Virgin Australia Financially Secure? [Now in Voluntary Administration]

[antycbr]

It will be interesting if the "paid" from the "booked and paid" quote will include bookings made through use of Travel Bank or conditional credits, or only include flights paid with fresh cash that have not yet been cancelled. Either way, as mentioned previously, it provides more fuel to the idea that those of us with such credit amounts should try to make use of them with a booking if possible.

I've converted by Travelbank into bookings for exactly this reason... It'd be more likely to be honoured than something that can be cancelled/devalued at a keystroke.

 

[jakeseven7]

As we know - its called the 'Foreign Investment Review Board' not the "Knock out all potential overseas investors board", although the details and the politics of the FIRB is certainly open to potential political interference.

No, in this instance the FIRB is known as the 'Hand me the stamp I don't care who buys this company we just want the issue dealt with' board.

 

[p--and--t]

Don't see on what basis the FIRB could have objection. A company currently 99% foreign owned being taken over by another foreign company (that isn't associated with China).

 

[jakeseven7]

Don't see on what basis the FIRB could have objection. A company currently 99% foreign owned being taken over by another foreign company (that isn't associated with China).

I'd put money in 5 years VA gets sold again though, so they probably were thinking 'We can read it properly when it comes back again the second time'

 

[BNEFlyer]

Apologies if it's already been mentioned, but from this ABC article quoting Australian Federation of Travel Agents (AFTA) Chairman Tom Manwaring:
Cyrus has confirmed it will honour existing bookings "booked and paid" if it's successful in the sale, AFTA is still waiting for a response from Bain.

It will be interesting if the "paid" from the "booked and paid" quote will include bookings made through use of Travel Bank or conditional credits, or only include flights paid with fresh cash that have not yet been cancelled. Either way, as mentioned previously, it provides more fuel to the idea that those of us with such credit amounts should try to make use of them with a booking if possible.

I think we’ll see credits being honoured too. It’ll just be a wait and see if current booked flights still operate or if there will be schedule changes.

 

[jakeseven7]

I wonder which undisclosed Australian airline grabbed them?.... Alliance?

I guess both Bain and Cyrus are working towards an all 737 fleet anyway...

--------

Avation To Remove Five Aircraft From Virgin Australia Fleet

Singapore-based lessor Avation announced on Friday the removal of five Virgin Australia aircraft from the carrier’s fleet. The lessor has decided to take back three ATR 72-500s and two Fokker 100s since Virgin Australia entered administration in April.

Regarding two of the three turboprops, Avation made arrangements with an undisclosed commercial airline in Australia. Thus, the airline in question will receive two of the ATR 72-500s until the end of 2021.

Although Avation has managed to secure deals with no lingering issues, the lessor remains strategic. It still has ATR 72-600s with Virgin Australia that it does not plan to remove. In an official statement, Chatfield said,

Full article:

Avation To Remove Five Aircraft From Virgin Australia Fleet

simpleflying.com

 

[BNEFlyer]

I wonder which undisclosed Australian airline grabbed them?.... Alliance?

Full article:

Avation To Remove Five Aircraft From Virgin Australia Fleet

simpleflying.com

Could be Hevilift. They currently have four ATR's. Two ex-VA plus two from other operators.

 

[Must...Fly!]

IIRC VA were due to take (or took) 2 F100s early this year on lease, so it's quite possible that is a paper only return.

As for the ATRs - Toll and VA were the only operators in Australia as far as I recall? Hard to see anyone taking on a new fleet type unless Rex got them for nothing to evaluate as some sort of consideration for Saab replacements/upgrade.

 

[jakeseven7]

Still time for twist in Virgin rescue

The bondholders' bid still hasn't materialised, but the group insists it's serious and has plenty of time to make its mark. The narrative goes that the bondholders, who are being marshalled by restructuring experts Faraday, have been working at a million miles an hour since being admitted to the Virgin data room on June 11.

They’re backed by a large and expanding group of advisers that now includes Virgin Blue founder Rob Sherrard.

For all that uncertainty, we do have a better feel for what the reborn Virgin will look like after Monday. We know that Tiger Airways will be dumped. We know the new Virgin will fly fewer routes, have limited international operations, and will likely use one type of aircraft to reduce costs.

Full article:

Still time for twist in Virgin rescue

The bondholders' bid still hasn't materialised, but the group insists it's serious and has plenty of time to make its mark.

www.afr.com

 

[jakeseven7]

As for the ATRs - Toll and VA were the only operators in Australia as far as I recall? Hard to see anyone taking on a new fleet type unless Rex got them for nothing to evaluate as some sort of consideration for Saab replacements/upgrade.

That would be a twist..... and I suppose that there is a good chance VA1's entire ATR fleet will be mothballed so there would be more up for grabs shortly as well.... And they didn't have that many to begin with, so perhaps it could all go to one airline...

 

[eastwest101]

Would have to think that the ATR's would likely be going to Heavylift or maybe Toll? As others have said - any decent Fokker F100 would be looked at either by Alliance or Network Aviation as these are the two largest operators of the type, even just as parts donors.

I am wondering if the consensus of whomever ends up with VA2 in the near future will be getting rid of the A332's due to their leasing costs (but surely bad leases can be renegotiated, what leasing company in their right mind would want to reposses an aircraft now and then have to redo the paint/interior and lease to who?) but maybe keeping the owned B777-300s because at the moment they are worthless on the second hand market.

The big unknown is international travel to the USA, UK, Europe, HGK and say Japan, and when it will reopen. If things are slow reopening then that means that Australian Federal government assistance will have to be extended to Qantas due to Qantas's fairly large exposure to its international division, if this is the case then the Federal Government will be trapped by its "sector specific assistance" mantra rather than a targetted "company specific assistance". If VA2 still has an international division, and infrastructure including aircraft, then they would have to be eligble for some sort of pro-rate assistance and extension of job-keeper payments to many employees presumably weighted on the size and capacity of their dormant international division, as compared to the dormant Qantas international division. If I were Bain or Cyrus I would be getting an Australian investor/bank/super fund inside the tent asap to at least 30-40% ownership to stop the inevitable Qantas PR campaign that all government assistance for international airlines should only be offered to Australian owned airlines.

 

[HS-TQE]

Most of VA/VARA's non 737 fleet are basically leased bar most of VARA's F100 fleet, 1 A320 (the original SkyWest A320) and the 4x 77Ws.

It would not surprise me if the entire ATR fleet is returned to lessors or the lessors transferred the lease to other operators.
The VARA F100s would have to be in under interest from the eyes of Alliance Airlines (or Network Aviation).

The only non 737 type I can see mothballed under VA2 is the 77Ws (under Cyrus).

Bain has only stated they've planned to restart NZ in the short term whereas Cyrus has stated they eventually plan to restarted long haul/LAX (in the medium term) once conditions improve.

 

[RAM]

Neither other creditors nor the administrators will be liable for the bond-holders’ fees in putting alternative proposals to administrators ... so I don’t see the point in them maximise their own losses....

Totally correct about the bondholders etc not paying for the 50+ team 'working FOR' the unsecured debt holders. It is the unsecured debtholders paying for this.

The saying 'A drowning man will clutch at a straw' is relevant.

There are some vulture funds who bought up the debt as a bet/gamble for rumoured to be 1 cent on the dollar in off-market transactions, add in the so-called mum & dad 'professional' investors who cannot believe that their unsecured debt from last year paying 5+ x bank term deposit rates could be risky.... and there's an opportunity for a 'clever' group to come in and make $10-20m in fees which most of the times sees the unsecured debt holders receive that much less than they were going to. Often these UDH are asked to 'fund' this white knight advisor group who are 'going in to bat' for you...

As mentioned in a much earlier post - I've seen cases where UDH have received 10%< of the final paid out amount and the White Knight group has >90%. As such endeavours often drag out the process - the amount paid out in total (to White Knight & UDHs) is significantly less (and paid much later) than if it was not disputed - due to the Administrators' fees over this extended period.

Everybody clips the ticket on the way through.

The vulture groups pick their targets. In this case the liquidation route sees the operating certificate lost (their leverage). Occasionally the vultures get a decent payout (on their entry cost). In this case if the 1 cent/$ entry cost is correct then they can easily make 3-5x after costs with a 5-6 cents/$ payout. Meanwhile the UDH get less than it could have been sold for back in mid-March theoretically.

As June 30 fast approaches - I would not be surprised if the vulture groups offer to buy from the other UDH's at 1 cent/$ so the sellers can claim it on their tax returns. Never give a sucker an even break perhaps?

Does make you wonder whether some of these people may have started life as phone/email scammers?

Yet another of the common ploys. Shock someone & then throw them some hope.

A drowning man will clutch at a straw

BTW - The ACCC move saying Q has to re-offer full refunds, if taken up by 70% of cancelled ticket holders (predominantly international) would clear out 3.2bn of cash. The last move to extend International border closures to Sept 17th - added roughly 1.2bn (by my reckoning) to NEW refunds able to be claimed. Potentially Q has no more aircraft that are able to be used as security as from publicly available info - looks like only 5 A380s are left somewhat unencumbered.

 

[BNEFlyer]

If I were Bain or Cyrus I would be getting an Australian investor/bank/super fund inside the tent asap to at least 30-40% ownership to stop the inevitable Qantas PR campaign that all government assistance for international airlines should only be offered to Australian owned airlines.

Both Bain and Cyrus have a deal with QIC which includes a stake in VA.

 

[HappyFlyerFamily]

Both Bain and Cyrus have a deal with QIC which includes a stake in VA.

Is there any sign of how much %?

The bond holders’ option might also be in need of a further large (Australian) backer? BGH back in the race??

 

[antycbr]

Potentially Q has no more aircraft that are able to be used as security as from publicly available info - looks like only 5 A380s are left somewhat unencumbered.

How much is an A380 worth as security? I'd wager it'd be parts and scrap only soon...

 

[BNEFlyer]

Is there any sign of how much %?

The bond holders’ option might also be in need of a further large (Australian) backer? BGH back in the race??

Reportedly $200m, and a guarantee that VA HQ stays in Brisbane.

 

[HappyFlyerFamily]

Reportedly $200m, and a guarantee that VA HQ stays in Brisbane.

So no ownership stake. I think post 3551 was referring to an ownership stake So that there is some comeback to Qantas’ inevitable argument that Australian federal support should go to Aussie-owned airlines.


Edit added: inevitable to reflect post 3551 better

 

[woodborer]

So no ownership stake. I think post 3551 was referring to an ownership stake So that there is some comeback to Qantas’ argument that Australian federal support should go to Aussie-owned airlines.

Have Qantas made such an argument?

 

[HappyFlyerFamily]

Have Qantas made such an argument?

No, not yet........