Virgin Australia Financially Secure? [Now in Voluntary Administration]

[dajop]

Only the experts would know for sure but PS seemed to have a plan and appeared to be working towards it.
Would have loved to have seen what things looked like in 12 months time but alas this virus had other ideas

It seemed, even before PS, that domestic and Velocity were both profitable. Maybe any strings that come should be the airline only retain previously profitable groups, so jettison International and Tiger. I would argue both Velocity and VA domestic are materially important to the competitive landscape. VA international and Tiger - not at all.

 

[kamchatsky]

It may be best for VA to file administration to get rid of the 'dead wood' (namely most of the shareholders that have financial problems of their own).

This would allow the administrators to set up a new domestic carrier in VA's place (using VA's existing assets) to attract a buyer, whilst at the same time sorting out VA's debts.

If VA does go into Voluntary Administration (VA!) then chances are that the international arm will completely go away, and will just be a domestic airline.

It would be a shame as they have a great international product.

 

[HS-TQE]

If VA does go into Voluntary Administration (VA!) then chances are that the international arm will completely go away, and will just be a domestic airline.

It would be a shame as they have a great international product.

Unfortunately the LAX flying (the only reported profitable route out of the VAi Long Haul network) before the pandemic is not enough to prop up the entire loss-making VAi subsidiary.

Unless if the likes of Delta (or others) are willing to invest, which is not likely. VAi will likely have to be closed down should VA file Voluntary Administration.

 

[Must...Fly!]

Well that's not necessarily true. Virgin own 4 of the 5 777s on the books.

The A330s are another issue.

 

[HS-TQE]

On a slightly related topic: Considering sister company's VS own problems, I think it can be said that (any) of the two remaining Virgin companies joining any Airline alliance in general can be considered dead, buried and cremated.

 

[clarkkent]

Virgin Australia: buy the business, don't bail out the shareholders - Michael West

Virgin Australia is pleading for a bail-out twice what its shares a worth. Nationalisation, constitution, Qantas, Scott Morrison, Sir Richard Branson

www.michaelwest.com.au

Another take:

• What does the Government want? To preserve the assets, both physical and human.
• Who does it pay? Virgin Australia Holdings.
• What does it pay? The fair value of the business.
• What is the upshot? The Government owns the business for $300 million. It flies the planes to Alice Springs, puts them in the desert so they don’t rust, drains the oil. It pays the staff so they are ready to roll when the airline flies again.

 

[Bagpuss]

Another article:

Scott Morrison casts doubt on billion dollar Virgin bail out

www.9news.com.au

 

[melb78]

was even thinking if SQ brought HNA share it would give SQ the right to buy VA out and turn VA only domestic arm eg Scoot airlines and SQ will have the rights to fly out of Australia. as SQ is owned by the gov and temasek. it would give them a big boost as SQ is the 3rd largest airline that flys out of Aust.

 

[HS-TQE]

was even thinking if SQ brought HNA share it would give SQ the right to buy VA out and turn VA only domestic arm eg Scoot airlines and SQ will have the rights to fly out of Australia.

Better stop treating SQ as the "so-called saviour".

SQ has financial problems of their own to perform a "take over", and they're trying to keep themselves afloat with their $18B bailout ($13B government funded bailout + $5B loan) to cover their own day to day multi-million dollar losses.

There's a higher chance of a new airline replacing VA and being owned by someone else under administration than a VA takeover by any of the existing shareholders.

 

[clarkkent]

Better stop treating SQ as the "so-called saviour".

Better stop posting the same thing over and over and over, we've all heard you every time anyone posts "SQ". Starting to look like a bot with that 3 minute turnaround.

 

[HS-TQE]

Another Article: CAPA (2 April 2020)

Why Australia needs Virgin Australia to survive

Virgin Australia is unlikely to survive without support, and the Australian government is reportedly planning to reject its request for a AUD1.4 billion support package, potentially leaving Qantas as a monopoly operator.

centreforaviation.com

Virgin Australia is another matter, and these are (very!) different times
A government bailout for one airline competitor in the system is not a desirable situation. Nor for that matter is coronavirus.

When we emerge from this social, medical and economic disaster, with perhaps 15-20% unemployment, do we really want a single monopoly airline?

To suggest another airline – or several airlines – will want to enter comprehensively in those conditions defies belief.

Picking winners after Virgin’s failure is no different from a bailout
And, if new investors did want to establish a new airline, how would the government then go about picking winners?

Would a full service airline, much more susceptible to blanket competition by Qantas, be preferred over an LCC? Because, with the scarcity of slots at Sydney, there is no way two airlines could get sufficient access to make them competitive. They’d be sitting targets.

And, in the months-long period it takes for a new airline to be authorised to fly, there would be a hiatus, as Qantas consolidated its position.

Meanwhile a functioning airline with 10,000 direct employees and many more reliant on its activity would have disappeared.

Hopefully, in its deliberations, the government is planning for these obstacles.

 

[woodborer]

Sims has a history of not knowing when to keep his mount shut. All he achieves by speaking publicly/giving his opinions about investigations that are underway, is undermining the legitimacy of those investigations by providing aggrieved parties with an opportunity to claim bias. I feel for his staff who must collectively roll their eyes every time he has a thought bubble and verbalises it.

But his quote was:

"We desperately need two full-service airlines when this is over. Whatever the government does is fine by me"

which from a competition point of view is completely true. That could be the government lowering the bars for a new entrant.
It could be forcing Qantas to divest Jetstar (which wouldn't give us 2 full-service airlines, but would give us 2 airlines).....

 

[HS-TQE]

Another piece from an Analyst:
"Tom Youl, Analyst from the DailyMail suggests Air New Zealand could be a 'good' choice to replace VA should VA file administration"

IMO, considering NZ's previous attempts at the Australian market which ended in grief and tears, I find this scenario to be highly unlikely.

Airline could crash as the government won't give $1.4billion loan

Virgin CEO Paul Scurrah requested a $1.4billion the loan last week but the Australian government refused.

www.dailymail.co.uk

 

[jase05]

Another piece from an Analyst:
"Tom Youl, Analyst from the DailyMail suggests Air New Zealand could be a 'good' choice to replace VA should VA file administration"

IMO, considering NZ's previous attempts at the Australian market which ended in grief and tears, I find this scenario to be highly unlikely.

Airline could crash as the government won't give $1.4billion loan

Virgin CEO Paul Scurrah requested a $1.4billion the loan last week but the Australian government refused.

www.dailymail.co.uk

Plenty of talk that NZ will operate as a domestic only airline when all this is over so not sure where they are getting the money from

 

[AIRwin]

Plenty of talk that NZ will operate as a domestic only airline when all this is over so not sure where they are getting the money from

How ironic that was what NZ had desired VA to be...

 

[dajop]

Better stop treating SQ as the "so-called saviour".

I agree with you regarding SQ. But I wouldn't rule out a Singaporean (or other foreign) non-airline interest picking over the bones of VA. They have had two moderately profitable forays into albeit niche Australian aviation markets with SkyWest and Rex. Competitive mainline would be a different matter altogether though to the niche markets.

 

[jase05]

Sheikh Khalifa Bin Zayed Al Nahyan would have a spare billion or two in the centre console of one his limousines. Hit him up for some spare change

 

[dkr]

On one hand the Gov say they're not in the business of picking winner and losers in markets, while on the other hand, from my understanding, they've yet to funnel money for repatriation charter flights to anyone other than QF?? Any reason VA's 777's aren't being tasked for some of these flights (ETOPS to Peru??), or the usual Government doublespeak about not picking winners and losers??

Edit: Ahh, look. Here's AJ's own words.. Perhaps he should be graciously knocking back requests from the Government to go run repatriation flights and share the love with VA???

“The government can’t pick winners and losers, the government has to be fair to every company. Whatever aid it’s giving to one company it must give to everyone in the sector.”

 

[Must...Fly!]

Sheikh Khalifa Bin Zayed Al Nahyan would have a spare billion or two in the centre console of one his limousines. Hit him up for some spare change

I'd suggest his ADOC credit card limit might be a little lower than about 2 months ago!

 

[ozstamps]

Sheikh Khalifa Bin Zayed Al Nahyan would have a spare billion or two in the centre console of one his limousines. Hit him up for some spare change

Not any more.

Etihad are in deep troubles, along with the good sheikh.

UAE has nothing except endless sand dunes and ............................................ oil

Which as all can see is at same price level per barrel of 40 years back.