Virgin Australia Financially Secure? [Now in Voluntary Administration]

[The-Aviator]

Confirmed - It's Bain and Cyrus according to Fairfax

Cyrus seems a bit of a dark horse and their earlier comments that they would leave the airline pretty much as is were very interesting. Hopefully they are genuine because if they are I think they are the best bid from a passenger's perspective!

Bain and Branson-linked Cyrus final two in race to buy Virgin

Virgin Australia's administrators have picked US private equity giant Bain Capital and the Richard Branson-linked firm Cyrus Capital as the final two bidders vying to buy and relaunch the collapsed airline.

www.smh.com.au

 

[HS-TQE]

VAH has now formally announced Bain and Cyrus on the ASX:

https://www.asx.com.au/asxpdf/20200602/pdf/44jb57qndf65f9.pdf

 

[desafinado74]

I hope Cyrus wins over Bain then.

 

[AIRwin]

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

Streetwise...

 

[HappyFlyerFamily]

Isn’t it rumoured that Branson has a foot in each of the last 2 bidders?

 

[RAM]

Thanks
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.

Not quite as written...

The secured loans/debt were secured in a pre-CV world. The prices of the planes the debt is secured against reflects this. At best the values of the planes have dropped 17-23% as of April 30th (last date I saw one of the major plane valuers' data). As of now the values have probably fallen somewhat further.

The leased planes' amount reflects the sum of lease payments over the remaining life of the respective leases. So, given the offers available in the market worldwide - the realistic value of these is less than AUD 1bn and any new VA owner will only take back the planes on that basis (if they want them at all).

The unsecured debt traded as low as 9 cents on the dollar some weeks prior tio administration - so value at AUD 200m then not the 2 billion+ it was issued for. Chances are they get 1 cent on the dollar as goodwill (let's not waste time you suing for zero after fees outcome) payment. I suspect if anyone was a real gambler - if you offered more than 1 cent you would be inundated with offers of the various bonds (especially if you did it before June 30th). Cannot claim it for tax loss until realised (for non-professional investors in Australia).

Staff entitlements only crystalise if staff made redundant - so likely no more than $200m cash required to cover that upfront.

Payments to suppliers & landlords will likely be covered but future costs for terminal use & lounges will be 'renegotiated'. Airports' cash flow looks WORSE than VA or Q's for the last few months with a number of chains not paying any rent to them at all & saying take us to court if you want to. Seems their car parks are not earning much at the moment either.

In the various shopping centre trusts (not airport terminals) one of the major operators reported less than 42% of rent payments were received in April!

The Chinese Curse lives - 'May you live in interesting times'.

 

[Carrots]

It will be interesting to see if it's the last we'll hear of "we're in, we're out, we're in, bugga we're out" Brookfield or not.

 

[BNEFlyer]

It will be interesting to see if it's the last we'll hear of "we're in, we're out, we're in, bugga we're out" Brookfield or not.

They're out now. Unless they want to start their own airline, or fund REX's alleged jet proposal.

 

[PPS_SYD]

They're out now. Unless they want to start their own airline, or fund REX's alleged jet proposal.

I would hate to see a 3rd party lob grenade, unlikely Deloitte will let them. Bain are not keen on too many people in the consortium, so their only hope is to cobble together some kind of partnership with Cyrus.

 

[RooFlyer]

They're out now. Unless they want to start their own airline, or fund REX's alleged jet proposal.

There was talk ... which I mentioned upthread .... that they could/might put an 'alternative' proposal to the Creditor's meeting, outside the Deloittes sanctioned proposal. I have no idea how that would work; understanding the 'value' of any proposal is not simple so how the creditors could make a decision is hard to guess and Brookfield would still be lacking a lot of critical information.

Anyone had experience of this? As its voluntary administration, I'm thinking that the creditors cannot act independently of what an Administrator proposes? As in ... "Its OK, we'll give these rogue mob another 2 weeks ... " Its the Creditor's decision, but who calls the shots as to what they decide on?

 

[chicco]

Anyone got any ideas of how these two proponents propose to deal with regional routes , especially in QLD and WA .Heaps of FIFO traffic and local tourism will hopefully pickup big time when full intrastate borders are open

 

[jakeseven7]

Confirmed - It's Bain and Cyrus according to Fairfax

Cyrus seems a bit of a dark horse and their earlier comments that they would leave the airline pretty much as is were very interesting. Hopefully they are genuine because if they are I think they are the best bid from a passenger's perspective!

Bain and Branson-linked Cyrus final two in race to buy Virgin

Virgin Australia's administrators have picked US private equity giant Bain Capital and the Richard Branson-linked firm Cyrus Capital as the final two bidders vying to buy and relaunch the collapsed airline.

www.smh.com.au

If Bain gets in, PS will be thrown out.

Cyrus may retain him.

Thank goodness Indigo didn’t get through, though Bains plan takes VA2 downmarket towards its LCC origins - question is how far....?

 

[jakeseven7]

Anyone got any ideas of how these two proponents propose to deal with regional routes , especially in QLD and WA .Heaps of FIFO traffic and local tourism will hopefully pickup big time when full intrastate borders are open

No real public indication though Bain have indicated VA2 will return to its LCC roots... don’t know what that means for regional....

 

[dajop]

Anyone got any ideas of how these two proponents propose to deal with regional routes , especially in QLD and WA .Heaps of FIFO traffic and local tourism will hopefully pickup big time when full intrastate borders are open

Surely, rationally looking at, if FIFO routes are making money then you either keep them, spin them off to a separate entity to which you divest, or a combination thereof. If not making money, close them down. Of course, often there is nothing rational about the airline industry, and also there is the compounding issue of how important they are in winning contracts with corporate customers, which could also include significant business on trunk routes.

Or in summary, only an insider would know.

 

[oz_mark]

I hope it's Cyrus. I fear it'll be Bain.

 

[antycbr]

I hope it's Cyrus. I fear it'll be Bain.

Bain will have to do a good job on the pitch to the employee creditors to convince them - which means Bain will need a clear explanation of their proposed operating model.

 

[jakeseven7]

I hope it's Cyrus. I fear it'll be Bain.

Cyrus have some strikes against them in terms of running a successful airline.... airlines they have bought have been run into the ground. Will they know how to make the tough calls?

Bain we know will be much more commercially driven and ruthless. Might not be great immediate outcome for staff, but would they shape a more commercially competitive business to take on QF group?

 

[RooFlyer]

Bain will have to do a good job on the pitch to the employee creditors to convince them -

Do the proponents actually get to address the employees or the Creditors meeting, or even the group nominated to represent them (genuine question). I would not expect so - as I mentioned up-thread, the proposals are unlikely to be simple and the '$$$' a mix of cash, promises, deferred etc etc, unlikely to be understandable in a 'pitch'. They already have had meetings with management and I think staff representatives as part of putting their second round proposals together.

I'd think most likely the Administrator will provide an explanation of any competing proposals, putting up pros and cons, their estimates of 'value' and a recommendation. Would not be the best outcome if a professionally assessed better deal was derailed by some emotive or sugar-coated 'pitch'.

 

[jakeseven7]

Isn’t it rumoured that Branson has a foot in each of the last 2 bidders?

He has worked with Cyrus before with two other airlines that end of lifed in spectacular fashion....

I’m sure he is lying in wait with his fleet of scantily clad bikini models waiting to slap the Virgin logo on anything that moves from either Bain or Cyrus if VA2 gets off the ground.

I’m beginning to feel, although conflicted, that Bain might be the right tough medicine for VA.... I’m just not sure Cyrus has the know how.

 

[antycbr]

Do the proponents actually get to address the employees or the Creditors meeting, or even the group nominated to represent them (genuine question). I would not expect so - as I mentioned up-thread, the proposals are unlikely to be simple and the '$$$' a mix of cash, promises, deferred etc etc, unlikely to be understandable in a 'pitch'. They already have had meetings with management and I think staff representatives as part of putting their second round proposals together.

I'd think most likely the Administrator will provide an explanation of any competing proposals, putting up pros and cons, their estimates of 'value' and a recommendation. Would not be the best outcome if a professionally assessed better deal was derailed by some emotive or sugar-coated 'pitch'.

I’m guessing the unions VIPA FAAA etc will have their own advisors on this whether in house or professional advisory. Employee entitlements are estimated at $400m so spending some money on representation is worth it let alone future earning potential, it’s not like any other airlines will be hiring for a while.

Post automatically merged: Jun 3, 2020

He has worked with Cyrus before with two other airlines that end of lifed in spectacular fashion....

I’m sure he is lying in wait with his fleet of scantily clad bikini models waiting to slap the Virgin logo on anything that moves from either Bain or Cyrus if VA2 gets off the ground.

I’m beginning to feel, although conflicted, that Bain might be the right tough medicine for VA.... I’m just not sure Cyrus has the know how.

Virgin America was bought out by Alaskan and shareholders made some money I believe so not a disaster. flybe was another terrible timing decision. Delta had the same problem with LATAM.

I do agree though that Bain might be a better bet for a longer term to cut costs. My partner works for a Bain owned business and despite appearances they’re still disorganised on the inside.