Virgin Australia Financially Secure? [Now in Voluntary Administration]

[serfty]

I'm talking everything, alliances, overseas partners, local lounges, etc etc. To get people to jump ship you have to present something different/better. VA did not.

I found the VA alliance with DL was almost seamless. I did need to educate a few re Skyclub access rights early on but that righted itself.

 

[travel_bug]

I found the VA alliance with DL was almost seamless. I did need to educate a few re Skyclub access rights early on but that righted itself.

At least you could do that in English if that’s your mother tongue as you’ve got the Alitalia alliance on the other end of the spectrum where even VA admits they know Alitalia don’t hold up their end of the bargain.

 

[Mr Pumblechook]

I'm talking everything, alliances, overseas partners, local lounges, etc etc. To get people to jump ship you have to present something different/better.

You have to present something much better. And I don't think that can be done in a financially viable manner in this country and in this climate.

I thought VA should've introduced basic economy pre-COVID-19 but now a once-failed airline that's QF+ up front and TT- down back is an even more confused image than what VA has now.

 

[Milefest]

I found the VA alliance with DL was almost seamless. I did need to educate a few re Skyclub access rights early on but that righted itself.

"Why are you handing me this velocity credit card?"

 

[Zanzara]

At least you could do that in English if that’s your mother tongue as you’ve got the Alitalia alliance on the other end of the spectrum where even VA admits they know Alitalia don’t hold up their end of the bargain.

Asking Alitalia to honour reciprocal rights wouldn't be an easy task in any language - including Italian.

 

[Notyourbag]

"Why are you handing me this velocity credit card?"

I also once had: "Sir, I don't think you can enter as ya'll aren't a member of SkyTeam"

 

[travel_bug]

Asking Alitalia to honour reciprocal rights wouldn't be an easy task in any language - including Italian.

Having done it in Italian, I completely agree - though I think I got some brownie points early on with the check in desk staff since I greeted them using the formal tense.
That, or they made me pay for that lounge access later on by ripping the handle out of my second piece of checked luggage

 

[jase05]

Will Velocity be considered an unsecured creditor given they were forced to siphon off $200 million to help prop up VA?

And how will that affect Velocity where members points are held?

Does anyone know if PS made this call the raid the Velocity trust or was it before his time?

No, another one of JB’s master strokes.
Borrowed it in 2014 and haven’t paid it back.

 

[travel_bug]

No, another one of JB’s master strokes.
Borrowed it in 2014 and haven’t paid it back.

At least it’s a secured loan and has been continually earning interest during the annual rollovers - which means even with a $50million haircut Velocity will get back the principal amount of what it gave.
Non paywalled article here:Embattled Virgin Australia's $150m loan from Velocity "an investment"

 

[Rob.au]

I love Indigo. They are LCC, sure, but they are also super flexible with excellent customer service - different from the previous LCC model where they seem to be angry at their customers at all times. They have taken a huge amount of business away from the full service carriers to the extent that Jet Airways collapsed (and I would guess others during COVID-19, although I haven't been following Indian aviation recently).

I flew with Indigo around new year and was pretty impressed - I was expecting a Tiger/Ryanair experience, but it wasn't that at all. Certainly a pay-for-the-features-you-want model, but agreed - attention to customer service, attention to on time running, just attention to detail overall. I'd fly them again.

However, Indigo Partners is an American private equity firm and hasn't got anything to with the Indian airline. They control Frontier in the US and have an interest in Wizz.

 

[andrewpf]

I love Indigo. They are LCC, sure, but they are also super flexible with excellent customer service - different from the previous LCC model where they seem to be angry at their customers at all times. They have taken a huge amount of business away from the full service carriers to the extent that Jet Airways collapsed (and I would guess others during COVID-19, although I haven't been following Indian aviation recently). They are operating in a different market that is more price conscious than Australian business, but what that means is that if you do have a bit more cash, you can upgrade yourself with their various perks and get equivalent to full service with some elite-like benefits (seat choice, priority baggage, priority check-in, extra baggage allowances, etc). Only thing they don't have is a lounge but I could see that as an easy add-on in Australia given how popular they are. They also do not have business/first class but I really think that is unnecessary for the Australian east coast market (in reality), where it may be more problematic is Perth/Darwin services.

There is absolutely nothing stopping, other than aggressive marketing or adoption of the same business model by QF, of VA offering LCC and full service within the same aircraft. This is the modus operandi of legacy North American and European carriers. In North America, you can get Jetstar service on AA, DL or UA by simply purchasing a "basic economy" fare. This is also similar to Indigo, at least for economy. Maybe some brand damage, but if you take care of high fare paying customers appropriately that can be minimised. Meantime you aren't maintaining two brands and two fleets and two sets of corporate overheads. Probably the only way to compete against QF.

To clarify - I thought the Indigo being discussed is Indigo Partners, which owns airlines like Frontier, Volaris and Wizz. I don't believe that is the same company as IndiGo, the Indian airline.

 

[muppet]

At least it’s a secured loan and has been continually earning interest during the annual rollovers - which means even with a $50million haircut Velocity will get back the principal amount of what it gave.
Non paywalled article here:Embattled Virgin Australia's $150m loan from Velocity "an investment"

This is such a bizarre legal arrangement. Who is the ultimate beneficiary of the interest? Velocity points never earn interest and when they expire the trust pays Virgin ... so weird.

 

[travel_bug]

This is such a bizarre legal arrangement. Who is the ultimate beneficiary of the interest? Velocity points never earn interest and when they expire the trust pays Virgin ... so weird.

I agree, it’s very weird and I still don’t understand how velocity points can be cash backed when they don’t even have a fixed value in terms of redemption.

The most sense I can make from the loan is if it was repaid in full you’d imagine the interest would assist in the stability of the trust or possibly allow for velocity points to be worth more. But with the way it just kept rolling on each year and is likely to take a haircut now - I don’t get it outside of having all these companies and taking money from Company A to pad the chequebook of Company B.

 

[GordonJ]

I see a report (sorry behind paywall) that IBA are currently repossessing Virgin aircraft. Might make restarting a tad difficult

Jets from bust airlines set to flood the aviation market

About 1,000 commercial passenger jets will be repossessed from airlines over the next year as the impact of coronavirus ravages the industry, it has been predicted.Hundreds of airlines are expected to be wiped out completely and many that remain will default on payments for the jets they rent from a

www.thetimes.co.uk

 

[HS-TQE]

I see a report (sorry behind paywall) that IBA are currently repossessing Virgin aircraft. Might make restarting a tad difficult

Jets from bust airlines set to flood the aviation market

About 1,000 commercial passenger jets will be repossessed from airlines over the next year as the impact of coronavirus ravages the industry, it has been predicted.Hundreds of airlines are expected to be wiped out completely and many that remain will default on payments for the jets they rent from a

www.thetimes.co.uk

Did it single out Virgin Australia or Virgin Atlantic, or just say "Virgin" in general (which means the author of that article is unsure which Virgin carrier are having the lessors reposses their aircraft).

 

[GordonJ]

Did it single out Virgin Australia or Virgin Atlantic, or just say "Virgin" in general (which means the author of that article is unsure which Virgin carrier are having the lessors reposses their aircraft).

Explicity VA.....

"The big leasing companies, which include AerCap, Avolon and GE Capital Aviation Services, typically rent popular Airbus and Boeing models that are between three and seven years old, for terms of between ten and fifteen years.

“You’re expected to make all the payments,” Phil Seymour, president of IBA, said. “It’s not very flexible at all.”

IBA is repossessing aircraft from Virgin Australia, which collapsed this month. “I’m fully expecting many airlines — even British Airways — to be looking very closely at aircraft with leases and looking to renegotiate the terms of the lease,” Mr Seymour said. “The same with the likes of Ryanair and Easyjet. I would expect them all to be giving up some of their aircraft. Norwegian is going to have to revisit the number of aircraft it needs."

 

[Melburnian1]

This legal document refers to the aircraft lessors but doesn't go into detail, unlike 'The Times' article above kindly referred to by GordonJ.

It however gives an idea of the very large number of parties involved:

https://www2.deloitte.com/content/dam/Deloitte/au/Documents/finance/insolvency/virgin/deloitte-au-fa-project-volar-affidavit-k-adams-filed-unsworn-280420.pdf

16 aircraft lessors or banks in this contribution. I don't know if that's the complete number for all aircraft: it may well not be.

Looks like there's a fair bit of burning of the midnight oil.

The fees must be mounting. Ka-ching!

This rather ominously worded summary is from the IBA (Pommy aircraft lessors consultancy) of Surrey:

Our remarketing team is always on hand to provide a wealth of technical and strategic information and support to help you when it comes to the situation of recovering or repossessing of assets at your request. At IBA, we have significant technical resources available, not only can we respond quickly, we are able to re-register the aircraft as well as further assess the condition of the aircraft once it has been returned. We can also additionally assess the robustness of the local legal systems where the aircraft is currently sited as well as its future destination with minimum delay. This means that the extensive but required processes are finished and completed without our clientele having to wait for long periods of time.

------------

If anything occurs in this process other than liquidation, all concerned ought buy a ticket in Tatts.

 

[muppet]

...

“You’re expected to make all the payments,” Phil Seymour, president of IBA, said. “It’s not very flexible at all.”
...

Lol. Good luck with that Phil.

 

[dajop]

Reminds me of an interview of a business operator who had closed due to the lockdown (a few weeks ago before the guidance from the government). The essence was the tenant was trying to negotiate lower rent with landlord during the lockdown. The landlord gave her the one fingered salute and evicted her instead. Tenants attitude was, oh well so be it, and that the Landlord in all likelihood won’t be able to rent the property for months now and will have no rent instead of just reduced rent.

 

[jakeseven7]

IBA is repossessing aircraft from Virgin Australia, which collapsed this month.

Wow not even waiting.

Well I guess VA2 won’t need as many planes.

How many IBA leased aircraft does the old VA have?