Virgin Australia Financially Secure? [Now in Voluntary Administration]

[jakeseven7]

Well, the $16M figure is new to me ... although a relatively small amount in the scheme of things ...

Indeed comparing it to the $200m VA have siphoned in the form of a loan from Velocity / it’s small fry!

 

[Quickstatus]

What Is the $200m “loan” security?
Additionally VFF also paid $100m in dividends to its owners.

A trust?. Not when it is used as a money pot. Not if the transactions are deemed commercial arms length - especially to an owner of the business
VFF is worthless if VA is not a going concern

 

[cove]

My Velocity points stash is pretty close to worthless unless a new business starts flying and wants us to support it.
Lots of creditors won’t get much out of the sale/wind up and that is the sad part of this failure.
i do hope a better group get this business restarted.

 

[Quickstatus]

Qantas dodged a bullet with JB. The JQ move was in hindsight very astute

 

[Gold60]

Not a lot of upside for almost anyone is there with this fiasco ?

My Velocity points stash is pretty close to worthless unless a new business starts flying and wants us to support it.
Lots of creditors won’t get much out of the sale/wind up and that is the sad part of this failure.
i do hope a better group get this business restarted.

 

[RAM]

At creditors meetings do they vote on value of debt or number of creditors?

The voting normally goes by face value of debt, not marktet value or what you bought it for. So as some of the secured bonds traded below 37 cents per $1 face value means those buyers have the same voting power per $1 face vale of debt as people who loaned the full $1 originally.

Secured creditors stand at the front of the queue just after the ATO & workers, unsecured creditors are a long way back and shareholders normally don't bother attending.

Share prices are normally 'valued' or traded on the basis of Price to Earnings not on price to Net Tangible Assets. Airlines have remarkably high fixed costs once you consider the plane leases/financing/maintenance, terminal leases, lounge leases, parking spaces, spare parts inventory etc etc. Add in the cost of call centers, line management, their office space...

Then the cash going out the door every day is substantial despite 90+% of aircraft grounded. VA seemingly made the assessment that State lockdowns of some degree would be here for more than 6 months and international 12 months+. Once lockdowns over then as social distancing on planes is yet to be 'decided' suggests that flying any plane with 'social distancing' will be loss making using historical fare prices.

The old rule book no longer applies so the Directors followed the 'discretion is the better part of valor' path.

 

[holdenmg]

Once lockdowns over then as social distancing on planes is yet to be 'decided' suggests that flying any plane with 'social distancing' will be loss making using historical fare prices.

There are some mock-ups of seating that might be less worse than current config at:

What flying economy could look like

Forget flying in economy as you once knew it.

www.escape.com.au

 

[hydrabyss]

There are some mock-ups of seating that might be less worse than current config at:

What flying economy could look like

Forget flying in economy as you once knew it.

www.escape.com.au

Here's the BYO version.

 

[holdenmg]

Here's the BYO version.

View attachment 216065

Bunnings can't lose. lol

 

[RooFlyer]

The administrators have to work out how best to repay all the debts.

Or, ideally, get someone to take over the company and they deal with the debt - either as part of the buy-in, or afterwards.

At creditors meetings do they vote on value of debt or number of creditors?

Its by value of debt. Ooops, EDIT: I see RAM answered that.

Don't think that the Administrator, or even a liquidator, if later appointed, is the end of the story. A company gone 'bust' can go through all the stages of administration/liquidation and still rise. I had one case where a big insolvent underground mining operation on care-and-maintenance was being sold off as a going concern. No-one offered the $$ that was being sought (including debt). So the liquidator (I think it was) declared game over, turned the pumps off and the mine began to flood. In a few days, the flooding would have claimed all the underground infrastructure and the mine could never re-open. After 24 hrs, one of the failed bidders swooped in, offered about 1/10 of the previous asking price. This ,being more than $zero, and the liability of an old mine site, was accepted by the liquidator. The bidder went in, re-started the pumps etc and after spending lots of capital, re-opened the mine, which went on to be very profitable.

 

[Must...Fly!]

Ummm why does VA have a pile of broken planes in PER?!

Almost certainly the F100s. Incredible difficult to get parts for and it's a lot easier to borrow part B from already broken aircraft on ground waiting on part A. Bit of a merry go round but that's how it is with the valiant Fokkers

 

[jase05]

Sounds like Adelaide airport has followed Perth and have reportedly seized 7 aircraft. Rumoured that VA owe ADL $10m

 

[flyingfan]

Guess the actions of PER and ADL airports definitely preclude their state govts from any consideration of bidding to rehouse VA then.

 

[jase05]

Guess the actions of PER and ADL airports definitely preclude their state govts from any consideration of bidding to rehouse VA then.

Couldn‘t imagine SA ever bidding even before this TBH

 

[flyingfan]

Couldn‘t imagine SA ever bidding even before this TBH

Me neither. Wonder if we'll see more of this (guess no VA aircraft is safe now wherever it's parked) and how much it complicates the job of the administrators.

 

[RAM]

Me neither. Wonder if we'll see more of this (guess no VA aircraft is safe now wherever it's parked) and how much it complicates the job of the administrators.

Not really a sensible move in legal terms - the old saying "possession is nine tenths of the law" does not carry any legal strength if the item already is secured against an existing borrowing.

As Perth & Adelaide Airports have not been the lessors of the planes - it is really hard to understand other than as a show for the politicians.

Perth & Adelaide Airports sure know how to make themselves a target for an ATO audit!

 

[tomlee1986]

My Velocity points stash is pretty close to worthless unless a new business starts flying and wants us to support it.
Lots of creditors won’t get much out of the sale/wind up and that is the sad part of this failure.
i do hope a better group get this business restarted.

I hope for your sake that this airline will resume - and hope it is not a huge stash of points sitting in account

 

[tomlee1986]

Perth & Adelaide Airports sure know how to make themselves a target for an ATO audit!

May i kindly ask why these actions would make them a target for an ATO audit?

 

[Quickstatus]

Not really a sensible move in legal terms - the old saying "possession is nine tenths of the law" does not carry any legal strength if the item already is secured against an existing borrowing.

maybe not but incidentally the fee to remove the bulldozers will be - oh isn’t that strange... $16mil + GST

 

[Melburnian1]

The administrator has suggested a couple of months - indicative bids are due Mid May, and binding in Mid June.

Hopefully by late June we'll have an answer.

That's the plan but Deloittes is also making noises about administrative difficulties, such as its staff largely having to contact VA executives or others by phone or email. Whether this is related to the NSW/Qld border closure, social distancing or something else isn't explained. It must be reducing productivity.

The aircraft leases are (by media reports) proving time consuming to sort out. I am guessing for some of them there are multiple players that may not be apparent from the 'head lease' if I am using the correct term. Is it analogous to how a tenant in a government-owned residential property may sub-let the flat or house to someone else but never inform the government entity?

There's bondholders' attitude to sort through - they may object to the administrators' appointment and instead want a rival firm such as KordaMentha or Grant Thornton - and also apparently technical difficulties with the virtual meeting next week for the c.12000 creditors.