Virgin Australia Financially Secure? [Now in Voluntary Administration]

[Must...Fly!]

I highlighted that upthread as well albeit in a different format. It appears facts presented to him that don't match his arguement are false

You can present any fact you like, bold lettering will disprove it.

 

[Mogul]

So what if both airlines were to be at the point of failure ? Let them both fail?

VA's domestic business was actually profitable.

 

[dajop]

Perhaps we could with a little less shouting in this thread please, it's hurting my eyes

 

[pauly7]

Wow I leave this thread for a few hours and look what happens

 

[p--and--t]

I thought the current problems were the result of coronavirus but it seems this thread has become infected with shoutalotvirus

 

[wannabeinvestmentbanker]

Perhaps we could with a little less shouting in this thread please, it's hurting my eyes

I was just over on FT to take a look at the BA thread and this one is starting to look a little like some of those. I think reported facts should take precedence. From what I saw, unfortunately a lot of QF crew seemed to find out the gravity of the situation from news reports not from internal comms.

 

[serfty]

Also what's with the varying font sizes and random BOLD?

Check the member's posts in the past - it's the norm for them.

 

[PaulllM]

Why?

It isn't 'the government's fault' that VA has had such poor financial performance.

It isn't the government's fault that we've had a new virus arrive that emanated in mainland communist China.

Simply put its all about employment.

The economic fallout from losing an airline would be felt throughout the economy and one of our main employment sectors is tourism and it is also a source for foreign revenue.

Politically Governments want to be re elected and will do as much as they can when they have the system of Government behind them to put them in the best position. A large portion of unemployed people that's jobs were not saved are not going to vote for the party in government and that creates a real problem when you consider the economic effects from the previous paragraph and the amount of voters in that sector.

Do not get me wrong for a second I'm a capitalist at heart and VA has been led astray under the JB years, some reforms i liked but some make no finanical sence to me.

I'm also a nationalist at heart and i seriously hope there is a major global response to mainland China after this.

 

[amaroo]

This comment may explain why Qantas was quick too lay off staff.

Airlines Qantas and Virgin Australia are also under pressure and have grounded their international fleets. While Virgin is hurting badly with large debts, it has $1 billion of cash on its balance sheet. Rival Qantas has $1.7 billion on its books. Analysts at Credit Suisse on Thursday however warned that Qantas would burn through its cash quickly.

IIRC QF wages bill for the year is north of $4B

Post automatically merged: Mar 22, 2020

Perhaps we could with a little less shouting in this thread please, it's hurting my eyes

Don’t count on it - most don’t like it when it’s call out.

 

[dajop]

I'm also a nationalist at heart and i seriously hope there is a major global response to mainland China after this.

We will almost certainly see some de-risking (diversification) of supply chains. Companies will finally realise its ways too risky having all their eggs in the one basket.

However, “a major global response” based on the virus originating in China? Not so sure. Nations led by thoughtful , logical leaders probably would not want to instigate significant action on this basis, as it would set a precedent to follow next time a major virus originates in a country: its far from 100% certain that the country of origin will always be China. But one can almost certainly expect further recriminations on Chinese trade and production from the US.

 

[jb747]

A major global response...perhaps like putting some serious world wide effort into viral research. There was plenty of warning. SARS, MERS, Ebola.

 

[Oubline]

I'm shocked that Virgin haven't announced any staff being stood down. Maybe not to the extent of Qantas given they have a much smaller international footprint but I would have thought 1/3 would be excess to current needs. One thing is for certain though, they sure as hell have not put them on the phone lines!

I'm weighing up transfering my 400k velocity points to KF. Only thing stopping me is that there is no telling how long international flying will be in lockdown for. With Australia being one of the better off countries so far in terms of outbreaks our boders could be closed for possibly years. I'd rather take the risk of being able to use my velocity points at least domestically, of course that depends on virgin not collapsing.

As depressing as it sounds, gift cards may be the only "safe" play left

For what it’s worth, you could still use KF points to travel domestically on Virgin (albeit a destruction of value in the transfer admittedly).

 

[hydrabyss]

Simply put its all about employment.

The economic fallout from losing an airline would be felt throughout the economy and one of our main employment sectors is tourism and it is also a source for foreign revenue.

Politically Governments want to be re elected and will do as much as they can when they have the system of Government behind them to put them in the best position. A large portion of unemployed people that's jobs were not saved are not going to vote for the party in government and that creates a real problem when you consider the economic effects from the previous paragraph and the amount of voters in that sector.

Do not get me wrong for a second I'm a capitalist at heart and VA has been led astray under the JB years, some reforms i liked but some make no finanical sence to me.

I'm also a nationalist at heart and i seriously hope there is a major global response to mainland China after this.

I have to agree employment will be the main issue. Tourism accounted for 666 000 jobs in 2018-2109. I am sure more jobs are created than just those employed by virgin. I have only ever flown virgin and after taking one flight back in 2012 have since maintained gold or platinum since. If there was no more second airline I may just use those funds to pay down my mortgage.

 

[moa999]

like putting some serious world wide effort into viral research

Think there is plenty of research around, but hard to research something you don't know about..

As in this things original name - novel-coronavirus

 

[Scarlett]

Given the bloodbath on global stocks, I suspect in 6 months time that many, many more companies will be majority Chinese owned.

For VA, it might not be Nanshan Group or Hainan Airlines, but if another investor wanted to pick up the bones of the organisation, I suspect we all know where those funds are coming from.

And in a time of crisis, tell me of an Australian Govt who will not want to get onto the coat tails of a 'white knight' arriving to save 10,000 jobs.

 

[justinbrett]

Given the bloodbath on global stocks, I suspect in 6 months time that many, many more companies will be majority Chinese owned.

For VA, it might not be Nanshan Group or Hainan Airlines, but if another investor wanted to pick up the bones of the organisation, I suspect we all know where those funds are coming from.

And in a time of crisis, tell me of an Australian Govt who will not want to get onto the coat tails of a 'white knight' arriving to save 10,000 jobs.

Assuming that A) the COVID-19 numbers coming out of China are truthful (probably not) and/or B) China isn’t subject to a second wave of the virus (it will be).

If China isn’t exporting it will have its own economic crisis.

 

[Doctore1003]

I think the government will have to take a stake in some of the airlines. The UK is doing it. Given Virgin’s valuation, it won’t be that much money!

Reuters | Breaking International News & Views

Find latest news from every corner of the globe at Reuters.com, your online source for breaking international news coverage.

uk.reuters.com

 

[justinbrett]

I think the government will have to take a stake in some of the airlines. The UK is doing it. Given Virgin’s valuation, it won’t be that much money!

I think you’ve got that mixed up - the government wouldn’t buy shares off other people, so the share price is irrelevant. It pumps the required amount of cash in and gets new shares based on how much it put in - which is why it would probably be nationalised (meaning the government would own a majority). So what was a 20% stake would become a 5-10% stake even though the number of shares owned by that company wouldn’t change - the total number of shares increase. I’m not an expert but I believe that’s how it works.

 

[Doctore1003]

I think you’ve got that mixed up - the government wouldn’t buy shares off other people, so the share price is irrelevant. It pumps the required amount of cash in and gets new shares based on how much it put in - which is why it would probably be nationalised (meaning the government would own a majority). So what was a 20% stake would become a 5-10% stake even though the number of shares owned by that company wouldn’t change - the total number of shares increase. I’m not an expert but I believe that’s how it works.

I don't understand what you're contesting about my basic point, which is that Virgin's valuation (however you measure it) is not going to be that high, and therefore it won't be very expensive for the government to take a stake.

 

[justinbrett]

I don't know what you're contesting about my basic point, which is that Virgin's valuation (however you measure it) is not going to be that high, and therefore it won't be very expensive for the government to take a stake.

And my point is that the government isn’t trying to take a stake, it’s injecting needed cash. The resulting stake is just a consequence of that. Whether the shares are worth 5c or 50c doesn’t change how much cash is needed. If the government wanted to take control of the company sure, your point is valid, but that’s not what’s happening here.