Virgin Australia Financially Secure? [Now in Voluntary Administration]

[Melburnian1]

..The other consideration is the employee entitlements issue only becomes a problem in liquidation or when employees are made redundant. Continuing employees would take leave at normal rates rather than those liabilities all falling due at once.

Why would any sensible businessman/woman take on extra employees on a continuing basis when a business that has been (or has to be) drastically scaled back due to lack of passenger demand would then have a continuing deadweight?

Having thousands of extra staff when not required would cost hundreds of millions of dollars per annum.

Liquidation coming up, sad as it might be.

 

[HappyFlyerFamily]

Yep, that seems to be the plan, unsecured creditors can try to veto the whole thing but they'd be brave thinking they'd get more in liquidation, particularly with global aviation so depressed. VA continuing would offer them more cents in the dollar in the current environment.

The other consideration is the employee entitlements issue only becomes a problem in liquidation or when employees are made redundant. Continuing employees would take leave at normal rates rather than those liabilities all falling due at once.

Thanks

In summary according to a Reuters article.

Total debt of VAH: US$4.4B (AUS $6.9B )

Breakdown in AU$
$2.3B Secured Debt
$1.9B in aircraft leases
$450million - Staff Wages/Entitlements
$167million - Trade Creditors
$71million - Landlords (assuming Airport leases)
$2B Bonds

Source: Virgin Australia owes $4.4 billion to creditors, to seek waiver on aircraft leases: administrator

{Edit: Numbers switched and corrected).

So going off this post #2215...and purported Brookfields’ offer

Secured $2.3 billion ...get your asset/paid
Planes ...get your asset/paid
Staff ...entitlements and redundancies paid
Trade, Landlord, Bonds ....about $500 million to squabble over against $2.2 billion debt, so may be 20 cents in the dollar.

 

[antycbr]

Why would any sensible businessman/woman take on extra employees on a continuing basis when a business that has been (or has to be) drastically scaled back due to lack of passenger demand would then have a continuing deadweight?

Having thousands of extra staff when not required would cost hundreds of millions of dollars per annum.

Liquidation coming up, sad as it might be.

Because they can see value that you cannot.

I guess what I am saying despite your insistence is that four/five firms are putting down serious cash to advance a bid right now. If the situation was as you describe then there would be NO bids received last week and we would be in liquidation.

 

[woodborer]

So only 2-3 billion dollars of debt to be forgiven? and if Brookfield’s purported offer is any guide Secured creditors and employees paid almost in full and the unsecured creditors get/share the remainder.

I think at least some of the 'debt' relates to contract break costs for leasing etc. They may have negotiated some of those things away.

 

[Melburnian1]

Melburnian1 with the greatest respect you post this on an almost daily basis.

According to the SMH this morning bids are in the 4-5 billion dollar range.

It seems reasonably certain that some form of VA will emerge from this process.

Well, I'm happy to see what occurs, so will refrain for a while from posting that. I'm only looking at the facts, and the history with Ansett Australia. There's been little media attention on the attitude of creditors yet they must be pivotal to the whole process. Perhaps they're deliberately not talking to media, the reverse of what most bidders appear to be doing.

Post automatically merged: Jun 2, 2020

Because they can see value that you cannot.

I guess what I am saying despite your insistence is that four/five firms are putting down serious cash to advance a bid right now. If the situation was as you describe then there would be NO bids received last week and we would be in liquidation.

Are you a VA staff member?

 

[serfty]

Perhaps they're deliberately not talking to media, the reverse of what most bidders appear to be doing.

Almost certainly - much of the media appear to have long been captured and expose red kangaroo attitudes

 

[Melburnian1]

Almost certainly - much of the media appear to have long been captured by red kangaroo attitudes

serfty, are you referring to how the Qantas CEO made disparaging comments about VA such as 'has been poorly run', or something else?

 

[serfty]

serfty, are you referring to how the Qantas CEO made disparaging comments about VA such as 'has been poorly run', or something else?

Not at all ... I'm inferring the media has a bias.

 

[antycbr]

Well, I'm happy to see what occurs, so will refrain for a while from posting that. I'm only looking at the facts, and the history with Ansett Australia. There's been little media attention on the attitude of creditors yet they must be pivotal to the whole process. Perhaps they're deliberately not talking to media, the reverse of what most bidders appear to be doing.

Post automatically merged: Jun 2, 2020

Are you a VA staff member?

No. VA platinum. My main point is that bidding alone has a cost for these consortiums so if they didn’t like what they saw they would be walking away.

 

[woodborer]

No. VA platinum. My main point is that bidding alone has a cost for these consortiums so if they didn’t like what they saw they would be walking away.

There'd be some pretty sizeable teams working on these bids. It's much more promising than Ansett was, where many of the people that had a look very quickly walked away.

 

[BNEFlyer]

There'd be some pretty sizeable teams working on these bids. It's much more promising than Ansett was, where many of the people that had a look very quickly walked away.

And VA won't be liquidated. It seems there are some commenters and media orgs that would celebrate liquidation for some reason, but as others have said if VA were close to being in that situation, there wouldn't be as many, if any, prospective buyers in the mix right now.

 

[jase05]

It’s going to be Bain and Indigo isn’t it

 

[dajop]

There'd be some pretty sizeable teams working on these bids. It's much more promising than Ansett was, where many of the people that had a look very quickly walked away.

Perhaps a difference is that Etihad, Singapore Airlines and Hainan haven't stepped in to strip the company of some of its equipment and assets, like a particular former owner of Ansett was alleged to have done

 

[jakeseven7]

Not at all ... I'm inferring the media has a bias.

Media reflects public feelings towards VA which was foreign government backed assets shouldn't get tax payer funded bailouts.

Prior to that, VA enjoyed pretty good PR and sentiment! - they just didn't drive it very hard, like most things in their business.

 

[Melburnian1]

Media reflects public feelings towards VA which was foreign government backed assets shouldn't get tax payer funded bailouts...

True. Although nowhere near VA's c.90 per cent foreign ownership (pre-administration), QF (that has a limit under the Qantas Sale Act of c.49pc foreign ownership) has a goodly percentage of about 35 per cent at present not owned by Australians.

If we walked down any residential street in Oz, many would if asked suggest QF was 100 per cent Australian owned. Fallacious.

 

[antycbr]

True. Although nowhere near VA's c.90 per cent foreign ownership (pre-administration), QF (that has a limit under the Qantas Sale Act of c.49pc foreign ownership) has a goodly percentage of about 35 per cent at present not owned by Australians.

If we walked down any residential street in Oz, many would if asked suggest QF was 100 per cent Australian owned. Fallacious.

Let alone Rex!

 

[Melburnian1]

Let alone Rex!

Yes, in rural Australia, most would perceive Rex as 100 per cent Australian owned. Little do they know (not that one expects residents to concentrate on such matters).

 

[woodborer]

word on the street is that it is down to Bain and Cyrus.

 

[HS-TQE]

Bain, Cyrus in line for Virgin, BGH Capital out: sources (May be paywall depending on 'free articles' used).

Supposedly down to between Bain (supposedly a 'LCC' backed by the former JQ CEO C.J.H) vs Cyrus (the Branson-backed 'Full Service' bidder).

 

[melb78]

yeh I herd that bgh did not make it I am hoping Cyrus will be in