Virgin Australia Financially Secure? [Now in Voluntary Administration]

[Cubiscus]

UAE has diversified a lot more than the countries around them

 

[andrewpf]

Just my hunch, but the article by Phil Coorey in the AFR is probably telling. He is a long time political journo, so probably has reliable contacts in terms of the Government's thinking.

Another, bit of a longer hunch, a certain CEO may be back-grounding about how another airline could just waltz in, and not to worry about Virgin's collapse ... the reason that I suggest that is that the article talks about Irish carrier Ryanair. I don't see on what basis Ryanair would want to set up in Australia, but I could imagine someone who was a former Aer Lingus staff member comparing that airline to Qantas, and suggesting a new start up could be like Ryanair.

Anyway, as I said, just pure speculation on my part.

 

[jase05]

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.

View attachment 211656

I was only joking in case people couldn’t tell but I’m sure his family fortune of $200bn odd dollars will see him through. Maybe he might have to hock one of his 500 odd cars or a spare helicopter or two if things get any worse.
Maybe he can sell Manchester City, they are only worth a few billion

 

[hydrabyss]

https://www.airlineratings.com/news/australian-airfares-jump-20-percent-government-doesnt-support-airlines/

 

[dajop]

https://www.airlineratings.com/news/australian-airfares-jump-20-percent-government-doesnt-support-airlines/

Interesting, IIRC, federal WOAG domestic airfare bill is in the order of $300m pre COVID-19. So, on the shaky assumption that government travel returns to the pre-COVID level, a 20% rise in airfare, could cost taxpayers $60m per annum. Forget private businesses (and state governments), how does that alone stack up against the cost of providing a line of credit to get VA through the next 6 months?

 

[moa999]

VAHHA bonds back under $40 which is telling.

I certainly agree the government shouldn't be backing winners (or subsidising losers). If equity loses it loses.

They can however play a role in backstop guarantees, or where there is total market failure, or enabling new equity or debt-equity conversions.

As a comparator, Carnival Cruise Lines just raised US$4bn in the bond market at a yield of 12% for 3 years. About half its current market cap having fallen 85% this year.

CCL: Carnival Corp Stock Price Quote - New York - Bloomberg

Stock analysis for Carnival Corp (CCL:New York) including stock price, stock chart, company news, key statistics, fundamentals and company profile.

www.bloomberg.com

 

[p--and--t]

https://www.airlineratings.com/news/australian-airfares-jump-20-percent-government-doesnt-support-airlines/

Maybe a total of half dozen fact based statements, the rest of the article (like most of the articles others posted here) mere conjecture. I don't know what will happen either. It will be interesting to watch this evolve and see what actually transpires.

 

[hydrabyss]

Interesting, IIRC, federal WOAG domestic airfare bill is in the order of $300m pre COVID-19. So, on the shaky assumption that government travel returns to the pre-COVID level, a 20% rise in airfare, could cost taxpayers $60m per annum. Forget private businesses (and state governments), how does that alone stack up against the cost of providing a line of credit to get VA through the next 6 months?

What has government travel got to do with it.

 

[dajop]

What has government travel got to do with it.

Only that it will cost more if there is a monopoly that results in 20% increase in airfares suggested by the linked article. Just like some big corporates. They have a hefty airfare bill.

 

[33kft]

Only that it will cost more if there is a monopoly that results in 20% increase in airfares suggested by the linked article. Just like some big corporates. They have a hefty airfare bill.

So if they reduce travel by 20%, they can save $1.4b? Bargain!

(It's a joke folks)

 

[muppet]

Just my hunch, but the article by Phil Coorey in the AFR is probably telling. He is a long time political journo, so probably has reliable contacts in terms of the Government's thinking.

Another, bit of a longer hunch, a certain CEO may be back-grounding about how another airline could just waltz in, and not to worry about Virgin's collapse ... the reason that I suggest that is that the article talks about Irish carrier Ryanair. I don't see on what basis Ryanair would want to set up in Australia, but I could imagine someone who was a former Aer Lingus staff member comparing that airline to Qantas, and suggesting a new start up could be like Ryanair.

Anyway, as I said, just pure speculation on my part.

Took Virgin Blue a decade to be a meaningful competitor to Qantas. Sadly our government ministers seem to have no idea.

 

[hydrabyss]

Only that it will cost more if there is a monopoly that results in 20% increase in airfares suggested by the linked article. Just like some big corporates. They have a hefty airfare bill.

I was looking at 25 million passengers for 2019 by 20% average increase to me would be in the low billions but most likely much more.

 

[Isochronous]

The government itself may also be divided - there will be factions in the partyroom and the Cabinet some of whom will want to just let it fail and some who will be more inclined to support it. I wonder if Queensland MPs will be more prone to wanting to support VA since their corporate HQ is in BNE

 

[Must...Fly!]

Took Virgin Blue a decade to be a meaningful competitor to Qantas. Sadly our government ministers seem to have no idea.

In a business sense, yes that's quite right.

A metric s**t tonne of money has been spent getting VA there. And while everyone would agree there has been a huge amount of unnecessary waste, it would not be easy to start from scratch. It's hard to see the airline disappearing entirely, but I can see voluntary administration being a realistic outcome. Question for most of us is then what that might mean to Velocity.

 

[HS-TQE]

If I recall correctly Velocity recently got transferred back in house to VA when the bonds were issued to pay for the Velocity buyback.

Though I do agree, I'd say Voluntary Administration scenario is the highest chance out of all possible scenarios. It allows to get rid of the deadwood (e.g the shareholders that are in debt before C-19) while also allows for a restructure with minimal impediments.

 

[muppet]

In a business sense, yes that's quite right.

A metric s**t tonne of money has been spent getting VA there. And while everyone would agree there has been a huge amount of unnecessary waste, it would not be easy to start from scratch. It's hard to see the airline disappearing entirely, but I can see voluntary administration being a realistic outcome. Question for most of us is then what that might mean to Velocity.

True. But Ansett take 2 never recovered from administration and it got a Government guarantee on all tickets sold.

 

[flyingfan]

"Virgin Australia chief executive Paul Scurrah is clinging on to hope his ailing airline will get a federal bailout despite a majority of cabinet ministers opposing a handout."

Virgin warns of price hikes under Qantas monopoly as bailout hopes stay alive

Virgin Australia's chief executive has warned travellers will face higher prices if his airline collapses, as the carrier hangs on to hopes of a government bailout.

www.theage.com.au

Letting 'the market' kill VA would be sad. I don't know about badly managed, I liked what they did with their lounges, priority boarding (yes it matters to me!), J class and service. Guess it cost too much. And buying back Velocity - is that an Bond-Packer moment?

But for Ryanair to be mentioned as a replacement... I thought we agreed things were too bleak for an April Fool's joke.

 

[Must...Fly!]

Scurrah makes an excellent point. Where on earth is the investment/seed money going to come from in a post-COVID world to set up a second carrier quickly? And be able to absorb losses? Alan Joyce would be all too aware of this I am sure.

As for Joyce requesting a bailout as well - where would his $4.2b go? Right in to a capacity war with Virgin to wipe them out (and the Government's money in VA), and oh no I bet not a single dollar would go overseas to prop up JQ's overseas arms in NZ, JP, SG etc....

There are absolutely no easy answers here but letting them fail will just...well, Scurrah isn't being too flippant in saying we should be ready for $800 MEL-SYD fares. Anyone who cared to look in the past 6-12 months could see that we weren't far away from those prices anyway during the week, and that's with a competing duopoly!

 

[amaroo]

Scurrah makes an excellent point. Where on earth is the investment/seed money going to come from in a post-COVID world to set up a second carrier quickly?

There are absolutely no easy answers here but letting them fail will just...well, Scurrah isn't being too flippant in saying we should be ready for $800 MEL-SYD fares. Anyone who cared to look in the past 6-12 months could see that we weren't far away from those prices anyway during the week, and that's with a competing duopoly!

Don't fall for the trap - one poorly managed business does not mean all businesses are in the same predicament. There are planty of people / businesses chock - full of cash.

Take a look at this. Jeez, if the thing falls a little further - I could buy it

Qantas could be taken over by cashed-up Wesfarmers, Macquarie says

The investment bank's analysts unveiled a laundry list of companies the retailing conglomerate could target after its Coles sell-down this week - and the nation's biggest airline is one of them.

www.smh.com.au

 

[hydrabyss]

I found this article interesting.

https://centreforaviation.com/analysis/reports/why-australia-needs-virgin-australia-to-survive-520272