Qatar in talks to take up to 20pc stake in Virgin

[HS-TQE]

Ansett Australia, VA 1.0 and VA 2.0 had structured their companies thus the subsidiaries of ANi, VAi 1.0 and VAi 2.0 are 51% owned by "Australian institutional investors" to meet the requirements for international bilateral rights. The 49% were owned by their foreign owners.

Although technically the ANi and VAi (1.0 and 2.0) subsidiaries are really just a collection of filing drawers of paperwork for those subsidiaries in the offices of AN and VA.

 

[justinbrett]

Is a major Australian investor really necessary? IIRC, VA1, AN were able to structure the company such that the international arm was indeed (on paper) majority Australian owned, but really in practice was just part of the overall company which had vast majority foreign ownership. Wouldn't VA2 already have such a structure as it already flies to Indonesia, Fiji and Vanuatu?

VAH was majority Australian owned at the time V Australia was launched.

There was some wizzardry when they raised more capital to keep VAi Australian owned, that was openly criticised by QF and some MPs. I believe they were saved by incumbency. In this situation it would be from the get-go, and if a foreign airline is involved and it’s seen as a way to cheat the capacity restrictions, you may well see a different outcome.

 

[twinaisle]

What's with all the discussion of QF in here?

 

[dajop]

In this situation it would be from the get-go, and if a foreign airline is involved and it’s seen as a way to cheat the capacity restrictions, you may well see a different outcome.

I get this piece, if it's about getting extra capacity into DOH, it could be viewed dimly.

But surely already VA1 have some "wizardry" in place to allow VAi to fly internationally already, again perhaps a legacy of VA1?

 

[Quickstatus]

What's with all the discussion of QF in here?

Apparently any tie up like that will decimate the "national carrier".

 

[justinbrett]

I get this piece, if it's about getting extra capacity into DOH, it could be viewed dimly.

But surely already VA1 have some "wizardry" in place to allow VAi to fly internationally already, again perhaps a legacy of VA1?

Well they do have 2% Australian ownership so they have something to work with. All up the international arm is probably breaking even or making a small loss, once wet lease* fees are included. (That’s the wizardry - not actually a wet lease but similar fees).

It becomes a lot more complex once you introduce wide bodies and suddenly you have dedicated crew etc. You’d want a larger investment to work with.

 

[trippin_the_rift]

Who could have possibly predicted that QR would buy into VA? Qantas Block Partner Earn on Competitor Routes

We're in for a fun ride over the coming years.

 

[moa999]

In this situation it would be from the get-go, and if a foreign airline is involved and it’s seen as a way to cheat the capacity restrictions, you may well see a different outcome.

As above by dajop, the structure is already there, allowing a 98% foreign owned VAi 2.0 to fly to Indonesia, Fiji and Vanuatu.

 

[justinbrett]

As above by dajop, the structure is already there, allowing a 98% foreign owned VAi 2.0 to fly to Indonesia, Fiji and Vanuatu.

Where are they getting the money for new aircraft?

 

[RooFlyer]

Pretty naive to think that an American holding company would be treated the same as a foreign government.

By FIRB, or the Government? For FIRB, they don't have to be treated the same, in fact, they cannot. Speaking generally, one entity bidding for an asset can have higher or different hurdles put in front of it than another - this is quite usual. But at the end of the day, there are regulated processes that the applicant can address and FIRB can make its decision & publish it.

The government on the other hand ...

Indeed. And that's not even getting into FIRB approvals being more or less a function of what the Treasurer decides. If they say no, then that's that.

FIRB considers the application first, then advises the Treasurer of its recommendation. The Treasurer then takes whatever political decision he/she chooses.

Considering the cough show & backlash that happened when the Minister blocked QR's application for additional capacity (on Qantas' urging), the government may be more circumspect now. Minister may have done QR a favour in the long run.

And Bain can also make representations, like - look, we've beaten the bushes, no other investor who can sustain the company & capital requirements; if this doesn't go through, we can't guarantee Virgin's future ...

Where are they getting the money for new aircraft?

With the backing of QR's balance sheet, the usual sources.

 

[Digicola]

Adopting a more level headed approach we could see QR taking a stake and doing several things:

-Remove SQ codeshares on services to EMEA.
Due to the terribly outdated European bilaterals Australia’s daily codeshare allocations are currently exhausted. Looking at France QF and VA already use them on EK&AF&BA and SQ&QR respectively (I may have missed a few). Due to how the EU uses air rights as FTA bargaining chips this is not likely to change anytime soon, this is partly why VA had to remove their EY codeshares to put them on QR. QR could use their influence to remove the allocations from SQ allocations and push them onto their own European services.

-Support VA fleet growth.
Currently QR has several orders for 737max that were placed during the airbus debacle. It wouldn’t be unfeasible for them to place these aircraft with VA once they start getting delivery of their now delayed A321neos. They could also help fund widebody fleet growth, a fleet of 10+ 787 could help VA target key markets whilst continuing to funnel passengers into partners for secondary destinations (SQ for Southeast Asia/China, ANA for Japan and Korea etc)

-Build a JV mimicking the EK/QF JV.
Codeshares could work but if codeshare capacity into Australia is limited a broader JV could help with revenue and cost sharing. If they want to go one step further potentially add VA into the IAG JV with BA and IB.

If Air Italy is anything to go by QR isn’t afraid to pump in capital to try to start something. Now I know that was a failed experiment but VA as a stand alone airline is currently profitable or at least should be, not much has to be done domestically since thats where their value currently lies and they probably already fly to wherever QR would want them to. It more about building up, imagine Velocity adopting avios, what a twist that would be….

This is all potential steps and I’m not saying they’re all appealing. Bain will probably want out if any of this were to happen

 

[exceladdict]

Who could have possibly predicted that QR would buy into VA? Qantas Block Partner Earn on Competitor Routes

We're in for a fun ride over the coming years.

Was waiting for this to pop back up!

 

[Danger]

You forgot the fine print:
* National carrier promotional offer is not available nationally. Offer void in Tasmania and the ACT. Offer limited in South Australia and the Northern Territory. See Jetstar website for further details.

Gold.

Who could have possibly predicted that QR would buy into VA? Qantas Block Partner Earn on Competitor Routes

We're in for a fun ride over the coming years.

In fairness, your earlier post said "QR to buy VA", not QR to buy into VA. Maybe I'm being pedantic, but one comes with a lot less than the other.

 

[burmans]

What's with all the discussion of QF in here?

For some people here it’s all about QF!

 

[anat0l]

So... QR buys a stake in VA. QR stakes VA lots of money to expand and have more resources to do wonderful things to flex in both the domestic and international markets. QF finally feels pressure. Basically QR operates VA like a puppet in what it views as one of its most lucrative markets in the world.

Australian government can't do anything once QR gets its stake. You can't stop someone giving money to someone else.

That's the tl;dr?

Guess it would finally bring on the competition we needed, i.e. a true competitor not seen since the likes of the two-airline monopoly of AN/QF from donkey's years ago.

 

[RSVKanga]

Guess it would finally bring on the competition we needed

I’ll just say that sometimes, Australia’s national interest, economic sovereignty and prosperity, which includes the profitability of Australian-owned airlines, is more important than the price of airfares (which are already down a whopping 13% since last year) and the individual Avios/Velocity FF points balances of a few citizens.

Sometimes, the country’s best interests are more important than that of a few vocal consumers. IMO this proposed stake by QR is deeply rooted against our country’s national interest, and a loud minority of consumers turn a blind eye to even considering the national interest as they are adamant on pushing their selfish agenda of “cheaper airfares” (Will it actually lower prices in the long term? ) and more personal Velocity/Avios privileges ahead of what’s best for their country economically in the long term. It’s alarming and getting out of hand.

 

[PERLHR]

I’ll just say that sometimes, Australia’s national interest, economic sovereignty and prosperity, which includes the profitability of Australian-owned airlines, is more important than the price of airfares (which are already down a whopping 13% since last year) and the individual Avios/Velocity FF points balances of a few citizens.

Sometimes, the country’s best interests are more important than that of a few consumers. IMO this proposed stake by QR is deeply rooted against our country’s national interest, and a loud minority of consumers turn a blind eye to even considering the national interest as they are adamant on pushing their selfish agenda of “cheaper airfares” (Will it actually lower prices in the long term? ) and more Velocity/Avios privileges ahead of what’s best for their country economically in the long term.

This just sounds so not "2024". Bring on the velocity and Avios privileged and lets go for at least 23 percent drop in airfares not 13 although not sure where that figure comes from. Certainly not on my routes out of Perth!! Anything that shakes up QF is good on my book.

 

[RSVKanga]

Bring on the velocity and Avoid

Don’t you love it how AutoCorrect sometimes automatically rectifies Avios to “Avoid” It’s telling.

 

[PERLHR]

Don’t you love it how AutoCorrect sometimes automatically rectifies Avios to “Avoid” It’s telling.

Will not tell you what my autocorrect comes up with for Qantas!

 

[justinbrett]

With the backing of QR's balance sheet, the usual sources.

My point exactly. They need some Australian money if they want to expand international services.

it will be pretty obvious what QR are up to if they gift VA some widebodies to fly to DOH.