Virgin Australia Financially Secure? [Now in Voluntary Administration]

[33kft]

At this point I feel like the financial fallout is going to surpass the physical/medical cost by many orders of magnitude. If the thing just instantly wiped out 2% of the population (mainly the weak and elderly) how much impact would we feel from that going forward?

This reminds me of the Ford Pinto episode:

The Ford Pinto Case and human life value

Jordi Granés Puig - In 1968, Ford was losing the U.S. car market against smaller and cheaper European cars. The general manager decided to launch a…

tudelft.openresearch.net

Not a dig at the conceptualisation of these things as it really is human nature for us to weigh up the potential upsides and downsides of approaches using objective measures however any discussion about the relative economic value of a human life is going to elicit a wide range of responses and emotions from others.

 

[Bundy Bear]

I will be very surprised if Virgin hold on in their current form.
I can see the Tiger name disappearing.
An all 737 airline.
We now have Delta flying to Australia, ANA flying to Sydney and SQ to Singapore,
A bit of NZ, Fiji and Bali in the mix depending on the mood for international.

 

[dajop]

A bit of NZ, Fiji and Bali in the mix depending on the mood for international.

These are just extensions of the domestic operations anyway

 

[jakeseven7]

I will be very surprised if Virgin hold on in their current form.
I can see the Tiger name disappearing.
An all 737 airline.
We now have Delta flying to Australia, ANA flying to Sydney and SQ to Singapore,
A bit of NZ, Fiji and Bali in the mix depending on the mood for international.

Agreed, the US operations were becoming marginal with all the competition anyway.

I suspect PS will see this as a great opportunity to kill off VAi pretty much.

 

[Must...Fly!]

Agreed, the US operations were becoming marginal with all the competition anyway.

I suspect PC will see this as a great opportunity to kill off VAi pretty much.

Not 6 weeks ago they were talking about returning the A330s to the lessor, selling 777s (and returning the one leased) and taking on 6-8 A350s or B787s as replacement to reduce costs but maintain profitable areas of international and a widebody fleet for domestic use.

I know the world has changed but once this crisis is over...

 

[HTG2016]

Have they landed in your SQ account out of interest?

Instantly land in my sq account .

 

[Inlander]

I will be very surprised if Virgin hold on in their current form.
I can see the Tiger name disappearing.
An all 737 airline.
We now have Delta flying to Australia, ANA flying to Sydney and SQ to Singapore,
A bit of NZ, Fiji and Bali in the mix depending on the mood for international.

yep i wouldnt be surprised if they turn into something of a "South West " model- all common type fleet with all one class seating with preferential boarding being given to status holders. Ana/Delta/Singapore etc to provide international bookings/rewards etc

 

[moa999]

Too some extent I actually think the supposed 'value' of the FF helps protect the points. Remember Virgin just paid $700m to buy back half the program (looks stupid now).

But if the banks send Virgin to the administrator that value is wiped out.
If you're a general lender there is a lot of sense in keeping virgin going

 

[Bundy Bear]

News just on the wire now, on The Australian.

Virgin Australia Financially Secure?

Answer: no.

NoCookies | The Australian

www.theaustralian.com.au

Hopefully someone can do a short article on the link.

 

[Stealthflyer]

News just on the wire now, on The Australian.

Virgin Australia Financially Secure?

Answer: no.

NoCookies | The Australian

www.theaustralian.com.au

Hopefully someone can do a short article on the link.

I'm a bit confused. It opens with "Virgin Australia is understood to be working closely with legal restructuring experts from the law firm Clayton Utz as the airline industry awaits news as to whether it will receive government support." And then continues later, "While Virgin Australia is yet to call in any restructuring experts, many believe it faces an uphill battle in the coming months and may ultimately wind up subject to a bail out by its major shareholders, including Singapore Airlines, if the Australian Government does not first provide assistance."

Is it calling in restructuring experts or not?

What would a restructure look like do you think?

 

[Carrots]

I hate it when this happens (PS sorry if it's now allowed!)

To me the article seems to be a lot of fluff, and not much substance. I would probably be more concerned if they weren't actively consulting (even though they said they've canned consultants!) to make sure they put their best foot forward in this troubled waters.

Virgin Australia is understood to be working closely with legal restructuring experts from the law firm Clayton Utz as the airline industry awaits news as to whether it will receive government support.
It comes as Virgin Australia on Tuesday told the market that the ratings agency S&P Global downgraded Virgin Australia’s credit rating to B- on deteriorating domestic market conditions and placed the airline on Credit Watch Negative.

Virgin Australia’s shares are now at 6c and its market value at $583m.

The company said on Tuesday that it counted Clayton Utz as its long-term legal advisers.

On March 13, Virgin Australia told the market it would reduce capacity by 6 per cent for the second half of the financial year and cut costs, with rival Qantas on Tuesday telling the market that it will cut 90 per cent of international flights and 60 per cent of domestic capacity until the end of May due to the coronavirus pandemic prompting countries to shut borders.

While Virgin Australia is yet to call in any restructuring experts, many believe it faces an uphill battle in the coming months and may ultimately wind up subject to a bail out by its major shareholders, including Singapore Airlines, if the Australian Government does not first provide assistance.

The level of government involvement is also a critical question for the country’s national carrier Qantas, which may need to resort to an emergency equity raising.

Qantas currently has a market value of $4.5bn, with the group’s shares moving from around $7.40 at the start of the year to about $2.92 in Tuesday afternoon trade.

At its half-year results, it said it had net debt of $5.3bn.

Equity capital markets specialists say that securing investor support for an equity raising currently revolves around selling the deal as one that will see the company return to a strong performance when the coronavirus concerns ease and offering adequate information about exactly how much funding is needed to be the case.

It comes as the Virgin Australia listed bonds on Tuesday afternoon were trading at $38 after investors paid $100 each for the bonds last year.

Virgin Australia is buckling under adjusted net debt of $5bn and for the half year it posted an $88.6m loss.

Investment bank UBS assisted Virgin Australia last year on its bond raising, which secured $325m to help pay for its $700m acquisition of the remaining 35 per cent stake in the Velocity frequent-flyer program that it did not own.

A challenge for Virgin remains the fixed costs it has for operational leases and asset finance on its aircraft.

 

[jakeseven7]

I hate it when this happens (PS sorry if it's now allowed!)

To me the article seems to be a lot of fluff, and not much substance. I would probably be more concerned if they weren't actively consulting (even though they said they've canned consultants!) to make sure they put their best foot forward in this troubled waters.


Virgin Australia is understood to be working closely with legal restructuring experts from the law firm Clayton Utz as the airline industry awaits news as to whether it will receive government support.
It comes as Virgin Australia on Tuesday told the market that the ratings agency S&P Global downgraded Virgin Australia’s credit rating to B- on deteriorating domestic market conditions and placed the airline on Credit Watch Negative.

Virgin Australia’s shares are now at 6c and its market value at $583m.

The company said on Tuesday that it counted Clayton Utz as its long-term legal advisers.

On March 13, Virgin Australia told the market it would reduce capacity by 6 per cent for the second half of the financial year and cut costs, with rival Qantas on Tuesday telling the market that it will cut 90 per cent of international flights and 60 per cent of domestic capacity until the end of May due to the coronavirus pandemic prompting countries to shut borders.

While Virgin Australia is yet to call in any restructuring experts, many believe it faces an uphill battle in the coming months and may ultimately wind up subject to a bail out by its major shareholders, including Singapore Airlines, if the Australian Government does not first provide assistance.

The level of government involvement is also a critical question for the country’s national carrier Qantas, which may need to resort to an emergency equity raising.

Qantas currently has a market value of $4.5bn, with the group’s shares moving from around $7.40 at the start of the year to about $2.92 in Tuesday afternoon trade.

At its half-year results, it said it had net debt of $5.3bn.

Equity capital markets specialists say that securing investor support for an equity raising currently revolves around selling the deal as one that will see the company return to a strong performance when the coronavirus concerns ease and offering adequate information about exactly how much funding is needed to be the case.

It comes as the Virgin Australia listed bonds on Tuesday afternoon were trading at $38 after investors paid $100 each for the bonds last year.

Virgin Australia is buckling under adjusted net debt of $5bn and for the half year it posted an $88.6m loss.

Investment bank UBS assisted Virgin Australia last year on its bond raising, which secured $325m to help pay for its $700m acquisition of the remaining 35 per cent stake in the Velocity frequent-flyer program that it did not own.

A challenge for Virgin remains the fixed costs it has for operational leases and asset finance on its aircraft.

Sounds like corporate corridor gossip, but it equally could be true.

PS might be looking to kill off certain parts of his busines cough, Tiger, cough VAi.....

If they are smart they are making a wish list for what they want from the Feds.

I'm sorry VA I think I'm moving some SQ points now

 

[Must...Fly!]

So they are consulting with a law firm. Which Qantas would be too. And indeed the rest of the industry.

The rest we already knew.

These articles are such rubbish. The paper they are printed on could be better used as toilet paper.

 

[HS-TQE]

Related: DL will be pulling out of SYD-LAX until mid April (resumption date subject to change).

With this recent breaking news: This could now go either way for VA, either VA operates a drastically reduced SYD-LAX schedule (with BNE/MEL-LAX axed and funneled through SYD), or VA follows DL out the door.

Delta axes Sydney-LAX flights

The US airline and Virgin Australia partner will pull out of Australia until at least mid-April.

www.executivetraveller.com

 

[woodborer]

Restructure away. Just keep flying.

 

[jakeseven7]

Restructure away. Just keep flying.

They should be asking for protection from the unions to make sweeping structural changes

 

[amaroo]

That reads like it's going to be very difficult for VA. If this thing drags on for 6 - 12 months as has been predicted by both the state and feds, they haven't got a chance.

 

[jase05]

That reads like it's going to be very difficult for VA. If this thing drags on for 6 - 12 months as has been predicted by both the state and feds, they haven't got a chance.

If it drags on for 6-12 months there will be next to no airlines in the world that would survive

 

[amaroo]

If it drags on for 6-12 months there will be next to no airlines in the world that would survive

It will be like the hospitals making a call on who gets assistance.... the gov will probably only have the means to assist one. And I think we all know which one they will put on life-support.

Plenty info from state and feds in the last couple of days suggesting if the schools close, it will be for 6 months, or most likely the rest of the year. That suggests this thing will be long and difficult. But who really knows...

 

[ozstamps]

What is the transfer rate Virgin to SQ?