Virgin Australia Financially Secure? [Now in Voluntary Administration]

[daft009]

I need to make a pricelist for my products.. Can't pin a rate down

 

[eastwest101]

Where do Virgin send all of their profits? Not Australia.
Wait... hang on
What profits




Been said before on here is that Govt might throw a failed VA to QF to operate for a skeleton version for period of time then sell. Could happen.

Yes - but any future profits are reinvested in the business and/or paid to shareholders as dividends, nothing to stop anyone from buying shares in VAH right now on the stock market to gain exposure to future profits. These evil foreign owners all have governments and corporate taxation in their own jurisdictions. Welcome to capitalism, let me know if you have found a better system of funding and financing businesses.

The idea of some sort of failed VA being given to QF would require the assent of VA's current owners and there would be an obvious incentive for QF to mismanage and run down and defund the proposed "skeleton VA business" so that no other party would be interested in buying it. Hello market monopoly again.....if anyone thought that situation is good for the economy then they have rocks in their head.

Difficult decision making for all governments about trying not to "pick winners" and balance competition concerns with long and medium term sustainability for affected industries.

 

[jakeseven7]

Yes - but any future profits are reinvested in the business and/or paid to shareholders as dividends, nothing to stop anyone from buying shares in VAH right now on the stock market to gain exposure to future profits.

But VA banned the word profit

 

[HS-TQE]

Been said before on here is that Govt might throw a failed VA to QF to operate for a skeleton version for period of time then sell. Could happen.

Not likely the Govt will step in if "worse comes to worse" for VA.

Just like how administrators ran AN Mk II while they were looking for a buyer of AN, it'll be the same case if VA appointed administrators and those administrators subsequently decided to run a "VA Mk II" skeletal operation while they're looking for a buyer for "a VA Mk II".

 

[ozstamps]

Not likely the Govt will step in if "worse comes to worse" for VA.

Just like how administrators ran AN Mk II while they were looking for a buyer of AN, it'll be the same case if VA appointed administrators and those administrators subsequently decided to run a "VA Mk II" skeletal operation while they're looking for a buyer for "a VA Mk II".

The Prime Minister has a few other minor issues on his plate right now.

I recall that mess well - lost a million or whatever Ansett miles. Gone forever. The “wisdom” of us all then on Flyertalk was it would *never occur.* It did. And occured VERY fast.

All award bookings I’d made with Ansett in their death throes to save something from the wreck were not honoured by partner carriers. As will occur with all awards made on Virgin ticket stock I suspect. Delta or Etihad or SQ etc, do not get *paid* by Virgin until that Award Ticket is taken AFAIK, and booking something now for Xmas on one of these is just a pipe dream I think.

Unlike the Ansett bust, who foundered in isolation, EVERY carrier globally right now is close to the wall, so no-one is about to pick over the carcasses anywhere – and there will be dozens by June 30.

 

[antycbr]

VA has written to AU and NZ PMs and Premiers asking for secondments to the government, VA have customer service skills, logistics and engineering specialization son staff which could help. Hope the governments take up the offer the CEO made.

they should also approach Coles as QF have done with Woolworths

 

[justinbrett]

Unlike the Ansett bust, who foundered in isolation, EVERY carrier globally right now is close to the wall, so no-one is about to pick over the carcasses anywhere – and there will be dozens by June 30.

Actually, It's very much exactly LIKE the Ansett bust. That happened the day after 9/11. Yes, the cause was not related but the end result was the same - nobody wanted to buy it.

And also like the Ansett bust, there will always be demand for a second domestic airline, so as soon as this is over, if VA folds, there will be a new start up.

 

[SeaWolf]

And also like the Ansett bust, there will always be demand for a second domestic airline, so as soon as this is over, if VA folds, there will be a new start up.

When all this is said and done there might be an opportunity for a start up to set up a new first airline in Australia.

 

[Harthagan]

When all this is said and done there might be an opportunity for a start up to set up a new first airline in Australia.

Yup it will be a long while before the industry bounces back, to think both airlines will survive is very optimistic indeed. Is there any possibility that Qantas crumbles first? I mean I know it's unlikely but I wonder what kind of odds an informed bookie would set.

 

[Must...Fly!]

Yup it will be a long while before the industry bounces back, to think both airlines will survive is very optimistic indeed. Is there any possibility that Qantas crumbles first? I mean I know it's unlikely but I wonder what kind of odds an informed bookie would set.

Their expenditure and lease costs are certainly way way higher than Virgin's.

But they will not be allowed to fail, their regional arms are the real strength of the group in this context.

 

[moa999]

When all this is said and done there might be an opportunity for a start up to set up a new first airline in Australia.

I would have said AirAsia would jump in if VA went down.

But
AAGB:MK (the Main Company) market cap is now under US$400m and AAX:MK (AirAsiaX) is about US$35m

Post automatically merged: Mar 19, 2020

Actually, It's very much exactly LIKE the Ansett bust. That happened the day after 9/11. Yes, the cause was not related but the end result was the same - nobody wanted to buy it.

And if I recall scuttlebutt at the time Virgin Blue was very close to doing the same, just Ansett got in first, which totally changed the market

 

[HS-TQE]

I would have said AirAsia would jump in if VA went down.

But
AAGB:MK (the Main Company) market cap is now under US$400m and AAX:MK (AirAsiaX) is about US$35m

IIRC the entire long haul 'X' operation across their subsidiaries (including the parent Malaysian 'X' operation) is in the red and the short haul stuff (across their brands) was marginal at best.

 

[SeaWolf]

Yup it will be a long while before the industry bounces back, to think both airlines will survive is very optimistic indeed. Is there any possibility that Qantas crumbles first?

Qantas does have a lot more exposure in the international market...
In either case, there's a major difference between the Ansett collapse and now. Back then there wasn't any reason to think that Qantas might collapse and there was a third airline (Virgin Blue) servicing the major trunk routes just waiting in the wings to step up and expand.
There's no third airline at the moment and in the current situation if one of the carriers goes under the other could be just behind it, especially given that we've no idea how long this is going to go on for. Allowing one to go under would be putting all the country's eggs into the one domestic airline basket and gambling they don't all get smashed. Ending up in a situation where both domestic trunk airlines have gone under during this crisis would bring economic ruin.
I don't think it's a gamble the government would take. If one of them looks like it's about to hit the wall I think they'd drastically step up the assistance to the whole airline industry.

 

[justinbrett]

Their expenditure and lease costs are certainly way way higher than Virgin's.

But they will not be allowed to fail, their regional arms are the real strength of the group in this context.

Qantas own most of their aircraft, so don't know about that (lease costs).

Qantas equity is around 3.5 billion, with over 2 billion in cash; Virgin equity is 618 million with 1.7 billion in cash. So really both have plenty of cash. If it comes to it Qantas has far more equity. I think if the government were to save one it would be Qantas - based on it being an Australian company (there's no Virgin Sale Act).

I don't think it will come to that though. Both will keep going - worst case VA will get a new shareholder to pump some cash in.

 

[antycbr]

Qantas own most of their aircraft, so don't know about that (lease costs).

Qantas equity is around 3.5 billion, with over 2 billion in cash; Virgin equity is 618 million with 1.7 billion in cash. So really both have plenty of cash. If it comes to it Qantas has far more equity. I think if the government were to save one it would be Qantas - based on it being an Australian company (there's no Virgin Sale Act).

I don't think it will come to that though. Both will keep going - worst case VA will get a new shareholder to pump some cash in.

I expect both airlines to be nationalized in the next six months. Plus Rex and Air North.

 

[dajop]

There's no third airline at the moment and in the current situation if one of the carriers goes under the other could be just behind it, especially given that we've no idea how long this is going to go on for.

Rex have indicated they have six months of reserves if the situation doesn't deteriorate any further. They could step in and abandon regional Australia and fly their "run on the smell of an oily rag, well and truly depreciated" lawn mowers back and forth between MEL and SYD and serve the current level of demand quite profitably

The country is well connected enough by fast ground transport, and economically air travel is far too important in the long run for the government to let both trunk carriers fail. Different to, say Europe, where some journeys could be undertaken by rail without taking too much longer than plane.

 

[pauly7]

This article contains a direct quote from AJ - all he basically says is what is in thebanner/headline.

Nationalising Virgin would be ‘completely unfair’: Qantas CEO

Qantas CEO Alan Joyce says "the government can't pick winners and losers", saying "Qantas needs to be treated equally" amid speculation competitor Virgin Australia could be nationalised. "Whatever aid is given to one company has to be given to every company in that sector," he said. "It would...

www.news.com.au

 

[Spongbob]

In circa 2012-2013 AJ had no problems with special treatment for Qantas when the company had financial difficulties.

 

[ozstamps]

"It was probably the worst decision I've had to make as CEO to ground that much of our fleet," Mr Joyce said.

I think AJ meant to say "hardest decision" but what he blurted out was possibly true!

 

[Must...Fly!]

"It was probably the worst decision I've had to make as CEO to ground that much of our fleet," Mr Joyce said.

I think AJ meant to say "hardest decision" but what he blurted out was possibly true!

Well I doubt it was difficult in the sense that it absolutely had to be done. But CEOs are people too (well...most are), and to have on your conscience that 20,000 people are going to really struggle for at least 2-3 months would be psychological torture.