Virgin Australia Financially Secure? [Now in Voluntary Administration]

[dajop]

What portion of VA revenue comes from Velocity? I can see for both VA and QF, that in the coming months, the cash generated by Velocity and QFF will be critical to the liquidity of both organisations. If people lack faith in VA and Velocity takes a huge hit then that coudl seal the airlines' fate.

 

[Must...Fly!]

What portion of VA revenue comes from Velocity? I can see for both VA and QF, that in the coming months, the cash generated by Velocity and QFF will be critical to the liquidity of both organisations. If people lack faith in VA and Velocity takes a huge hit then that coudl seal the airlines' fate.

If consumer and business spending drops then even that liquidity tap might slow a little.

If VA drop a double SC promotion I'll book a couple of transcon flexi fares for a few months time and do my bit. I think it's critical to keep supporting organisations as best you can. Not for their health necessarily, but if Qantas becomes the only game in town after all this, then, well, everything becomes more expensive.

 

[andrewpf]

I assume after NZ Govt's announcement of 14-day self imposed isolation, it would make sense for all airlines, including VA to further cut back on trans-tasmin flights.

At some point there has to be a question of whether the Federal Government steps in and provides some kind of financial underwrite/loan assistance of all the major domestic airlines (Qantas, VA, Rex). Reporting in the US is that the decline in patronage for US airlines has been sharper than 9/11. The collapse of any of the major airlines would be a major negative look for the Federal Government; and potentially able to be linked back directly to advice and actions they have taken (even if they are legitimate health measures).

 

[Must...Fly!]

So, if you were Paul Scurrah, what would you do? Think big, I say - in no particular order, these come to mind as extreme but possibly necessary measures.

1. Make it clear that hard decisions have to be made to save the business - not because it's in danger of collapse, but because you need to act so that it doesn't get to that point.
2. Look at suspending BNE-LAX and MEL-LAX. Co-operate with DL to run SYD-LAX daily and share the burden. Unsure on the cargo implications but there will be lots of spare belly space across the industry so this might not be the money spinner it normally is.
3. Delay Tokyo no matter what. Co-operate with NH to have codeshare services up and running ASAP on NH metal.
4. Suspend Velocity points transfers to KF. It costs money and would bleed cash. Every dollar will be needed.
5. Suspend all NZ flying except for 1x daily SYD-CHC/AKL/WLG. Domestic connections for those traveling from other cities.
6. Ground the 4 owned 777s and at least 2 A330s immediately, and some unknown number of 737s. Get 777 maintenance started early if possible.
7. Cut back TigerAir flying to the absolute lowest possible without ditching the airline and triggering redundancy payouts, unless the latter is cheaper.
8. Lobby government and airports for immediate relief in payment of airport fees.
9. Start the hard discussions with unions about leave arrangements, with and without pay.
10. Immediate double status credit promotion, network wide, through end of schedule, bookings until April 30 (with extensions as required).
11. Perhaps investigate flight passes as a way to bring in liquidity.
12. Optics count, give up own salary for at least six months, suspend all directors fees. Leaders will have to lead.

Too extreme? Curious to know what the punters here think.

 

[serfty]

So, if you were Paul Scurrah, what would you do? Think big, I say - in no particular order, these come to mind as extreme but possibly necessary measures.

1. Make it clear that hard decisions have to be made to save the business - not because it's in danger of collapse, but because you need to act so that it doesn't get to that point.
2. Look at suspending BNE-LAX and MEL-LAX. Co-operate with DL to run SYD-LAX daily and share the burden. Unsure on the cargo implications but there will be lots of spare belly space across the industry so this might not be the money spinner it normally is.
3. Delay Tokyo no matter what. Co-operate with NH to have codeshare services up and running ASAP on NH metal.
4. Suspend Velocity points transfers to KF. It costs money and would bleed cash. Every dollar will be needed.
5. Suspend all NZ flying except for 1x daily SYD-CHC/AKL/WLG. Domestic connections for those traveling from other cities.
6. Ground the 4 owned 777s and at least 2 A330s immediately, and some unknown number of 737s. Get 777 maintenance started early if possible.
7. Cut back TigerAir flying to the absolute lowest possible without ditching the airline and triggering redundancy payouts, unless the latter is cheaper.
8. Lobby government and airports for immediate relief in payment of airport fees.
9. Start the hard discussions with unions about leave arrangements, with and without pay.
10. Immediate double status credit promotion, network wide, through end of schedule, bookings until April 30 (with extensions as required).
11. Perhaps investigate flight passes as a way to bring in liquidity.
12. Optics count, give up own salary for at least six months, suspend all directors fees. Leaders will have to lead.

Too extreme? Curious to know what the punters here think.

1. I believe they have already indicated that or similar.
2. It is interesting they reduced the SYD services - I was thinking DL and their SYD flight was a factor in this.
3. Will Happen I believe - but only after they are sure they won't lose the slot.
4. Yes - it would also stop Velocity Punters bailing on VA
5. It would not surprise if all NZ flights were suspended until after June
6. The LAX services apparently were more than covering their costs until (I guess) recently. Maybe there is hope yet.
7. maybe cut Tiger altogether in any case
8. I'm not sure the Airport owners would be amenable to such.
9. I suspect that is already under way.
10. Would people buy fares in the current climate?
11. They can also be a yoke.
12. Havn't they already done something along these lines?

 

[Must...Fly!]

1. I believe they have already indicated that or similar.
2. It is interesting they reduced the SYD services - I was thinking DL and their SYD flight was a factor in this.
3. Will Happen I believe - but only after they are sure they won't lose the slot.
4. Yes - it would also stop Velocity Punters bailing on VA
5. It would not surprise if all NZ flights were suspended until after June
6. The LAX services apparently were more than covering their costs until (I guess) recently. Maybe there is hope yet.
7. maybe cut Tiger altogether in any case
8. I'm not sure the Airport owners would be amenable to such.
9. I suspect that is already under way.
10. Would people buy fares in the current climate?
11. They can also be a yoke.
12. Havn't they already done something along these lines?

A few thoughts on the above


8) Probably not, but they may not have a customer on the other side of this if they play hard ball. Understand they have costs too but everyone has to share the burden here.

10) Good question, but I think it would encourage some bookings from those on the fence. It would have to provide some benefit in extra cash flow.

11) Absolutely agreed, this idea would be heavily dependent on what loads look like. Definitely only apply to domestic services.

12) The announcement yesterday to the ASX said only that Chairman and Independent Directors to drop base fees by 15%, zero bonuses group wide, and no base salary for non-EA staff. Nothing about PS, and if the board were serious, they would suspend their fees entirely.

 

[exceladdict]

I'd throw in an immediate 12 month status credit extension, so people have both an extra year of status and an extra year to requalify for next year, possibly as an alternative to short term DSCs.

 

[Must...Fly!]

I'd throw in an immediate 12 month status credit extension, so people have both an extra year of status and an extra year to requalify for next year, possibly as an alternative to short term DSCs.

I actually wrote that but then deleted. Partly because it may discourage people booking flights, and would require VA to send out a huge raft of new Velocity membership cards which is not an expense they need to incur.

 

[exceladdict]

I actually wrote that but then deleted. Partly because it may discourage people booking flights, and would require VA to send out a huge raft of new Velocity membership cards which is not an expense they need to incur.

Fair point. Thinking about my own work travel patterns, it would probably discourage me from booking travel I could postpone, but then I'd be doing that for health and convenience reasons anyway. What it would do though is prevent me from starting again with QF.

 

[jakeseven7]

Ok so with VA imminently about to cut their TT I imagine to the bare bones (maybe nothing) and LAX soon on the chopping block as a US travel ban becomes likely, could we see the end/Suspension of VA international - period?

 

[AIRwin]

There are other short haul international destinations - APW, DPS, HIR, NAN, POM and VLI...

 

[vmile]

1. Suspend Velocity points transfers to KF. It costs money and would bleed cash. Every dollar will be needed.

Too extreme? Curious to know what the punters here think.

Interesting. Good ,well thought out ideas.
Just as a point of reference, and it is absolutely correct if you do not wish to indicate, but approx, how many VA points do you hold at the moment? And if a serious amount, are you considering shifting them to KF?

 

[jakeseven7]

There are other short haul international destinations - DPS, HIR, NAN, POM and VLI...

Think DPS is on borrowed time.

Technically they don’t fly POM do they? Thought Alliance did (part owned by Qantas lol)

The others.... don’t know.

 

[Must...Fly!]

Interesting. Good ,well thought out ideas.
Just as a point of reference, and it is absolutely correct if you do not wish to indicate, but approx, how many VA points do you hold at the moment? And if a serious amount, are you considering shifting them to KF?

Roughly 200,000.

I will not be transferring to KF, nor have I seriously considered it.

 

[vmile]

Think DPS is on borrowed time.

I'm sorry but is not DPS, AUS Bogan Central. If an AUS carrier cannot make money on that route, they should totally give up any international flights ???.

And seriously, just try and get a VA reward ticket on AUS-LAX or LAX-AUS. Not available. So the load factor must be pretty good. Other than travel bans, why shut that down, if Delta do not shut their flights down?

I understand that things are changing day by day, but it really is throwing the baby out with the bath-water stuff...

 

[Must...Fly!]

Well VA were about to start MEL-DPS again, so I think it's fair to say they're doing ok there. (Well, before COVID-19). Pacific island flying has long been subsidised by various groups and the assumption has been that cargo has underwritten many of these routes for some time. Scurrah is known to be someone focused on costs, so these routes may not last - certainly there have been rumours.

Delta has plans to drop capacity across their network by 40%. VA have announced cuts of about 6%.

I know which number is closer to the reality of the world at the moment...

 

[jakeseven7]

Well VA were about to start MEL-DPS again, so I think it's fair to say they're doing ok there. (Well, before COVID-19). Pacific island flying has long been subsidised by various groups and the assumption has been that cargo has underwritten many of these routes for some time. Scurrah is known to be someone focused on costs, so these routes may not last - certainly there have been rumours.

Delta has plans to drop capacity across their network by 40%. VA have announced cuts of about 6%.

I know which number is closer to the reality of the world at the moment...

My comment around DPS was more it’s only a matter of time before corona goes wild there and hence expecting route to face significant challenges

 

[Ace3162]

Is this as bad as it sounds??
I may be a bit behind on my reading... I’ve only just discovered this article and VA is included as one of 9 airlines apparently in a stop sale.
“A stop sale is never good news for anyone, and 9 airlines from around the globe have now been put on stop sale by leading travel agencies, following unprecedented concerns around the global pandemic.”

9 Airlines Put On "Stop Sale" By Travel Agents...

In breaking news, 9 major airlines have been put on stop sale by leading travel agencies, due to a variety of operational or financial concerns. Even....

www.godsavethepoints.com

 

[AIRwin]

I’ve only just discovered this article and VA is included as one of 9 airlines apparently in a stop sale.

This was already raised for discussion in post 310:

Virgin Australia Financially Secure? [Now in Voluntary Administration]

Massive swing into the close for the Aussie market. VAH oscillating around the 40% gain trading between $0.08-$0.09

www.australianfrequentflyer.com.au

 

[Must...Fly!]

One of the problems with that article is we have no idea as to which agent it refers.