Qatar Airways Near to Acquiring up to 20% of Virgin Australia

[TheInsider]

I really hope VA will have relentless focus on improving the customer experience, if Qatar enables that great, if it doesn't go ahead, I hope VA has a plan B.

Reading through this forum and others, so many Aussies are so fed up with Qantas, feels like there's a genuine opportunity to take sustainable marketshare.

Not saying their CX is bad, as a gold member its great in Aus and VA has been my airline choice for business travel over past 12 years, early days post Borghetti it was fantastic!

I dont have the answers as to what it would take to win the marketshare but I'm sure the clever people at VA and/or Qatar can think of innovative ways to improve or can identify the CX gaps that need plugging e.g. a more consistent loyalty experience across partner airlines, particularly when traveling in ports that are not a direct flight away from Aus - whether a partner model can consistently and sustainably enable this vs. alliance model, unsure!

Introducing the wide body plane again, particularly to destinations like Nadi and Denpasar, 5-6 hours is too long for me on a narrow body would be another one on my wish list!

Lol, it's possibly a 20% stake. Really doesn't mean much at all.
Also some Aussies are 'fed up with Qantas', most are still fine with them.

 

[SYD]

Lol, it's possibly a 20% stake. Really doesn't mean much at all.
Also some Aussies are 'fed up with Qantas', most are still fine with them.

People seem to ignore that the 20% stake is cash to Bain not necessarily a capital injection into VA2.0 itself. Maybe it will be somewhere in between but I won’t hold my breadth. I suspect the main driver will be the ability to control the base cost for QR codeshares on VA metal.

 

[oz_mark]

Not wanting to open up previous issues really but I believe the Federal Court threw out the claims as QR were not actually directly involved in any search. In other words..nothing to do with the airline

Correct.

 

[JessicaTam]

[mod hat]
Discussion regarding the VA secret announcement has been moved here: VA “secret announcement”
[/mod hat]

 

[justinbrett]

A fair dose of cold water has been issued by JH on the matter. I’m guessing FIRB decision is probably not imminent as some suggested. Maybe next year?

https://www.news.com.au/travel/travel-updates/virgin-australia-boss-jayne-hrdlicka-hits-out-at-qatar-airways-rumour-and-innuendo/news-story/34022dda6261d2b5ebf1edc9d9931355?amp

 

[Saab34]

Who even started the whole rumour? I had a quick detective look, I won’t mention names due to getting into trouble, but it does appear to be traced back to one or two journalists who might have created this ‘rumour’.

 

[RooFlyer]

A fair dose of cold water has been issued by JH on the matter. I’m guessing FIRB decision is probably not imminent as some suggested. Maybe next year?

https://www.news.com.au/travel/travel-updates/virgin-australia-boss-jayne-hrdlicka-hits-out-at-qatar-airways-rumour-and-innuendo/news-story/34022dda6261d2b5ebf1edc9d9931355?amp

Interesting comments! But if VA+QR have gone to FIRB for some 'preliminary OK-ing', it was always going to take the announcement of anything off the table for at least a few months. FIRB usually takes its time and with this deal's sensitivity, that'll be an understatement, I think.

Who even started the whole rumour? I had a quick detective look, I won’t mention names due to getting into trouble, but it does appear to be traced back to one or two journalists who might have created this ‘rumour’.

First in the FinReview I think, but I think it can be classed as a bit more than a rumour, can't it?

Or maybe the talks have recently fallen over?

 

[Saab34]

The Rex collapse of would have a somewhat impact on the VA valuation as margin will be somewhat elevated. I assume potentially the price commanded from Bain had somewhat increased, that could have stalled talks and/or QR didn’t want to move on price.

 

[justinbrett]

I don’t think QR’s intention is in question.

I’d say the cold water is being poured on the timeline. As I suggested earlier I doubt a public decision would be made this side of the election. I doubt a formal request has even gone in, probably just an informal “in principle” testing of the waters, and JH may have been told an answer she doesn’t like (ie, wait until next year).

 

[HS-TQE]

The recent Qatar equity articles is starting to get some early shades of the old "Singapore will TAEK OVAH VA and will bring them into TeH StAr aLLiAnCE !!!!111!!!1!!!" circus of the Borghetti era.

Saying that, Qatar intentions of acquiring a stake isn't in doubt at this stage.
However, the MSM's reporting of said timeline of acquiring said stake (a.k.a This Friday.. I mean Next Week!!) was always questionable IMO.

 

[justinbrett]

What would be interesting is if the FIRB is not the reason for the cold water, but another prospective investor.

Maybe even DL, so it can own both Virgins.

Can we rule out a Chinese airline?

 

[eastwest101]

What would be interesting is if the FIRB is not the reason for the cold water, but another prospective investor.

Maybe even DL, so it can own both Virgins.

Can we rule out a Chinese airline?

I think FIRB and/or the Federal Treasurer would rule out any more than 20% for any mainland Chinese ownership of VA.

I would not be surprised if FIRB approvals or reviews are holding up things and causing delays. FIRB seem to take months to decide a routine office coffee order, let alone an ownership % of an Australian airline issue.

 

[PERLHR]

Gosh and then she says ..

“But our partners are absolutely essential to us and we have the world’s best partners – United Airlines, Air Canada, Singapore Airlines, Qatar, ANA, Hawaiian – we have the world’s best partners ..."

Well that is a credibility stock take with a few of these carriers....world best UA, AC, NH ...um don't think so!

 

[Saab34]

What is also a bit strange is the non announcement re the new CEO. It was reported that it was down to one internal and external, now if the internal was successful you would have thought it would have been announced long ago, that was months back when that talk was published.

 

[HS-TQE]

Gosh and then she says ..

“But our partners are absolutely essential to us and we have the world’s best partners – United Airlines, Air Canada, Singapore Airlines, Qatar, ANA, Hawaiian – we have the world’s best partners ..."

Well that is a credibility stock take with a few of these carriers....world best UA, AC, NH ...um don't think so!

VA are about to lose HA, which is being merged into the AS group. AC, NH and UA aren't considered "World's Best" when up against their peers.

Then there is the outbound unilateral Tasman partnership with NZ and the inbound domestic unilateral partnership with EY. The later unilateral partnership may potentially be cut in the future should QR eventually take up the stake.

Edit: VA could benefit from diversifying with more 2-way partnerships across Star Alliance and maybe even Oneworld (the non-QF codeshare partners via QR). across all the major alliances that are non-QF codeshare partners.

 

[SYD]

Gosh and then she says ..

“But our partners are absolutely essential to us and we have the world’s best partners – United Airlines, Air Canada, Singapore Airlines, Qatar, ANA, Hawaiian – we have the world’s best partners ..."

Well that is a credibility stock take with a few of these carriers....world best UA, AC, NH ...um don't think so!

Quietly ignored EY…

 

[HS-TQE]

Quietly ignored EY…

Minor/Largely Unilateral partner. SA and VS were also ignored.

 

[SYD]

Minor/Largely Unilateral partner. SA and VS were also ignored.

They poached EY from QF and became a major codeshare partner as well as flying VA metal to AUH. Not to mention EY owning a chunk of VA1.0. That and some other dodgy investments didn’t pan out well for EY…

But they still provide good perks in AUH for VA WPs (First Lounge access). SQ in SIN only A*G Lounge and QR “OW Platinum” lounge.

Rumour has it that EY might merge with EK, so maybe they return to QF…

 

[jakeseven7]

They poached EY from QF and became a major codeshare partner as well as flying VA metal to AUH. Not to mention EY owning a chunk of VA1.0. That and some other dodgy investments didn’t pan out well for EY…

But they still provide good perks in AUH for VA WPs (First Lounge access). SQ in SIN only A*G Lounge and QR “OW Platinum” lounge.

Rumour has it that EY might merge with EK, so maybe they return to QF…

QF shifted to Emirates and inked their big partnership with them, leaving behind their relationship with EY in the process which meant EY was basically the only option for VA1 (at the time). VA1 previously had a relationship with Emirates prior to shifting to EY. Was lucky/strategic move for QF in hindsight given what then happened to EY over the years…

EY was a much better airline back then, they are a shell of what they used to be now of course.

But yes as you say, if EY gets swallowed up by EK then yes they could return to QF - who knows, it’s certainly a roundabout of partners! And now all the games with QR enter a new chapter of the story

I do agree the government will desperately want to avoid this QR discussion bubbling up pre-election if they can avoid it, being such a divisive issue in the community.

 

[drron]

Personally I think JH has only thrown some lukewarm water on the idea of QR taking an equity stake in VA. There is a sentence right after her pronouncing the wonderful international partners that they have which suggests they are in discussion with at least 1 partner with regard to deepening the partnership.

“But our partners are absolutely essential to us and we have the world’s best partners – United Airlines, Air Canada, Singapore Airlines, Qatar, ANA, Hawaiian – we have the world’s best partners and we’re working every day to deepen those relationships and strengthen the experience we provide to our customers and do a better job selling together to business customers,” she said.

“It’s not lost on Virgin Australia that to compete effectively domestically, we actually have to be in a position where we can compete internationally for our customers.

“Anybody who’s flying frequently domestically also has international needs and we have to be able to provide an experience for them which rivals the competition.

The reason for bringing the QR issue up in her speech is probably they don't want public discussion of the issue. Whether that is for political or business reasons who knows.