Qatar Airways to acquire 25% of Virgin Australia

[justinbrett]

QR have had 3 CEOs - a 2 year founder, the 17 year Al Baker and the current one. I dare say Qantas had Aussie CEOs for a while after merging with TAA.

I think the relevant comparison here (ie WRT VA) is to who are the CEOs of other airline/air entities that QR has minority stakes in, not the parent entity. I don't think there is a Qatari amongst them.

We've had this discussion before. My bet would be that QR 'suggests' to Bain, as current majority owner, a CEO that they have had experience with before, a 'safe pair of hands' for a year or so. Internationally recognised, for the IPO, and probably with a very capable Aussie under them, who would be in line to be CEO after the IPO is bedded down. Its very usual to have a CEO to take a company through an IPO (like I did ) who moves on once the company is "operating normally" (like I did ).

I was talking about board members, just using the CEO as an indication of their lack of form appointing foreign CEOs unlike their peers. Just pointing out QR is likely required to appoint Australian nationals for their rep(s) (at least the way I read the reported FIRB conditions, which albeit are summarised).

As for QR appointing the CEO, well again whether it's a condition or not, appointing a foreigner is going to be counter productive.

OT but QF has always had Australian CEOs. AJ was a full citizen. Just because they have an accent (like JH) doesn't make them any less Australian

 

[Saab34]

IPO wouldn’t be far away now. They would want a CEO in place before any roadshows, the CFO seems like a very safe bet considering he was there for the whole process last time round. Would be hard to drag around a new foreign head with little business knowledge. These processes can be make or break and the finance man is who you want in the seat.

I’d say they will go off H1 FY26, roadshows next Feb and listing in May. This half is too full on with the Qatar deal still to go through, no CEO elect, and the workload with the Doha flights.

 

[twinaisle]

Armchair CEO experts - did you all apply when VA was recruiting or?

 

[MooTime]

Armchair CEO experts - did you all apply when VA was recruiting or?

Wouldn't be much of a forum if opinions weren't shared.

 

[Bagpuss]

IPO wouldn’t be far away now. They would want a CEO in place before any roadshows, the CFO seems like a very safe bet considering he was there for the whole process last time round. Would be hard to drag around a new foreign head with little business knowledge. These processes can be make or break and the finance man is who you want in the seat.

I’d say they will go off H1 FY26, roadshows next Feb and listing in May. This half is too full on with the Qatar deal still to go through, no CEO elect, and the workload with the Doha flights.

Don't know if they would IPO it now. That's taking on board Bain have said they want to maintain majority ownership.

I think the VA/QR partnership firstly needs to prove itself prior to any IPO. So if they did they are years off and probably needed to have exited to arrangement or flying VA metal.

If anything, QR may want to increase their shareholding at a later stage.

 

[RooFlyer]

Armchair CEO experts - did you all apply when VA was recruiting or?

Not me, I’m waiting for a better offer. . Like BHP?

 

[HS-TQE]

It'll be a while off before the IPO, imo. As Bagpuss stated, Bain would want the QR/VA investment to prove itself first, I'd tip between 12 months to 2.5 years. The eventual IPO won't be in one go, as Bain will likely do a gradual sell-down within certain timeframes as opposed to "all at once".

 

[jase05]

If anything, QR may want to increase their shareholding at a later stage.

There were some reports yesterday that QR stumped up $1bn for the 25% stake which is not too shabby for Bain. Be interesting to see if QR decide to buy another 24% or not

 

[elanshin]

There were some reports yesterday that QR stumped up $1bn for the 25% stake which is not too shabby for Bain. Be interesting to see if QR decide to buy another 24% or not

Wasn't the concern (and why QR opted for 25%) that if they had too big of a controlling stake, they government might look to block the deal?

 

[Saab34]

Does the government need to approve any increase in a stake?

 

[clifford]

I really can't see how this will actually be beneficial for Australian travellers (perhaps other than providing for more seats out of Oz). VA (QR) will just charge similar fares to every other premium airline (as they do now), and the only beneficiary will be the the State of Qatar.

That's not to say that the deal should't proceed, but everyone needs to look at it for what it is. I won't be rushing to book VA (QR), but who will?

 

[jase05]

Does the government need to approve any increase in a stake?

I’m not completely over the make up of it but aren’t VAi and Domestic already set up different and therefore different ownership laws apply. Could QR for instance purchase more of the domestic side of things?

 

[Human]

I really can't see how this will actually be beneficial for Australian travellers (perhaps other than providing for more seats out of Oz).

Isn’t it simple economics to state that that’s what’s beneficial for Australian travellers? More seats out of Oz = downward pressure on prices (ie. prices either go down or they don’t go up by as much as otherwise would have been the case)?

 

[Lucass]

Anyone have a ball-park figure for how much money this will actually make Virgin Australia? How will QR and VA split revenue? and will VA make a profit or just qatar?

 

[justinbrett]

Does the government need to approve any increase in a stake?

Yes, same process as before.

I’m not completely over the make up of it but aren’t VAi and Domestic already set up different and therefore different ownership laws apply. Could QR for instance purchase more of the domestic side of things?

There’s no such thing as VAd. It’s just VA. There is a VAi which is a subsidiary.

It’s quite a shonk how that’s structured.

Anyone have a ball-park figure for how much money this will actually make Virgin Australia? How will QR and VA split revenue? and will VA make a profit or just qatar?

$0. Not a cent goes to VA. It only goes to Bain. Revenue stays in VA and QR might get a divdend if they’re lucky, and if VA stays profitable. I expect that’s not what they’re focused on.

The risk is QR turns VA2 back into VA1 and starts losing money again, not an issue for QR because this is pocket change for them.

 

[#flying]

$0. Not a cent goes to VA. It only goes to Bain. Revenue stays in VA and QR might get a divdend if they’re lucky, and if VA stays profitable. I expect that’s not what they’re focused on.

If you are referring to any profits from VA’s operations that is probably right.

I had read the question as relating to revenue from the wet lease flights - the answer to which is confidential, as far as I know.

 

[justinbrett]

If you are referring to any profits from VA’s operations that is probably right.

I had read the question as relating to revenue from the wet lease flights - the answer to which is confidential, as far as I know.

VA would pay a set fee to QR for the lease. Some money will come back to VAi for the QR codeshare.

It’s likely VA won’t see much profit from this deal, unless QR is being very generous and giving them a cheap price. Wet leases are usually pretty expensive.

 

[Lucass]

VA would pay a set fee to QR for the lease. Some money will come back to VAi for the QR codeshare.

It’s likely VA won’t see much profit from this deal, unless QR is being very generous and giving them a cheap price. Wet leases are usually pretty expensive.

I don't really get why VA agreed to this deal. It doesn't really seem as though they will benefit from it.

 

[Saab34]

I don't really get why VA agreed to this deal. It doesn't really seem as though they will benefit from it.

They don’t need it but Bain needs/wants QR’s cash and QR wants more Aussie flights.

You’re right, Virgin isn’t really in the middle here, they are more just being dragged along.

They don’t really have a choice, they made stupid decisions in the past which pushed them into bankruptcy, the big powerbrokers now call the shots.

I’m not completely over the make up of it but aren’t VAi and Domestic already set up different and therefore different ownership laws apply. Could QR for instance purchase more of the domestic side of things?

I believe the foreign ownership restrictions is on international flights, however they can have a whole owned subsidiary of the parent company (which is foreign owned), the subsidiary here being Virgin Australia International airlines.

 

[#flying]

I don't really get why VA agreed to this deal. It doesn't really seem as though they will benefit from it

Just remember that everything in this thread as to how the deal works is speculation. VA/Bain aren’t stupid and wouldn’t enter into it if they didn’t consider it to be to their advantage (ie make them $$).