Virgin Australia Financially Secure? [Now in Voluntary Administration]

[DavidFlynn]

'SQ to the rescue' has been a recurring theme during times of VA woe but right now, especially right now, SQ's focus is on its own survival. I don't believe there is any silver bullet for VA here, and I just hope that CIVID-19 isn't a bullet to the head.

 

[cove]

I think SQ will get their money as Temasek is there. They are trying to raise almost $20 billion in shares and loans.....

 

[ozstamps]

Yes the Feds pretty clearly said that last week too. And if anyone gets an Fed edge, it will always be QF. They must keep at least one airline flying as widely as possible, in pretty much the same form as before. Sure fares will rise, but Australians can fly to where they wish again, and that is crucial.

I retain my oft stated view here they are gone by June 30 - the raw numbers were very easy to see - as financial experts are now confirming here below. If Virgin emerge as anything, it will be possibly a stripped down Tiger size shell, doing no frills trunk domestic routes sadly. Anyone remember something called Virgin Blue?

If there is a Velocity it will be superb basic - I doubt there will be one at all - just like Tiger worked. Current points and upgrades and shiny Platinum cards are probably as useful as Zimbabwe currency going forward.

MAYBE a White Knight will emerge, nothing is impossible, ( I hope so!) but Virgin lost money for 7 straight years in the Boom Times. The Cheer Squad here forget such minor fiscal realities.

White Knights will have 100s of Corporate Carcasses to pick over come July 1. A risky airline would never get on any short list methinks.



"We want them to continue to be commercial operations. We want the aviation sector to come out the other side as best it can."

Minister McCormack's decree follows speculation that the Government might initiate a taxpayer-funded bailout of Virgin Australia, which – following seven straight years of losses, with an $88m loss for the most-recent half-year of July-December 2019 – lacks the deeper pockets of Qantas when it comes to riding out the COVID-19 storm.

How long can airlines remain in business?

While Virgin had an estimated $1.1 billion of cash on hand at the end of 2019, Credit Suisse analyst Paul Butler has advised clients that Virgin could burn $860 million of that cash stash by June and could need a further $829 million next financial year.

In comparison, Qantas can fall back on reserves of $2.95 billion – with an additional $1 billion if needed – following a 10-year 'debt funding' loan worth $1 billion against seven of its Boeing 787-9 Dreamliners.

 

[jase05]

MAYBE a White Knight will emerge, nothing is impossible, ( I hope so!) but Virgin lost money for 7 straight years in the Boom Times. The Cheer Squad here forget such minor fiscal realities.

Absolutely true and no one is denying that JB made some massive errors which has led to this. I however have faith in what PS was working towards and believe he was turning things around to a point where I think a profit may have been possible soon.
Unfortunately Covid-19 had other ideas and as such no one could have been prepared for this.

 

[ozstamps]

Agree - mo one on the planet saw this occurring even on Jan 1. Very sad for everyone - you, me, airlines etc.

These situations are like animals in the wild. The weak and the injured simply just do not survive in a drought etc. Virgin was weak and limping badly BEFORE this.

Virgin fiddled and experimented (badly) while Qantas stashed a lot of acorns down the burrow etc.

 

[hydrabyss]

Yes the Feds pretty clearly said that last week too. And if anyone gets an Fed edge, it will always be QF. They must keep at least one airline flying as widely as possible, in pretty much the same form as before. Sure fares will rise, but Australians can fly to where they wish.

I retain my oft stated view here they are gone by June 30 - the raw numbers were very easy to see - as financial experts are now confirming here below. If Virgin emerge as anything, it will be possibly a stripped down Tiger size shell, doing no frills trunk domestic routes sadly. Anyone remember something called Virgin Blue?

If there is a Velocity it will be superb basic - I doubt there will be one at all - just like Tiger worked. Current points and upgrades and shiny Platinum cards are probably as useful as Zimbabwe currency going forward.

MAYBE a White Knight will emerge, nothing is impossible, ( I hope so!) but Virgin lost money for 7 straight years in the Boom Times. The Cheer Squad here forget such minor fiscal realities.

White Knights will have 100s of Corporate Carcasses to pick over come July 1. A risky airline would never get on any short list methinks.



"We want them to continue to be commercial operations. We want the aviation sector to come out the other side as best it can."

Minister McCormack's decree follows speculation that the Government might initiate a taxpayer-funded bailout of Virgin Australia, which – following seven straight years of losses, with an $88m loss for the most-recent half-year of July-December 2019 – lacks the deeper pockets of Qantas when it comes to riding out the COVID-19 storm.

How long can airlines remain in business?

While Virgin had an estimated $1.1 billion of cash on hand at the end of 2019, Credit Suisse analyst Paul Butler has advised clients that Virgin could burn $860 million of that cash stash by June and could need a further $829 million next financial year.

In comparison, Qantas can fall back on reserves of $2.95 billion – with an additional $1 billion if needed – following a 10-year 'debt funding' loan worth $1 billion against seven of its Boeing 787-9 Dreamliners.

The government has already announced funding for regional airlines as many from what I read where not going to be able to fly anymore.

The majors still have money in the bank so I feel it is still too early for them too do anything plus it gives them incentive to cut costs where needed.

 

[DavidFlynn]

The government has already announced funding for regional airlines as many from what I read where not going to be able to fly anymore.

Yep, regional airline package announced yesterday of almost $300m ($200m now, $100m later if needed and probably will be). Total aviation sector support now at $1bn.

 

[Melburnian1]

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

But isn't each new one (radically?) different? How can something that's yet to surface be researched?

Did QF's or VA's 'displans' forecast a pandemic in 2020?

 

[oz_mark]

But isn't each new one (radically?) different? How can something that's yet to surface be researched?

Did QF's or VA's 'displans' forecast a pandemic in 2020?

Pandemics were likely in their risk management plans. Good chance the mitigation strategy was accept the risk, and refer to the crisis management plan.

 

[muppet]

Yep, regional airline package announced yesterday of almost $300m ($200m now, $100m later if needed and probably will be). Total aviation sector support now at $1bn.

Not really $1b ... probably closer to $450m - $300m for regional aviation and $150m in refunded levies to all aviation. The other $550m was in waived levies that airlines cannot now incur because of the restrictions.

 

[HS-TQE]

'SQ to the rescue' has been a recurring theme during times of VA woe but right now, especially right now, SQ's focus is on its own survival. I don't believe there is any silver bullet for VA here, and I just hope that CIVID-19 isn't a bullet to the head.

Considering's SQ's track record during the 10000+ articles of "SQ to buy VA" (fake news) articles over the past 5 years, any future "so-called messiah SQ" themed articles in the media should be treated as "fake news" until there is an actual formal ASX announcement and/or there's actual pen to paper.

Saying that, there's a better chance of interested investors waiting for VA to file administration and to pick up VA's assets (the owned 737s) at a liquidation sale, as opposed to any of the usual suspects (SQ or DL) "taking over" VA with the associated $5B debt.

 

[pauly7]

Why aviation might never look the same again

Starting next week the vast majority of Australia's aeroplanes and the people who operate them will be sitting idle, grounded by the coronavirus pandemic.

www.theage.com.au

Analysts predicting VA can last until June. Down to about $900m now. Suggest their owners will not support VA if they request more $.

They predict QF can last until about Feb.

 

[HS-TQE]

Don't think NZ would be interested in having "another" go at the AU market considering their previous two goes ended in failure. That's including the infamous 'AN' bankruptcy adventure due to the egos running NZ over two decades ago, well before the Luxon/Borghetti "clash of the egos" that ended NZ's second attempt at the Australian market.

At most NZ might (or might not) partner with whoever is interested in picking "VA's" assets from a liquidation sale if VA ends up filing administration.

 

[jonboixxx]

Agree - mo one on the planet saw this occurring even on Jan 1. Very sad for everyone - you, me, airlines etc.

These situations are like animals in the wild. The weak and the injured simply just do not survive in a drought etc. Virgin was weak and limping badly BEFORE this.

Virgin fiddled and experimented (badly) while Qantas stashed a lot of acorns down the burrow etc.

Nah. Don't think Bambi's mum had a chance of a negotiated political or financial outcome. Piss-poor analogy methinks, which only serves to your sustained shorting of VA. I think we all get it.

 

[oz_mark]

Even if VA were to go, I would suspect that it wouldn't be long before one new entrant or another had a crack.

I suspect, however, there will be some for of government support. If there is, then there needs to be significant strings attached to stop executives pocketing any of the money.

 

[ozstamps]

Why aviation might never look the same again

Starting next week the vast majority of Australia's aeroplanes and the people who operate them will be sitting idle, grounded by the coronavirus pandemic.

www.theage.com.au

Analysts predicting VA can last until June. Down to about $900m now. Suggest their owners will not support VA if they request more $.

The piece in more detail, indicating near all Virgin cash on hand will be gone by June -

Credit Suisse analyst Paul Butler this week estimated Virgin could burn $860 million of its cash by June, and would need another $829 million next financial year. “Virgin likely requires additional liquidity to be comfortable about surviving the current COVID-19 crisis,” he wrote in a note to clients.

Virgin is 90 per cent owned by the government-controlled Singapore Airlines and Etihad Airways, Chinese groups HNA and Nanshan, and Richard Branson's Virgin Group.

Credit ratings agency Standard and Poors says those shareholders are unlikely to support Virgin through the crisis given they all face their own financial woes. "A default or distressed exchange appears increasingly likely over the next 12 months, absent timely government or other support and/or a swift reversal of the COVID-19 outbreak," the agency said on Thursday while downgrading Virgin further into "junk" territory with a CCC rating.

 

[cove]

Australia needs at least two carriers. If there is a further need to recapitalize all of them I would like for the Federal Government to hold some of their shares but not all. Let’s say a one third holding so that would remove the excess charges possible to anyone. Lend them money but get a shareholding for virtually nothing as they are all bust anyway.

 

[SheikYerbouti]

I'm already planning for Ansett Part II and all my Velocity status/perks/points/etc to be worthless by the new financial year, back to generic middle-seat economy queuing and flying.

 

[Obi-run Kenobi]

I'm already planning for Ansett Part II and all my Velocity status/perks/points/etc to be worthless by the new financial year, back to generic middle-seat economy queuing and flying.

Unless you get outta Dodge now and transfer your points to SQ. Sure, you'll lose a few in the transfer but better than nothing IMO.

 

[hydrabyss]

I'm already planning for Ansett Part II and all my Velocity status/perks/points/etc to be worthless by the new financial year, back to generic middle-seat economy queuing and flying.

I don't know a lot about Ansett but have read a few articles and wonder why you feel there are similarities between the two.