Virgin Australia Financially Secure? [Now in Voluntary Administration]

[Quickstatus]

What would be the name of the rebranded airline if it manages to do a Phoenix.

 

[Franky]

So it will be interesting times for any buyer to have to consider honoring flight credits, frequent flyer points, keeping travel agents whole, settling airport usage charges and stuff like that. Then there are the money wallets and fuel suppliers as well as the food and drink suppliers.
You would not blame a subcontractor holding on to a plane engine if the fix up work has not been paid. They would have a lien on that item.
All good fun for an accounting firm to look at and mostly ignore as they look for a buyer.

That’s why they get paid the big bucks...

 

[33kft]

The fund "Temasek" is not doing as well as it should at the moment - this is because of the negative oil price last week - this is based on a youtuber in Chinese that studies these things often

Temasek has an important function within the Singapore economy. It exists as one of two soveriegn wealth funds (Temasek and GIC) which invest Singapore's reserves into equities. On the Temasek side they own SGD-denominated assets such as SingTel, StarHub and Singapore Airlines. GIC owns non-SGD denominated assets such as Optus and foreign real estate.

Singapore cleverly uses these two funds to buy/sell their own currency in order to manage inflation without needing to rely on interest rates as Australia does.

End of the day, Temasek would never own Virgin. People are confusing the smaller fund Temasek's cash injection for their investment in Singapore Airlines with a Singpore-based investment in VA. Temasek is not going to be interested in capitalizing SIA for the purpose of investing in non-SGD equities, that defeats the purpose of the GIC and Temasek entities of which it is the smaller fund. If Singapore were interested in a stake in VA directly, it would be via GIC.

An example of this is GIC's stake in GMR, who own Airport assets in India. This is not via Temasek as it is not a "domestic" SGD-denominated holding.

So end of the day, you can see why this is not much of a drawcard for SIA/Temasek. Their job is to invest in local assets (eg SIA) and get a good return which is then offset against investments in foriegn equities (which a totally different entity, GIC manage). Instead what they got was equity by proxy in VA through their "domestic" (but not domestic) airline's investment in a foreign asset that has continuously lost them money. Are Temasek going to stump up for VA? No, not even if Singapore does show interest in VA. That would be GIC's role.

 

[HS-TQE]

Again, I really wonder if they had joined Star (YES I know why they didn't before I get screamed at) but if they had - their 'virtual' network would have been much much stronger with SQ being so strong in Aus... And would have attracted alot more of those high flying corporates who pay a premium for that access that QF provides with oneworld.

Honestly, I know that the administrators and new owners will probably take VA2 down market, I'm coming to accept that...

....But surely the new owners should look at least look at Star again?

This is based on the assumption that the "so-called (incompetent) saviour" SQ invests into a VA2 again, which is unlikely again for the foreseeable future.

As said by you, me and others. We don't know which direction the 'new owners' will take VA Mk II, is it a LCC?, a Hybrid?, A Full Service? There's been plenty of plans out there by various parties.

Going the 1-class Hybrid direction would already "fail" the criteria for any full membership of a FSC Alliance membership in general, at least a few routes would require a J 'domestic' class at the minimum (which would be the Golden Triangle in VA Mk II's case).

If the new owner(s) had decided to take VA Mk II towards the LCC or 1-class Hybrid direction, then Star Alliance can be ruled out for the foreseeable future.
Connecting Partners level, despite being cheaper, would pretty much be pointless and would only benefit the partners, and as it's cheap, the benefits don't extend for the wider network.

Going in the LCC direction would position them towards (re)joining the Value Alliance with their sister company's one time stablemates of Scoot, Jeju Air and Cebu Pacific.

 

[holdenmg]

Deloitte Bumper Sticker:
VAH, Less Debt than Enron.

 

[grubbidok]

A return to DJ days appears to be the consensus strategy.

I realise I'm posting this with a bit of self-interest in naivety but is there a reason that "have to go back to being some form LCC" has become an almost universally accepted truth?

I love the VA product, I loathe the QF brand and don't particularly like the QF product. I've never had a great experience on QF but I've had quite a few bad ones. Most of my VA experiences have been good to great. But if the VA Mk2 is nothing like VA and more like a LCC then I will have to grit my teeth and shift to QF (or preferably, any other full service serving Oz and my other destinations).

Most of my travel is for work but also significant personal (both my wife and I are WP with plenty to spare). The "perks" of status actually make the travel bearable and productive, particularly as we are only permitted to fly Y. I couldn't imagine anything worse than doing it all on a LCC (perhaps a bit of hyperbole...).

But if VA does go downmarket, do they risk losing a lot of very frequent flyers such as myself? Will the infrequently travelling leisure and tourist market be enough to compensate? I'd say they'd need to win over at least 10 people to VA to replace my flights (and the same again for my wife). People are discussing the tourist and leisure market like it's a golden untapped opportunity, when actually it's just as - perhaps more - competitive now than the full service. It's certainly a lot more competitive now than in DJ days.

People keep pointing to how DJ worked and VA didn't. But the fact is the environment DJ worked in doesn't exist anymore. Would an airline like DJ even work if launched now?

I guess I'm just wondering why all the commentary seems to be uncritically boosting the wisdom of VA going LCC, when PS was seeming to do a decent job of starting to turn it around before all of this as the full-service light (even with the byzantine ownership structure) before COVID came along?

Is there a reason everyone seems so committed to VA going the LCC route? Am I missing something? It doesn't seem open and shut to me, more like VA Mk2 are damned if they do and damned if they don't drastically change.

 

[AustraliaPoochie]

What would be the name of the rebranded airline if it manages to do a Phoenix.

It might be agreed that Alliance takes over, some routes or in some capacity.
Seeing they are already flying their own planes, have an Aust AOC, and have the staff to do it.
The industry would save a lot, going with Alliance, not that I have any shares or interests in them, just saying.
Think it was that ExecutiveTraveller info on their website, that pinged my interest.
Alliance Airlines.
Alliance Velocity Wallet
Alliance Frequent Flyer.
This is just my warble.
Edit: if they have to go down the LCC route, either with Alliance, or as separate, we have to put up with it to save money.
They might decide that those who have Travelbank $ will get a seat, but in Y.
If they own some 737-800s, they might decide to take out the J seats and have it as all Y, and return the leased 737-800s back to their owners, saving money.
No lounge or keep lounge closed for a while, will save money.
No IFE will save money.
No food on board will save money.
Guess we will have to go with the new Virgin being a true LCC, if we want to have something flying domestically in Aust that is **not** QF.
They (VA) are still allowing bookings to be made, after Jun, but I am not game to book anything.

 

[Quickstatus]

Is there a reason everyone seems so committed to VA going the LCC route?

Just people’s opinions. There is no white knight on the horizon - yet.

Whatever the form VA2 will take, it has to do it in a way that is different. Up until Covid, VA was being squeezed by QF and JQ

 

[Melburnian1]

Just people’s opinions. There is no white knight on the horizon - yet...

We don't know, but my suggestion is there won't be.

Likely though that by Friday next we'll have a somewhat better idea, because assuming technical difficulties can be overcome, the creditors' meeting will have been held.

 

[hydrabyss]

I realise I'm posting this with a bit of self-interest in naivety but is there a reason that "have to go back to being some form LCC" has become an almost universally accepted truth?

I love the VA product, I loathe the QF brand and don't particularly like the QF product. I've never had a great experience on QF but I've had quite a few bad ones. Most of my VA experiences have been good to great. But if the VA Mk2 is nothing like VA and more like a LCC then I will have to grit my teeth and shift to QF (or preferably, any other full service serving Oz and my other destinations).

Most of my travel is for work but also significant personal (both my wife and I are WP with plenty to spare). The "perks" of status actually make the travel bearable and productive, particularly as we are only permitted to fly Y. I couldn't imagine anything worse than doing it all on a LCC (perhaps a bit of hyperbole...).

But if VA does go downmarket, do they risk losing a lot of very frequent flyers such as myself? Will the infrequently travelling leisure and tourist market be enough to compensate? I'd say they'd need to win over at least 10 people to VA to replace my flights (and the same again for my wife). People are discussing the tourist and leisure market like it's a golden untapped opportunity, when actually it's just as - perhaps more - competitive now than the full service. It's certainly a lot more competitive now than in DJ days.

People keep pointing to how DJ worked and VA didn't. But the fact is the environment DJ worked in doesn't exist anymore. Would an airline like DJ even work if launched now?

I guess I'm just wondering why all the commentary seems to be uncritically boosting the wisdom of VA going LCC, when PS was seeming to do a decent job of starting to turn it around before all of this as the full-service light (even with the byzantine ownership structure) before COVID came along?

Is there a reason everyone seems so committed to VA going the LCC route? Am I missing something? It doesn't seem open and shut to me, more like VA Mk2 are damned if they do and damned if they don't drastically change.

I don't see anything wrong with the product they offer. For someone to buy it and change it from what it is now I would think it would make more sense to just start from scratch if that is the direction they want to go. Buying them as they are now I see having more appeal as you already have a large customer base to work with and a product that many like.

 

[oz_mark]

I realise I'm posting this with a bit of self-interest in naivety but is there a reason that "have to go back to being some form LCC" has become an almost universally accepted truth?

...

Is there a reason everyone seems so committed to VA going the LCC route? Am I missing something? It doesn't seem open and shut to me, more like VA Mk2 are damned if they do and damned if they don't drastically change.

I think it is seen as where they were once profitable.

My own thoughts is that it may keep a similar sort of product to now, but be a slimmed down operation. I'd expect initially most of the leased aircraft to exit the fleet, and they will take it from there. Fortunately, I don't think they need the fleet at its current size for a year or two.

But this may just be wishful thinking on my part.

 

[jakeseven7]

Virgin Australia was never going to last

If its foreign owners thought it had a future they would have kicked in money.

theconversation.com

 

[AustraliaPoochie]

They will need to go down the LCC flight (for a while if they come out of creditors meeting alive), due to lack of $.
Reduce costings.
Or increase fares to make more $.
OR creditors might decide No, and go the AN mark2 way.
Ie shut shop.
Lots say it's not the same, VA and AN, maybe true, but lots of similarities.

 

[Spongbob]

Over the last 10 years, I have never found a VA domestic fare cheaper than a matching QF fare (i.e. same departure time).

 

[muppet]

Over the last 10 years, I have never found a VA domestic fare cheaper than a matching QF fare (i.e. same departure time).

Did you ever try a website other than qantas.com?

Either that or you ever only flew MEL-SYD at 5pm on a Friday, when yes all the fares are with $20 of each other.

On all other routes I found VA consistently cheaper and usually cheaper enough to skip the J lounge.

 

[tomlee1986]

Over the last 10 years, I have never found a VA domestic fare cheaper than a matching QF fare (i.e. same departure time).

I haven't flown VA before - i like to ask are they around the same price or which is a tiny bit cheaper of the 2?

 

[jase05]

Over the last 10 years, I have never found a VA domestic fare cheaper than a matching QF fare (i.e. same departure time).

Y or J fares?
Obviously everyone has different core routes but for us VA J is significantly cheaper on nearly every route we fly. ADL-MEL for example which is our most used route VA J goes for around $550 where QF is nearly always $800

 

[tomlee1986]

Y or J fares?
Obviously everyone has different core routes but for us VA J is significantly cheaper on nearly every route we fly. ADL-MEL for example which is our most used route VA J goes for around $550 where QF is nearly always $800

I agree.. there can be a bit of difference in that but I like to know how much cheaper on either airline and on which fares...

 

[Spongbob]

Both Y and J fares.
I was really looking for a reason to fly VA but could not find one.
My work has QF as the default airline, unless you can find comparable cheaper fare and I never could.

 

[tomlee1986]

Both Y and J fares.
I was really looking for a reason to fly VA but could not find one.
My work has QF as the default airline, unless you can find comparable cheaper fare and I never could.

May i kindly ask does VA fares normally gets more expensive than a comparable QF fare? or the reverse?