Virgin Australia Financially Secure? [Now in Voluntary Administration]

[p--and--t]

Interesting comment in article how most bidders don't agree with the administrators/VA1's business plan.

So regardless of who wins, big changes afoot.

Indigo Partners Eye Return To Low Cost For Virgin Australia

simpleflying.com

Reading between the lines (without any access to the facts) is seems the administrator under guidance from the old team is proposing "same-old same-old" which is totally unrealistic.

 

[HS-TQE]

According to this paywall article: Scurrah is now pushing for a all-737 Domestic + Tran-Tasman airline only for the foreseeable future, with the scope of returning to the USA with a partner (either with existing partner DL or negotiate a new deal with UA) in the medium term once US borders open up in mid-late 2021 at the earliest.

This suggests either-way VA's owned 777 fleet will be "mothballed" considering that there are no buyers for widebodies for the foreseeable future. Once the market picks up for wide-bodies, who knows.

NoCookies | The Australian

www.theaustralian.com.au

 

[oz_mark]

I think by nature of the world at the moment, it will have to be a largely domestic only operation at the moment. What may matter is that they are still able to offer Velocity members a compelling proposition.

 

[desafinado74]

Brookfield could be back in the race for Virgin...

Brookfield to Discuss Rejoining Virgin Australia Bidding

Brookfield Asset Management Inc. is in discussions with administrators for Virgin Australia Holdings Ltd. over rejoining the bidding for the airline after withdrawing from consideration, people familiar with the matter said.

www.bloomberg.com

 

[melb78]

I think BGH is the only group that is still willing for VA to be a full service carrier

 

[jakeseven7]

According to this paywall article: Scurrah is now pushing for a all-737 Domestic + Tran-Tasman airline only for the foreseeable future.

This suggests either-way VA's owned 777 fleet will be "mothballed".

If true then he’s clearly sniffed that the previous strategy went down like a lead balloon with the suitors and has pivoted his rhetoric to shore up his job application!

 

[BNEFlyer]

According to this paywall article: Scurrah is now pushing for a all-737 Domestic + Tran-Tasman airline only for the foreseeable future, with the scope of returning to the USA with a partner (either with existing partner DL or negotiate a new deal with UA) in the medium term once US borders open up in mid-late 2021 at the earliest.

This suggests either-way VA's owned 777 fleet will be "mothballed" considering that there are no buyers for widebodies for the foreseeable future. Once the market picks up for wide-bodies, who knows.

NoCookies | The Australian

www.theaustralian.com.au

Is it true or did you read it in The Australian?

 

[adrenaln]

I've never seen a thread before with so many experienced airline execs commenting! This is awesome!

 

[jakeseven7]

Melbourne puts its case forward for VA2 to be moved south to Australia’s most liveable (and soon to be largest) city with a lot of enticing numbers and solid rationale being touted to all bidders

Meanwhile our QLD government just keeps the borders closed, hurting VA’s sale process more and more every day

Why Virgin 2 should move to Melbourne

Melbourne Airport chief executive Lyell Strambi says there is a $1.6 billion reason why a reborn Virgin Australia should move to Melbourne with the Victorian government supporting any potential move.

The RDC data – which the Victorian government is believed to have seen before making a $500 million bid – shows Melbourne already holds the mantle as Virgin Australia’s most profitable market with daylight in second place.

Virgin’s Brisbane base has led to the airline being over-reliant on the leisure and resources sectors," he said. "Queensland is a fantastic tourism market. But it fails to provide the depth or diversity of traffic, particularly business traffic, to support an airline’s financial sustainability.”

Why Virgin Mark II should move to Melbourne

Virgin Australia has a $1.6 billion dollar reason to move to Melbourne, says the Victorian capital's airport chief.

www.afr.com

 

[tomlee1986]

Melbourne puts its case forward for VA2 to be moved south to Australia’s most liveable (and soon to be largest) city with a lot of enticing numbers and cleverly
rationale.

Our QLD government just keeps screeching nonsensical sentences and keeps the borders closed

Why Virgin 2 should move to Melbourne

Melbourne Airport chief executive Lyell Strambi says there is a $1.6 billion reason why a reborn Virgin Australia should move to Melbourne with the Victorian government supporting any potential move.

Why Virgin Mark II should move to Melbourne

Virgin Australia has a $1.6 billion dollar reason to move to Melbourne, says the Victorian capital's airport chief.

www.afr.com

I heard earlier in the year that the Melbourne Terminal was being revamped before the administration period began.. or was i misinformed?

 

[jakeseven7]

Interesting comment re: OOL - it’s been rumoured that when QF re-entered OOL and scooped up all the premium Syd and Mel PAX it tanked VA’s profitability, so this confirms that they really suffered from that move.

 

[oz_mark]

I heard earlier in the year that the Melbourne Terminal was being revamped before the administration period began.. or was i misinformed?

It was in process. The check-in areas had been worked on..

 

[oz_mark]

I've never seen a thread before with so many experienced airline execs commenting! This is awesome!

It's an awesome board like that. Other threads have experienced epidemiologists

 

[HappyFlyerFamily]

Melbourne puts its case forward for VA2 to be moved south to Australia’s most liveable (and soon to be largest) city with a lot of enticing numbers and solid rationale being touted to all bidders

Meanwhile our QLD government just keeps the borders closed, hurting VA’s sale process more and more every day

Why Virgin 2 should move to Melbourne

Melbourne Airport chief executive Lyell Strambi says there is a $1.6 billion reason why a reborn Virgin Australia should move to Melbourne with the Victorian government supporting any potential move.

The airport adds – in a clear message to the four potential buyers – it has "an extraordinary amount of land and existing facilities an airline could utilise straight away" with the airport a 24/7 operation and a major international facility where the terminals are connected.

Why Virgin Mark II should move to Melbourne

Virgin Australia has a $1.6 billion dollar reason to move to Melbourne, says the Victorian capital's airport chief.

www.afr.com

But is the drilled down profit from business or economy? 3 of 4 “final” bidders might be going low cost carrier or lower.

Rhetorical question, since it’s a State Government pitch.

 

[jakeseven7]

Well we will be down to 2 bidders by the end of the week.

Indigo appears to be the favourite on the business news outlets. But who knows. Victoria and Queensland are courting all bidders. Sydney is either doing it very quietly or has dropped out - but many commentators suggested the cost base would be too high in NSW.



Virgin bidders down to two by end of the month

Virgin Australia's four shortlisted bidders will halve in number by the end of the month, the stricken airline's administrator Deloitte has told creditors, as a June 12 deadline on final, binding offers for the business approaches.

In the race are local and international private equity outfits – BGH Capital and Bain Capital, respectively – as well as foreign airline investors Indigo Partners and Cyrus Capital

Virgin bidders down to two by end of the month

The four shortlisted ones in the race are BGH Capital, Bain Capital, Indigo Partners and Cyrus Capital Partners.

www.afr.com

 

[jase05]

Well we will be down to 2 bidders by the end of the week.

Indigo appears to be the favourite on the business news outlets. But who knows. Victoria and Queensland are courting all bidders. Sydney is either doing it very quietly or has dropped out - but many commentators suggested the cost base would be too high in NSW.



Virgin bidders down to two by end of the month

Virgin Australia's four shortlisted bidders will halve in number by the end of the month, the stricken airline's administrator Deloitte has told creditors, as a June 12 deadline on final, binding offers for the business approaches.

In the race are local and international private equity outfits – BGH Capital and Bain Capital, respectively – as well as foreign airline investors Indigo Partners and Cyrus Capital

Virgin bidders down to two by end of the month

The four shortlisted ones in the race are BGH Capital, Bain Capital, Indigo Partners and Cyrus Capital Partners.

www.afr.com

I think the timing isn’t right for NSW as SWZ is years away and QF rules the roost at SYD.
MEL makes the most sense if VA2 could get a foothold in there but if they are going to be a LCC I guess it doesn’t really matter where they are based

 

[travelislife]

Why does where they are ‘based’ really matter? Doesn’t change the number of flights or detonations being served does it? Just a corporate office?

 

[RooFlyer]

Why does where they are ‘based’ really matter? Doesn’t change the number of flights or detonations being served does it? Just a corporate office?

Only as much as the state government where its based is likely to offer substantial incentives to get the jobs in its state. Saving on costs in the immediate term adds disproportionately to the NPV (although perhaps not enough to make a go-no-go decision).

 

[jakeseven7]

Only as much as the state government where its based is likely to offer substantial incentives to get the jobs in its state. Saving on costs in the immediate term adds disproportionately to the NPV (although perhaps not enough to make a go-no-go decision).

Another consideration was corporate talent. VA HQ had well publicised and self admitted difficulties attracting and retaining top tier talent in Brisbane. They even tried to navigate this by setting up their corporate office in Sydney with several key functions moved there.

Now I’m a proud Queenslander but working in a large corporate we see the same. Melbourne and Sydney have a far greater share of the white collar talent pool.

 

[eastwest101]

Another consideration was corporate talent. VA HQ had well publicised and self admitted difficulties attracting and retaining top tier talent in Brisbane. They even tried to navigate this by setting up their corporate office in Sydney with several key functions moved there.

Now I’m a proud Queenslander but working in a large corporate we see the same. Melbourne and Sydney have a far greater share of the white collar talent pool.

I would argue that the separate corporate offices in SYD with the majority of functions in BNE was another contributor to the poor performance of VA, just created two unaccountable corporate overheads that were both ineffective and costly. Its a different world now, white collar people being laid off everywhere, corporate office rents are sinking in all cities and post-Covid19 working from home practises may upend traditional corporate edifices, the payroll tax exemptions from different state governments may sway the bean counters but its a costly wasteful exercise moving corporate head offices every few years just to chase some minor payroll tax exemptions. A lot of the routine back office functions can already be done in low cost jurisdictions like the Phillippines or India if you are prepared to accept the low quality output.

In an airline the only thing that corporate should be doing is allowing the front line workforce of ground agents, air crew and maintenance and their contractors to do their jobs and get paid, monitoring the operation for cost control, doing revenue/yield management and making sure all the safety stuff is done and maintain a web site that works and allows your customers to do that they need to do. Thats it. Nothing else.