Virgin Australia Financially Secure? [Now in Voluntary Administration]

[andrewpf]

One big issue for Qantas.. the most profitable part for them is NOT the flying division... hasn't been for a LONG time.. the most profitable part is the frequent flyer loyalty scheme... I think Qantas will have more money in the bank than Virgin and harder for someone to take over

Perhaps ... but their shares are trading at a 50% discount to their December high. And I suspect this crisis will go on for many months longer.

But yes, essentially you'd be buying a business that has a demonstrated ability to turn a profit in its current form (crisis notwithstanding). At the end of this, Virgin on the other hand may just end up as a collection of physical assets (whatever they don't lease) and air operator certificates. Anyway, I'm not a finance guy, so I'm just speculating

 

[tomlee1986]

Perhaps ... but their shares are trading at a 50% discount to their December high. And I suspect this crisis will go on for many months longer.

But yes, essentially you'd be buying a business that has a demonstrated ability to turn a profit in its current form (crisis notwithstanding). At the end of this, Virgin on the other hand may just end up as a collection of physical assets (whatever they don't lease) and air operator certificates. Anyway, I'm not a finance guy, so I'm just speculating

I think your explanation in finance is sound and pretty close to the point

 

[Scr77]

It’s been 6 weeks since I started this thread. Way back then, I felt a little silly about asking the question. Oh boy, how things have changed!

OZstamps, was there a particular event that caused you to change your view?

I feel fine about my points.

I also do not have a Nuclear Fallout Shelter dug into the bedrock out the back.

Just call me less paranoid than some out there.

 

[tomlee1986]

It’s been 6 weeks since I started this thread. Way back then, I felt a little silly about asking the question. Oh boy, how things have changed!

OZstamps, was there a particular event that caused you to change your view?

To be honest... I don’t think your question was silly but legitimate... we all know this airline is struggling but I would never thought things would turn this bad this quickly

 

[jase05]

To be honest... I don’t think your question was silly but legitimate... we all know this airline is struggling but I would never thought things would turn this bad this quickly

6 weeks ago I don’t think anyone could have predicted the whole world would grind to a halt.

 

[Captain Halliday]

Down down, prices are down...

Could be the slogan for the 737-Max.

 

[I love to travel]

Slighty off topic what happened to the Ansett planes?

 

[HS-TQE]

Slighty off topic what happened to the Ansett planes?

Returned to lessors (763s/744s/CRJs and some of the 737 fleet), sold to other operators (most of the owned 737 and A320) fleets, or scraped (the old 762s).

 

[p--and--t]

This is a move away from their usual fluff advertising pieces in wider media.

" A monopoly in Australian skies will be good for no one. Not the 25 million people who fly with Virgin Australia. Not our 10,000 incredible people, or the 600,000 people who work in tourism. Not the Australian economy, to which we add $11 billion a year. Even our biggest competitors need a challenger to keep them honest and innovative"

Desperate times calls for desperate measures?

....and a bit of distortion of the facts. Pretty sure 25 million people did not fly with VA. Maybe they sold 25M seat sectors, many of them repeatedly to a much smaller group of people. Facts go by the wayside in the process of lobbying.

 

[Doctore1003]

Adele Ferguson has an interesting opinion piece in The Age today.

"[Virgin] has set up a data room and is looking at a recapitalisation of the business. High net wealth individuals, private equity and super funds are some of the parties that have been approached to gauge their appetite to take part in a debt restructure. Existing shareholders would be invited to take part or have their equity diluted. The pitch is that the airline would make some massive cost reductions and reshape the business. If the government gave it a bridging loan, it would inspire confidence that a recapitalisation will work."

Later: "[R]umours that if Virgin collapses a new player such as Ryanair will step in is nonsense. For starters, if Ryanair could afford to enter the Australian market, it is a low-cost carrier and it would therefore be competing with Jetstar not Virgin, which is a full service carrier. Anyone trying to compare Virgin to Ansett in the 2000s is wrong. Virgin had already entered the Australian market when Ansett collapsed and even then it took it a decade to build its fleet of aircraft. Turning into a full-service carrier to seriously compete against Qantas took even longer ... "

She basically argues that the government must step in.

Virgin Australia needs a government lifeline to survive

A government loan will go a long way to helping Virgin Australia quell customer uncertainty as it talks to potential investors about a rescue plan.

www.theage.com.au

 

[bigbadbyrnes]

It’s been 6 weeks since I started this thread.

To answer OP's OG question: No.

 

[ozstamps]

Adele Ferguson has an interesting opinion piece in The Age today.

She basically argues that the government must step in.

That really seems their only real hope but Gov't keep saying NIET so far.

 

[jase05]

That really seems their only real hope but Gov't keep saying NIET so far.

Yeah, I’m not sure the government will step in.
PS’s best hope I think is to try and tap into some wealthy backers and shake a few trees. Getting domestic travel up and running ASAP might buy him a bit of time aswell but just can’t see that happening

 

[travelbee26]

Update to my original post:
Today in the Age, a good opinion piece to consider amongst the gloom and doom naysayers....

Virgin Australia needs a government lifeline to survive

A government loan will go a long way to helping Virgin Australia quell customer uncertainty as it talks to potential investors about a rescue plan.

www.theage.com.au

 

[Standby]

With govt messaging that travel restrictions are with us for sometime(months) and the reality that once boarders open,Corp travel & reduced economic activity won’t return for some time ,If at all before the end of the next financial year.QF should be able to meet Dom travel needs with the groups fleet into next year without extra fleet should VA not survive.They have dormant international fleet units that can be quickly moved to Dom flying Sadly that’s not an inviting position for potential investors to step up and invest money in VA with little likelihood of an end to losses.None of this is the fault of hard working front line staff.

 

[BRIS_VA_HAWK]

That's a nice juxtaposition to the Stephen Bartholomeusz hate piece in the Fairfax papers 2 days prior:

Government shouldn't rescue airlines or super funds from their own ineptitude

The Morrison government is right to ignore the bailout pleas from Virgin Australia and some industry superannuation funds. Poorly managed private companies have only themselves to blame.

www.theage.com.au

 

[antycbr]

I think VA should target selected coalition MPs, e.g. Warren Entsch for Cairns would be a good start along with all Tasmanian and NT MPs as well.

These regions are heavily dependent on tourism and having QF/JQ only will be a major problem for the recovery if airfares are extortionate. Domestic tourism will be in demand but people conversely won’t be able to afford it.

I think it’s stupid to throw 20 years of work in the form of VA in the bin. It took close to 10 years for VA to be a viable network competitor to QF. I doubt QF will make it easy for any new competitor so if we are left with QF only airfares must be regulated and not by the toothless ACCC.

I think VAs move to dump TIger makes sense and we all agree with that.

I am also beyond disgusted with Alan Joyce at the moment and he’s gone too far with his public statements and asking the staff to lobby their MPs to basically force 10,000 people out of careers.

 

[SydneySwan]

I wonder if the other VA owners (Etihad, HNA, Nanshan, Virgin, etc) stepped in and told Virgin to stop the transfers. I doubt they would be happy with VA running down its cash reserves to the benefit of one of the owners - Singapore Airlines - at their potential expense.

 

[I love to travel]

Government missed an opportunity to give Virgin a small leg up with international flights that are commencing next week. Sole rights might have sent a message to AJ.

 

[antycbr]

Government missed an opportunity to give Virgin a small leg up with international flights that are commencing next week. Sole rights might have sent a message to AJ.

VA is doing BNE-HKG and BNE-LAX on 777s but the media made it sound like a QF only initiative.