VA 1.0 huge loss 2019-20

[Melburnian1]

The Australian has just come up with this:

"Virgin Australia posted a $3.1bn loss in the year ending June 30, 2020 — a period in which the coronavirus pandemic halted flights and the country’s second-largest airline collapsed into voluntary administration.

The massive figure — almost ten times the $315m loss recorded by the airline in the previous year — was the company’s ninth annual negative return in a row.

Documents filed by the airline with the Australian Securities and Investments Commission also show the significant impact of the pandemic on the airline, with flying reduced to just 4.2 per cent of previous levels...

...The company appointed Deloitte in April to sell Virgin, at the time a publicly-listed company. The airline was later sold, for $3.5bn, to private equity group Bain Capital.

The airline has made about 3000 jobs redundant, and its new chief executive, former Jetstar boss Jayne Hrdlicka, has not ruled out cutting more of the 6000 remaining positions...."

Interestingly, the Qantas CEO has foreshadowed another very large loss (on a group basis) when that company announces its results for the year ended 30 June 2021.

Hard to imagine that VA 2.0 is profitable, and same with ZL.

The only passenger airline making any money in Oz may be Alliance, and it's employing a different model to the mainline carriers.

NoCookies | The Australian

www.theaustralian.com.au

 

[dajop]

Hard to imagine that VA 2.0 is profitable, and same with ZL.

ZL reported an underlying operating loss of $0.9m over first half of the FY and are expecting that to continue in the second half (for regional operations). For their jet ops they are not expecting them to make a profit yet either.

 

[Melburnian1]

ZL reported an underlying operating loss of $0.9m over first half of the FY and are expecting that to continue in the second half (for regional operations). For their jet ops they are not expecting them to make a profit yet either.

It will be interesting to see if in time - perhaps a year from now- any media report the financial position of VA 2.0 in its first (part) year of operation, FY 21 (i,.e. 2020-21).

The balance sheet end date may however be 31 December 2021. not the Australian-favoured 30 June each year.

Of the three 'group' major airlines, it's the only one not listed on the ASX.

 

[oz_mark]

The Australian has just come up with this:

"Virgin Australia posted a $3.1bn loss in the year ending June 30, 2020 — a period in which the coronavirus pandemic halted flights and the country’s second-largest airline collapsed into voluntary administration.

The massive figure — almost ten times the $315m loss recorded by the airline in the previous year — was the company’s ninth annual negative return in a row.

I'm stuck at the paywall, but does the fact it was in administration affect the way things are accounted for?

It's a big number, but I don't know if being in administration changes ho/when things are recognised?

 

[Melburnian1]

I'm stuck at the paywall, but does the fact it was in administration affect the way things are accounted for?

It's a big number, but I don't know if being in administration changes ho/when things are recognised?

The article is silent on that but while I have never been an accountant, those complex AASB 16 accounting standard changes affected the recognition of some items on balance sheets such as leases.

The quoted VA (2.0) company spokesman claimed VA 'now has a much stronger balance sheet'.

Wouldn't be hard!

 

[moa999]

Probably a record QAN is happy not to have think $2bn loss was their record

 

[Melburnian1]

Probably a record QAN is happy not to have think $2bn loss was their record

From memory, the record QF loss was A$2.8 billion in 2013-14. While inflation has been low since then, it still compounds, so that figure today (seven years later) would be around A$3.1 billion.

 

[serfty]

Well Qantas reported on Feb 25th a ½ yearly loss of A$1.1Billion

Qantas hopes to be flying internationally in October, but analyst warns US, UK may be off limits until 2023

Qantas posts a $1.08 billion half-year loss, following a dramatic $6.9 billion plunge in revenue due to continued travel restrictions.

www.abc.net.au

 

[Flying Fox]

Yikes!!!

So VA lost $3.1B and that is on top of the $7.0B in debt that they had prior to bankruptcy?

 

[Bagpuss]

Yikes!!!

So VA lost $3.1B and that is on top of the $7.0B in debt that they had prior to bankruptcy?

Virgin Australia wasn’t bankrupt, it went into Voluntary Administration.
The debt they were under (I thought it was $6B, not $7B) is actually if all debts and liabilities were immediately drawn down. IE paying out all aircraft outstanding leases immediately, paying out all staff costs such a redundancy, leave etc. , paying all debtors etc.
There was some comments that cash wise Bain only pumped in $750million,

 

[Flying Fox]

Virgin Australia wasn’t bankrupt, it went into Voluntary Administration.
The debt they were under (I thought it was $6B, not $7B) is actually if all debts and liabilities were immediately drawn down. IE paying out all aircraft outstanding leases immediately, paying out all staff costs such a redundancy, leave etc. , paying all debtors etc.
There was some comments that cash wise Bain only pumped in $750million,

I stand corrected.

Does that mean that VA were trading whilst insolvent?

Personally, after $5B who can really be bother counting

 

[hydrabyss]

I stand corrected.

Does that mean that VA were trading whilst insolvent?

Personally, after $5B who can really be bother counting

They changed some laws when covid hit last year and I gather it would have applied to all businesses.

 

[oz_mark]

I stand corrected.

Does that mean that VA were trading whilst insolvent?

Personally, after $5B who can really be bother counting

IIRC the administrators suggested they may have done so for a short period of time. Not sure anyone delved into it any deeper to see if it was the case.

Edit: Adding a link to an ABC report

Virgin Australia may have traded while insolvent, administrator Deloitte says

Virgin Australia may have been trading while insolvent in the early days of the coronavirus pandemic's impact on airline travel, according to a report by Virgin's administrator Deloitte.

www.abc.net.au