Virgin Australia Financially Secure? [Now in Voluntary Administration]

[Must...Fly!]

Well as most of us here in this 5-star thread predicted, Japan will not launch.

And VAi is closed for business.

My next prediction is that some routes will never reopen (International) and this has handed PS a golden opportunity to do a swift brutal restructure to prune off the decaying parts of their business for when the recovery comes back.

Trans-Tasman yes, everything else, no.

Lessors may be more encouraged to go along with the early proposed deal about selling 777s, returning the leased 777 and A330s in favour of 6-8 A350s or B787s - if VA can effectively finance this once it is all over.

However what you might see is a 777 on the Tokyo route should it come good. Confidence in USA travel might be low leading in to the election cycle, and the dollar very weak.

 

[daft009]

Are people emptying their VFF accounts?

 

[jase05]

Are people emptying their VFF accounts?

Nope. I don’t have as much to lose as most but I’m prepared to ride it out

 

[ozstamps]

I have suggested they have a 50% off Award Seat Sale IMMEDIATELY - Systemwide - and dump a LOT of seats into inventory buckets -

Time for a 50% off Award Seat sale?

If Virgin had any brains they'd have a massive award sale right now - for 6 months out - ''50% off'' or something. Maybe have a caveat that for these seats NO cancellation or change is permitted by passenger unless the fight route is cancelled due to Government directives etc? Highly...

www.australianfrequentflyer.com.au

Cuts a ton of point liability off the books (that they now own) AND helps fill planes and retains jobs. Seems like a no brainer to me.

I have over a million Velocity points - if I move them to Kris Flyer that COSTS Virgin real money.

Putting my bum on a Biz Class seat to Perth or Darwin - or both - right now just cuts their point liability - multiplied by the million others who would follow suit.

 

[Auski]

If I use Velocity points to book a SQ flight does Velocity pay SQ at the time to guarantee the booking?
Or is it possible that if Velocity goes under the SQ booking will be cancelled?

 

[jakeseven7]

If I use Velocity points to book a SQ flight does Velocity pay SQ at the time to guarantee the booking?
Or is it possible that if Velocity goes under the SQ booking will be cancelled?

I believe once it is in your SQ account it has nothing to do with VA anymore.
Not 100%.

 

[jase05]

I believe once it is in your SQ account it has nothing to do with VA anymore.
Not 100%.

Very interesting.
I’ve asked the same question on here once before and if I can recall correctly I was told that SQ can cancel it still. I have a couple of redemption flights booked for later in the year with SQ using VA points and I’m not panicking but would be keen to know a definitive answer

 

[Stealthflyer]

Are people emptying their VFF accounts?

Nope. I’ll be sad if I lose them all because I’ve finally saved enough for a specific trip.
However, I figure if I transfer points to KrisFlyer I lose value automatically. If I wait, I’m taking a chance Virgin will come through this alive. If they do then I get to keep all my points (hopefully they won’t be devalued in the process). I think there’s a fair chance they’ll get through it and I’ll be able to use the points as planned (or close to). It’s a risk, but one I’m going to take.

I should also note that I don’t have 100% faith in Krisflyer’s security either. I know they have the Singapore government’s backing, but to an extent, both Virgin and Qantas have the Australian government’s support too.

 

[Harthagan]

Nope. I’ll be sad if I lose them all because I’ve finally saved enough for a specific trip.
However, I figure if I transfer points to KrisFlyer I lose value automatically. If I wait, I’m taking a chance Virgin will come through this alive. If they do then I get to keep all my points (hopefully they won’t be devalued in the process). I think there’s a fair chance they’ll get through it and I’ll be able to use the points as planned (or close to). It’s a risk, but one I’m going to take.

I should also note that I don’t have 100% faith in Krisflyer’s security either. I know they have the Singapore government’s backing, but to an extent, both Virgin and Qantas have the Australian government’s support too.

Very much agree. I am counting on the federal government backing virgin and qantas through this turbulence. Let's face it, if it keeps getting worse for too much longer it will become survival of the fittest, in which case there will be no saving the airlines. But at this stage solidarity is the only way forward, and the aviation industry along with the flying public are doing their part for the betterment of the larger community. I have to believe that will not be forgotten when times get even tougher.

 

[jakeseven7]

Very interesting.
I’ve asked the same question on here once before and if I can recall correctly I was told that SQ can cancel it still. I have a couple of redemption flights booked for later in the year with SQ using VA points and I’m not panicking but would be keen to know a definitive answer

That is interesting, who told you that?
How on earth would that even work? (the answer you were given)
Maybe I'll ask SQ directly for all of us transferring out and get an answer!

 

[justinbrett]

If I use Velocity points to book a SQ flight does Velocity pay SQ at the time to guarantee the booking?
Or is it possible that if Velocity goes under the SQ booking will be cancelled?

I would check, I was under the impression if your ticket is issued by Virgin (with SQ flights) and they go bust, your ticket is no longer valid.

 

[jase05]

That is interesting, who told you that?
How on earth would that even work? (the answer you were given)
Maybe I'll ask SQ directly for all of us transferring out and get an answer!

That would be great if you could.
I might be losing my marbles but I’m pretty sure I asked a similar question awhile back on here. I think it was something along the lines that SQ doesn’t get paid until the flight is taken so that if VA went belly up the ticket is cancelled

 

[justinbrett]

Very much agree. I am counting on the federal government backing virgin and qantas through this turbulence. Let's face it, if it keeps getting worse for too much longer it will become survival of the fittest, in which case there will be no saving the airlines. But at this stage solidarity is the only way forward, and the aviation industry along with the flying public are doing their part for the betterment of the larger community. I have to believe that will not be forgotten when times get even tougher.

Qantas is a given, Virgin less certain. Virgin is effectively a foreign airline, so questions to be asked about why the government would be handing out money to foreign governments.

More likely scenario is similar to the Air New Zealand bailout where the government got shares in return for its cash, and thus it became re-nationalised. Effectively it would become a new airline but keep its Australian staff and essential transport routes (which is what the government really cares about). The risk of this - similar to the short lived Ansett II, is things like frequent flyer points / status / forward bookings may not be completely guaranteed, depending on how it's executed (a bailout vs let it fail and then pick up the pieces to reform a new airline).

On a positive note, it sounds like the government's plan is to stop it failing the first place, so hopefully won't come to this.

 

[jakeseven7]

Qantas is a given, Virgin less certain. Virgin is effectively a foreign airline, so questions to be asked about why the government would be handing out money to foreign governments.

More likely scenario is similar to the Air New Zealand bailout where the government got shares in return for its cash, and thus it became re-nationalised. Effectively it would become a new airline but keep its Australian staff and essential transport routes (which is what the government really cares about). The risk of this - similar to the short lived Ansett II, is things like frequent flyer points / status / forward bookings may not be completely guaranteed, depending on how it's executed (a bailout vs let it fail and then pick up the pieces to reform a new airline).

On a positive note, it sounds like the government's plan is to stop it failing the first place, so hopefully won't come to this.

PS dodged a couple of questions about reserves and solvency I noticed... although he probably didn't mean too he sounded quite cagey.

 

[justinbrett]

If NZ manages to stop the virus there and their economy rebounds quicker than the rest of the world - wonder if Air New Zealand could buy Virgin and rebrand it as Ansett Australia as an Australian domestic only subsidiary (and star alliance member)?

 

[aus_flyer]

If NZ manages to stop the virus there and their economy rebounds quicker than the rest of the world - wonder if Air New Zealand could buy Virgin and rebrand it as Ansett Australia as an Australian domestic only subsidiary (and star alliance member)?

LOVE LOVE LOVE this idea! As long as Air NZ doesn't do to Ansett v2 what it did to Ansett v1.

 

[HS-TQE]

If NZ manages to stop the virus there and their economy rebounds quicker than the rest of the world - wonder if Air New Zealand could buy Virgin and rebrand it as Ansett Australia as an Australian domestic only subsidiary (and star alliance member)?

Considering NZ is often linked to the collapse of Ansett Mk 1 thanks to then-NZ chairman's Selwyn "Borghetti" Cushing's huge ego over 2 decades ago, it would be seen as a very 'risky' move on NZ's part.

Saying that, this scenario looks least likely.

 

[serfty]

If NZ manages to stop the virus there and their economy rebounds quicker than the rest of the world - wonder if Air New Zealand could buy Virgin and rebrand it as Ansett Australia as an Australian domestic only subsidiary (and star alliance member)?

LOVE LOVE LOVE this idea! As long as Air NZ doesn't do to Ansett v2 what it did to Ansett v1.

Careful what you wish for ... I dabbled in Airpoints a decade ago it was borderline then ... but they destroyed it later on ...

 

[justinbrett]

Saying that, this scenario looks least likely.

Hence the emoji...

 

[eastwest101]

Qantas is a given, Virgin less certain. Virgin is effectively a foreign airline, so questions to be asked about why the government would be handing out money to foreign governments.

Virgin Australia might have some foreign owners but think about:

Where are the staff employed? Mostly Australia.
Routes flown? Mostly within Australia with some Pacific and a few long haul.
If profitable in the future, where are company taxes paid. To Australia.
Where is payroll tax paid? Australia.
Where is the income tax paid for most of its employees? Australia
Where are most of its subcontractors, and their staff and other business partners based and operating? Australia.
Airport owners? Mostly Australian companies (although I doubt the government is super concerned about them).
Aeronautical and security charges charges? To the Australian government.
Who benefits from competitive airfares? Australian people, and the local tourism industry in particular.
Charter business? Mostly Australian resource projects.
Velocity partners? Australian companies like Coles a few Banks, Hertz, Thrifty etc

Plus the undeniable elephant in the room that (sure VA are a bit of a mess), they are the only competitor to the Qantas group so waving through a massive monopoly on such a capital intensive highly regulated, specialised, and vital part of the transportation economy would be a massive drain on the economy.

I think owning an airline or two would be the very last resort of the current federal government, but they would certainly be open to the idea of giving some sort of assistance and relief for airlines so they at least have the time to restructure themselves and survive so that once the COVID-19 issue is over we still have a way of getting around the country.