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

[ben95]

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’.

These are reputable journalists in the sector publishing in reputable publications. They have their sources from inside and certainly won't just make things out of thin air and risk their reputations.

 

[roby]

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?

All Chinese airlines, hell most companies in China, are on life support. We can definitely rule them out. I would have to imagine the delay in announcing QR buying into VA had met with some resistance from a few current partners.

 

[RooFlyer]

I would have to imagine the delay in announcing QR buying into VA had met with some resistance from a few current partners.

If there is in fact I proposed buy-in, then I think the delay is much more likely to be due to them approaching FIRB in a preliminary sense, as has been written about.

 

[justinbrett]

If there is in fact I proposed buy-in, then I think the delay is much more likely to be due to them approaching FIRB in a preliminary sense, as has been written about.

But it does raise an interesting question, as to whether QR buy in will upset someone like SQ.

QF learnt the hard way pax prefer a SIN transit to the Middle East.

Not saying you can’t have both but not out of the question SQ is complaining, especially with SQ’s huge market share in Australia and long history of investing (and losing) with VA.

 

[RooFlyer]

But it does raise an interesting question, as to whether QR buy in will upset someone like SQ.

QF learnt the hard way pax prefer a SIN transit to the Middle East.

Not saying you can’t have both but not out of the question SQ is complaining, especially with SQ’s huge market share in Australia and long history of investing (and losing) with VA.

Yes, it’ll be fascinating as to how it plays out

Maybe it’ll go along the lines of "well, SQ we offered you the opportunity and you declined so either put up or shut up". ( We wanted you all along).

 

[HS-TQE]

A shame that VA is still being used as a a tyre-kicking financial "plaything" by the partner airlines, which no doubt will tick off the Private Equity owners a fair bit (if not more).

Especially witth SQ's long history of "tyre-kicking" VA over the past decade since VA 1.0 was formed (If you thought the QR circus is bad now, the ol "SQ WILL TAEK OVAH" was an ongoing circus during the Borghetti and early Scurrah days.

 

[MEL_Traveller]

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.

I don’t know what there is to ‘improve’ under their current model? a MEL-SYD flight only guarantees water these days. Tea and coffee are optional depending on ‘flight time’.

Wifi is only on a select number of planes, and the streaming IFE isn’t always available.

Delays and cancellations are a problem, and service recovery is hard when you only have 8 seats in the forward cabin.

The problem with VA is the triple or quadruple whammy… flight delayed, no wifi, no ife and only water. On Qantas, only one of those things happens… your flight might be delayed, but you’ll still get wifi, IFE and drinks with a snack. That comes at a price, but having 3 out of four things is far better at relieving the stress than having 0 out of 4

QR would have to invest significant money to improve the offering.

 

[HS-TQE]

Yes, it’ll be fascinating as to how it plays out

Maybe it’ll go along the lines of "well, SQ we offered you the opportunity and you declined so either put up or shut up". ( We wanted you all along).

To be honest, SQ should be honoured that VA/Bain reps had approached them about a stake (per the AFR report), considering SQ's very mediocre to dismal history of investments worldwide (including their dismal record in Australia) which going all the way back to the Ansett days.

SQ alongside other equity partners such as EY, NZ, et al also did rubber stamp anything that Borghetti implemented so SQ are also co-involved in flying VA 1.0 into the ground financially.

 

[RooFlyer]

SQ alongside other equity partners such as EY, NZ, et al also did rubber stamp anything that Borghetti implemented so SQ are also co-involved in flying VA 1.0 into the ground financially.

Yeah, get that; just making conversation, really. .

But as I've said before, having three large industry players as co investors in a fourth small entity is a whole different scenario than having a single one, especially when Bain can map out in advance the structure and who gets what say.

 

[elanshin]

Yes, it’ll be fascinating as to how it plays out

Maybe it’ll go along the lines of "well, SQ we offered you the opportunity and you declined so either put up or shut up". ( We wanted you all along).

I suspect VFF value will tank like a rock if SQ gets shafted. You'd be severely limited in your ability to go west or even to Asia.

We're kidding ourselves if we think VA has significant value beyond VFF right now even as the second domestic feeder. It may be possible to build something from the domestic network but the only real serious value is velocity right now.

Edit: should clarify in that domestic flight operations can be finnicky and easily fluctuate from profit to loss due to all sorts of reasons where as VFF is a solid earner.

 

[justinbrett]

I suspect VFF value will tank like a rock if SQ gets shafted. You'd be severely limited in your ability to go west or even to Asia.

As I was implying earlier I think VA needs to keep SIN open as a transit option. Going all in on QR will backfire just as QF found out with EK. There’s a lot of Aussies who just prefer going through Asia.

I think QF would love to have a partnership with SQ, but obviously that would never be approved.

 

[drron]

I really don't think QR having 19%< of VA will cause problems with SQ. QR doesn't fly direct from Australia to SIN nor from there to Europe.
VA will know the figures for it's codeshare flights with SQ and how popular are velocity redemptions on SQ. I can't see them rocking the boat.

 

[HS-TQE]

NH also reportedly complained about the lack of VA 1.0 approaching them and the blame allegedly put on SQ and HNA for keeping the "partner circle" tight.

In any scenario of QR taking up a stake, pretty sure that QR won't rock the boat on most of VA's current partners except for VA's unilateral domestic codeshare partnership with their nearby rivals EY.

 

[tmdl]

NH also reportedly complained about the lack of VA 1.0 approaching them and the blame allegedly put on SQ and HNA for keeping the "partner circle" tight.

In any scenario of QR taking up a stake, pretty sure that QR won't rock the boat on most of VA's current partners except for VA's unilateral domestic codeshare partnership with their nearby rivals EY.

Is this why there is virtually no NH rewards available?

 

[jase05]

Is this why there is virtually no NH rewards available?

Plenty available about 10 days out.
Better availability than most other FFP’s

 

[dajop]

, especially with SQ’s huge market share in Australia and long history of investing (and losing) with VA.

I'm not actually convinced that SQ's investment in VA was a dismal failure as many make out. In the context of SQ's overall annual expenditure ($18-19b AUD last year), their write downs in VA probably were not that significant. Meantime the number of services they operate to Australia has significantly expanded, and they command decent margins. I am sure their relationship with VA helped contribute to some of that, whether they could have achieved that with just a strong loyalty partnership and codeshare arrangement without equity stake is the question. And the question going forward as well.

 

[justinbrett]

QR doesn't fly direct from Australia to SIN nor from there to Europe.

That doesn’t matter. Most of QR’s pax (in our market) are going from Australia to Europe. SQ carries a lot of pax from Australia to Asia but also to Europe.

When you are operating a midpoint hub like QR/EK/SQ etc it doesn’t matter where you hub is, you’re still transporting pax from one place in Australia to one place in Europe.

If QR want to throw their weight around after investing, it’s within reason European routes could be excluded from the VA/SQ partnership.

 

[drron]

That doesn’t matter. Most of QR’s pax (in our market) are going from Australia to Europe. SQ carries a lot of pax from Australia to Asia but also to Europe.

When you are operating a midpoint hub like QR/EK/SQ etc it doesn’t matter where you hub is, you’re still transporting pax from one place in Australia to one place in Europe.

If QR want to throw their weight around after investing, it’s within reason European routes could be excluded from the VA/SQ partnership.

There a re a lot of us that prefer to travel via Asia rather than the ME. And many of us have found SQ to be more to our liking than QF via SIN.
So I really don't think QR are going to be throwing their weight around. sounds a bit like wishful thinking from the QF camp.
And I got an email today to take advantage of QR's 15th Anniversary of Australian flights sale. SQ I doubt are worried.

 

[antycbr]

There a re a lot of us that prefer to travel via Asia rather than the ME. And many of us have found SQ to be more to our liking than QF via SIN.
So I really don't think QR are going to be throwing their weight around. sounds a bit like wishful thinking from the QF camp.
And I got an email today to take advantage of QR's 15th Anniversary of Australian flights sale. SQ I doubt are worried.

If Velocity eliminates or limits the SQ partnership you will most likely see sQ KrisFlyer earning credit cards enter the market in a big way.

 

[justinbrett]

There a re a lot of us that prefer to travel via Asia rather than the ME. And many of us have found SQ to be more to our liking than QF via SIN.
So I really don't think QR are going to be throwing their weight around. sounds a bit like wishful thinking from the QF camp.
And I got an email today to take advantage of QR's 15th Anniversary of Australian flights sale. SQ I doubt are worried.

It’s got nothing to do with QF. I don’t know why you felt the need to mention them (or more likely, suggest my opinion isn’t valid because I don’t loathe QF the same as you. Having said that, I have not once ever flown QF to Europe. I’ve always used other airlines).

QR competes with many airlines, QF is just one, and really a minor competitor in the grand scheme of things. SQ, like EK, is a major competitor to their business model. People said EY would coexist with QR as VA partners but now they’re as good as gone.

I don’t know what a QR sale has to do with anything.