Virgin Australia Financially Secure? [Now in Voluntary Administration]

[TheInsider]

Wasn't it reported that Qantas had encouraged their staff to be out there opposing support to Virgin, or did I imagine that?

Not that I've heard...

 

[andrewpf]

Not that I've heard...

No, I was right: Qantas boss enlists staff for ‘equal treatment’ fight with Virgin

Qantas CEO Alan Joyce has issued a “call to action” to employees to lobby their local member of parliament to make sure smaller rival Virgin Australia gets no extra assistance beyond that of other airlines to survive the current coronavirus crisis.

 

[Must...Fly!]

Not that I've heard...

Yeah righto.

On Thursday, when Qantas announced it was cutting two-thirds of its staff and all but cancelling all international flights, Joyce told the media it would be “survival of the fittest” in the airline industry in tackling the coronavirus crisis.

Finally, in a phone call to staff, Joyce reportedly told workers to lobby their MPs on behalf of Qantas and said “governments are definitely not there to support a company that’s owned by Singaporeans, Chinese, Abu Dhabi and a British billionaire”, in a clear dig at Virgin.

Virgin complains to competition watchdog about Qantas

Virgin Australia’s chief executive has written to the competition watchdog to formally complain about Qantas’s recent attacks on his airline.

australianaviation.com.au

 

[Spongbob]

Unfortunately there are many ignorant morons in society who make their opinions from headlines and without knowing the full facts.

And this never happens on AFF!

 

[Jack_OC]

No, I was right: Qantas boss enlists staff for ‘equal treatment’ fight with Virgin

There is a difference between "opposing support to Virgin" and being opposed to Virgin receiving "extra assistance beyond that of other airlines", which is what AJ is quoted as saying in the article you linked.

 

[melb78]

As we all know none if the share holders has put there hands up to help VA out. so what is the use off them having major stakes in VA they should sell there stakes and let other well pocked companies turn VA around, Either way the share holders are losing money from VA anyway

 

[Bundy Bear]

Jetstar will be sold off. Neither QF nor Virgin will not be around at the end.

Seems a bit harsh.
Ok If it comes to it I take Qantas as I want to keep my life time Qantas club, see ya Virgin, nice knowing you. Smile thingy

 

[HS-TQE]

The easiest way to "sack" the shareholders from VA is filing 'voluntary administration'.

However it seems Scurrah may be exploring that option as a 'last resort'.

 

[Must...Fly!]

As we all know none if the share holders has put there hands up to help VA out. so what is the use off them having major stakes in VA they should sell there stakes and let other well pocked companies turn VA around, Either way the share holders are losing money from VA anyway

HNA had been trying that for over a year (i.e. before COVID-19) and could not find an acceptable buyer.

There are no other deep pocketed companies going around buying airlines, and certainly not now. Arguably VA's current shareholder arrangement served it well for the objectives of it's owners, but unfortunately for many reasons (some within their control, most not) it now simply does not work as each have their own significant problems and understandably can't/won't help financially with VA (with Virgin Group being a possible exception).

Which is why the lender of last resort (i.e. Government) is being approached for a loan - which as I've said before, even at $1.4b as long as the company didn't collapse, with some very hard decisions could work out well. The absolute last resort would be administration, but I don't think anyone outside VA and it's banking consultants at UBS & Morgan Stanley know what that eventuality really looks like.

 

[hydrabyss]

Virgin are also considering moving head office including Velocity in a bid to save the company.

https://www.afr.com/street-talk/virgin-australia-mulls-interstate-move-to-help-save-company-20200416-p54kal

 

[Jack_OC]

As we all know none if the share holders has put there hands up to help VA out. so what is the use off them having major stakes in VA they should sell there stakes and let other well pocked companies turn VA around, Either way the share holders are losing money from VA anyway

Sell their stakes? Once the existing shareholders declined to rescue the company, they effectively accepted that their stakes in VAH are now worthless. The nominal VAH share price is now meaningless. If the shares resumed trading on the ASX today the price would fall quickly and dramatically. It seems very unlikely that VAH shares will resume trading unless/until a rescue package of some sort is announced, and once that happens, even those with ~20% ownership now will end up with miniscule percentages (if anything).

 

[dajop]

The easiest way to "sack" the shareholders from VA is filing 'voluntary administration'.

Normally would disagree with you about administration being a viable option to see the airline continue (definitely a good option to sack shareholders though). . Outside of the Chapter 11 arrangements in the US, once an airline enters "voluntary administration" it's more or less all over - other than a few cherry picked niches (ala Rex, Skywest emerging from AN). Public trust in the brand completely eroded, nobody willing to book in advance, nobody willing to accrue loyalty points etc. Which means that there is very little hope to emerge from administration as a going concern (i.e. airline operating a schedule).

However, at the moment, it may well be a good option - as nobody has any confidence to book in advance anyway right now, irrespective of the financial state of the airline. Go through administration, demonstrate you are ready to ramp up again if/when lockdowns pass and there might be a hope of something emerging from adminstraiton.

 

[Must...Fly!]

Virgin are also considering moving head office including Velocity in a bid to save the company.

https://www.afr.com/street-talk/virgin-australia-mulls-interstate-move-to-help-save-company-20200416-p54kal

Interesting concept if they were to survive.

Admittedly if you were to pick a location in Australia to base an airline at the moment (for post COVID times), you probably would pick Melbourne. I take it as notable that strategic thinking is occurring though, even if it is "out there" stuff.

 

[Jack_OC]

Interesting concept if they were to survive.

Admittedly if you were to pick a location in Australia to base an airline at the moment (for post COVID times), you probably would pick Melbourne. I take it as notable that strategic thinking is occurring though, even if it is "out there" stuff.

Are you able to elaborate on why moving to Melbourne might be helpful for them? That is clearly the implication of the AFR article too, but it doesn't seem to explain why.

 

[andrewpf]

There is a difference between "opposing support to Virgin" and being opposed to Virgin receiving "extra assistance beyond that of other airlines", which is what AJ is quoted as saying in the article you linked.

Here's a more detailed quote:

“Governments aren’t there to pick winners and losers; governments are definitely not there to support a company that’s been badly managed for ten years, and governments are definitely not there to support a company that’s owned by Singaporeans, Chinese, Abu Dhabi and a British billionaire. They are there to do what’s best for Australia.”

 

[dajop]

“Governments aren’t there to pick winners and losers; governments are definitely not there to support a company that’s been badly managed for ten years, and governments are definitely not there to support a company that’s owned by Singaporeans, Chinese, Abu Dhabi and a British billionaire. They are there to do what’s best for Australia.” :

Ironically, government support would mean effectively the company will no longer be owned by Singaporeans, Chinese, Abu Dhabi and a British billionaire. It won't help the owners at all, it will effectively destroy their equity, but it will help the Australian staff and travel industry. But let's not let reality in the way of a good tale appealing to our prejudices. Those foreigners have pumped more money into VA, and Australia, than they've directly got out of it (perhaps except the British billionaire who takes his royalty regardless of how profitable the company is).

 

[Jack_OC]

Here's a more detailed quote:

It's actually a completely different quote to the one you posted earlier, which is what I responded to. This still doesn't say what you claimed earlier. He's been arguing all along that the govt shouldn't be giving preferential support to VA. For some reason you have chosen to de-emphasise the key part at the beginning of this quote: "Governments aren’t there to pick winners and losers".

AJ is also on record as saying he'd be ok with the govt giving VA the $1.4 billion they asked for, as long as they also give QF an equivalent amount, taking into account the relative size of the businesses. His views on this issue really at all aren't controversial IMHO. I don't think any CEO on the planet would accept their main competitor being given public money while they get none.

 

[oz_mark]

It's actually a completely different quote to the one you posted earlier, which is what I responded to. This still doesn't say what you claimed earlier. He's been arguing all along that the govt shouldn't be giving preferential support to VA. For some reason you have chosen to de-emphasise the key part at the beginning of this quote: "Governments aren’t there to pick winners and losers".

AJ is also on record as saying he'd be ok with the govt giving VA the $1.4 billion they asked for, as long as they also give QF an equivalent amount, taking into account the relative size of the businesses. His views on this issue really at all aren't controversial IMHO. I don't think any CEO on the planet would accept their main competitor being given public money while they get none.

Keep in mind that VA weren't asking for a gift, they were asking for a loan.

 

[Jack_OC]

Ironically, government support would mean effectively the company will no longer be owned by Singaporeans, Chinese, Abu Dhabi and a British billionaire. It won't help the owners at all, it will effectively destroy their equity, but it will help the Australian staff and travel industry. But let's not let reality in the way of a good tale appealing to our prejudices. Those foreigners have pumped more money into VA, and Australia, than they've directly got out of it (perhaps except the British billionaire who takes his royalty regardless of how profitable the company is).

Sorry, but the govt support that VA asked for would not have resulted in any change to the company ownership, unless things continue to go wrong in the future. They asked for a govt loan to essentially allow them to continue to exist in their current form. It would only convert to equity if they can't repay it in a few years. In other words, the foreign owners get the upside if it the plan works, while the govt (or us taxpayers in reality) would end up owning a big chunk of a worthless company if it doesn't.

There are other scenarios under which the govt could get ownership now (in full or in part) and thus reduce or even entirely eliminate the level of foreign ownership. One of those scenarios might come to pass, but let's be clear, that is not what VA asked for. And AJ was responding to what VA was asking for, which could indeed have hugely benefited its foreign owners.

Post automatically merged: Apr 16, 2020

Keep in mind that VA weren't asking for a gift, they were asking for a loan.

Yes I know. That doesn't change the point though - AJ is saying that whatever support is extended should be industry-wide, not company-specific.

 

[33kft]

Are you able to elaborate on why moving to Melbourne might be helpful for them? That is clearly the implication of the AFR article too, but it doesn't seem to explain why.

Best guess would be to lobby for incentives and concessions? This could also very easily be a negotiation tactic to force the QLD Gov's hand.