heart.

SO have signed, and shared and I sincerely hope both VA and QF get through this.

Speak for yourself, we don't "ALL" believe this at all. Their service is incredible, like no other, and that is my opinion. Gotta love the people that are so brainwashed from Qantas CEO spin!

 

[dannylowau]

I normally fly QF and do not often fly VA.

Australian aviation need competition. In addition, VA provide jobs for Australians.
Happy to sign petition. All the best

 

[Stealthflyer]

Signed both petitions. Thank you for sharing, @FlyerAus.

 

[dajop]

The other thing, if VA doesn't stay around, QF could easily generate so much cash in a monopoly it could become very attractive for a takeover bid from private equity and really turn into a truly monopolistic beast.

 

[Mattg]

I've also signed both petitions. We need VA to survive for many reasons.

 

[samh004]

He said Qantas, which had been operating for more than 100 years, 70 of which involved government ownership, was a “fierce competitor” with “a strong balance sheet” and “formidable financial strength”.

The trouble with such a statement is that when Qantas was government owned, that was the culture behind a lot of services, and it is not anymore, at least in Australia. This 'loan' that they are asking for will only serve to become government ownership down the track as the reality will be that they cannot pay it back quickly enough. It's a good ploy though, as then the government will be more likely to use VA for government travel (as they own a stake) than the competitor – but then we're not on a level playing field anymore.

I note that neither HNA Group, Nanshan Group or Virgin Group are government owned from what I can tell – and it is a little murky; however, Singapore Airlines is 56% owned by the Singapore Government and Etihad Airways is a state-owned carrier, so I guess VA is already over 30% state owned? Just not the Australian-states

On a side note, why does any new entrant have to compete with Qantas (not Qantas Group)? A more logical competitor – especially considering the airlines that were mentioned as perhaps being given a hand to enter the market – would be Jetstar. Virgin Blue didn't have this competition when it originally started as Jetstar didn't launch until about 2003 I think? Then again, if a full service carrier was given help setting up here, such as SIA or ANZ on its own, they would be competing with Qantas, and both could bring (star) 'alliance' connections that many flyers of VA have been wishing for, for a long time. Arguably, what would emerge is a FAR stronger competitor to Qantas than VA is now or will be in the future.