Virgin Australia Financially Secure? [Now in Voluntary Administration]

[HS-TQE]

Thanks. Wow. I don't even know where to start with that "article". Why would a government offer money to bailout any company if an existing shareholder was willing (SIA in this case) to stump up cash? There are no restrictions on VAH's share register re international ownership - although SIA would need approval to increase above the existing 20% (as any company would under the ownership 'creep' provisions). Further, how is Qantas "government backed" such that it needs protection from "foreign owned" SIA? If the government was so inclined, then why didn't they put the same 50% foreign ownership provision on VAH back in 2014 - the lack of such restriction being a big part of the reason that QF asked for assistance.

SIA doesn't have the money to "stump up cash" for VA, as they're currently in financial trouble themselves due to the COVID-19 situation. The Singapore Government recently raised a $10B+ funded bailout, plus a $5B loan from the banks for SQ to service their day to day debts. SQ are currently losing millions per day due to the pandemic.

In addition, there's been plenty of "so-called saviour" SQ to "take over VA" articles in the past 5 years and in all cases have ended up being 'fake news'.

Also to add to that is SQ's overall dismal record at overseas investments (including 3 in Australia). Strike 1: NZ/Ansett (bankruptcy debacle), Strike 2: Tiger Airways Australia (maintenance debacles) and Strike 3: Virgin Australia (Capacity War and CapEx losses).

Also to add to SIA's 3 failures in Australia is their 'epic fail' in their Virgin Atlantic investment in the UK, selling at a loss to DL and DL performing the recovery job over there.

Not exactly a great record for a 'so-called saviour' of VA. Time to stop treating SQ as a 'so-called saviour' of VA when their overall record has been completely dismal.

 

[bigbadbyrnes]

As hard as I try to get the best available information to inform me what to do with my Velocity points, as always, the info I need is buried in the future.

Hold onto the points now and realise their full value for international business class flights in the future, or cash them out for vouchers with the few options left. Or see about converting to KrisFlyer miles.

There's enough info currently available to support the argument that they'll be broadly ok once the restrictions are lifted and 'things go (close to) back to normal', and enough to support the counterpoint that their goose is as cooked as any other business which has a lot of product it can't sell and needs to sell in order to meet debt obligations.

I'm considering hedging the points by cashing half of them for vouchers - at least I'll have a consolation prize if it does all go wrong.

As always, we're driving the car by looking in the rear view mirror.

 

[jase05]

I can understand why the government may want to let Virgin crash. Why risk owning an airline that’s performed so poorly and racked up $5 billion in debt when you can let existing stock and bond holders wear the cost, with the expectation that a new carrier would enter the market quickly. There are risks and costs either way, but the latter seems ’cleaner’.

I wonder if the government will consider that VA has started to turn things around. Some experts had them making a profit in the very near future. Unfortunately PS is on a hiding to nothing whilst the previous boss responsible for racking up the debt is no longer there.
Im dead against a bail out but a loan with strings attached would be fine by me. Give PS a time frame to try and work out of this mess as I still think VA can produce a model which can succeed. Fingers crossed anyway

 

[MarcB]

SIA doesn't have the money to "stump up cash" for VA, as they're currently in financial trouble themselves due to the COVID-19 situation. The Singapore Government recently raised a $10B+ funded bailout, plus a $5B loan from the banks for SQ to service their day to day debts. SQ are currently losing millions per day due to the pandemic.

In addition, there's been plenty of "so-called saviour" SQ to "take over VA" articles in the past 5 years and in all cases have ended up being 'fake news'.

Also to add to that is SQ's overall dismal record at overseas investments (including 3 in Australia). Strike 1: NZ/Ansett (bankruptcy debacle), Strike 2: Tiger Airways Australia (maintenance debacles) and Strike 3: Virgin Australia (Capacity War and CapEx losses).

Also to add to SIA's 3 failures in Australia is their 'epic fail' in their Virgin Atlantic investment in the UK, selling at a loss to DL and DL performing the recovery job over there.

Not exactly a great record for a 'so-called saviour' of VA. Time to stop treating SQ as a 'so-called saviour' of VA when their overall record has been completely dismal.

Sorry, I wasn't suggesting that SIA was going to "stump up cash". It was meant as a rhetorical question...the "article" makes a claim that SIA was ready and willing to "save" VAH but that the Government didn't want them to be foreign owned, so would put their hands in the taxpayer pocket instead. Such a statement is baseless and completely at odds with the policy and legislative settings that exist in the Australian aviation market.

For a start, VAH are already 90% foreign owned.

I don't have a view on whether SIA will "save" VAH, but I certainly don't believe that the Government would save "VAH" if SIA was ready and willing to do so. That would be a monumental waste of money in a time where the Government needs to ensure any assistance is targeted where it is needed; not spent to entrench some xenophobic, anti-overseas ownership policy that does not exist.

The point I was making (trying to make) is that the article reads like fiction.

 

[p--and--t]

Here's a screenshot of that article for those of you who decline to have a subscription

Seems the work experience kids have been offered jobs in the media.

That article is so full of inconsistencies and conjecture it should be filed in the fiction/conspiracy theory section at the library. Or seeing there is a shortage of toilet paper.............

 

[AIRwin]

Seems the work experience kids have been offered jobs in the media.

Profile of the editor:

NoCookies | The Australian

www.theaustralian.com.au

 

[p--and--t]

Profile of the editor:

NoCookies | The Australian

www.theaustralian.com.au

Ok I'll agree my first para was hyperbole.

YMMV, but standing by the second para. Length of time working in a job and length of CV doesn't make you right.

 

[HS-TQE]

This analyst from SMH suggests that VA should file 'Voluntary Administration' to get rid of the current shareholders, then restructure and 'right-size' from there to attract a new buyer.

IMO, the administrators should ensure that the likes of HNA, Etihad, Singapore Airlines, Nanshan, etc has no equity involvement in the 'replacement' should VA file voluntary administration. They all had their chances (3 times for Singapore) and failed dismally.

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

 

[hydrabyss]

ACCC chairman publicly backs Virgin

The chairman of the Australian Competition and Consumer Commission (ACCC) has publicly leant his support to Virgin Australia, which is currently seeking a bailout.

australianaviation.com.au

 

[amaroo]

SMH...

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.smh.com.au

 

[p--and--t]

Seems totally illogical to me for a Liberal government to enact a course that may end up with it owning a share of Virgin (which may end up being worthless) when over the years it has privatised and shed itself of as much as possible and promoting a capitalist competitive market.

If any sort of bailout was to occur (of which I'm not necessarily in favour), an approach similar to NZ of a loan guaranteed over assets with a total embargo on any dividends until every cent is paid back would be more favourable so we are not pouring good taxpayer money after bad and benefiting overseas shareholders.

 

[MarcB]

ACCC chairman publicly backs Virgin

The chairman of the Australian Competition and Consumer Commission (ACCC) has publicly leant his support to Virgin Australia, which is currently seeking a bailout.

australianaviation.com.au

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.

 

[bigbadbyrnes]

SMH...

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.smh.com.au

He's right about the principle of rewarding risk takers who avoid the downside of the risk by getting public funds. Asymmetry of private profit, public losses. Allowing it to happen rewards the behavior.

I wonder if he would be saying the same if it were Australian banks on the verge of collapse as a result of government action in response a pandemic.

 

[Must...Fly!]

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.

A bit like Joyce then...

 

[MarcB]

A bit like Joyce then...

Except Joyce is allowed to have a bias towards the airline he’s running. Sims is heading a regulator, so it’s usually best to appear neutral on matters that are subject to an investigation.

 

[Must...Fly!]

Except Joyce is allowed to have a bias towards the airline he’s running. Sims is heading a regulator, so it’s usually best to appear neutral on matters that are subject to an investigation.

There is a difference between bias, and what he's been up to over the past few weeks as well.

 

[Bagpuss]

I wonder if the government will consider that VA has started to turn things around.

But have they, really?
I think Virgin will go into Administration and some level of security given by the government to allow it to trade until a buyer is found. It's obvious the void would be filled.

 

[HS-TQE]

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.

 

[jase05]

But have they, really?
I think Virgin will go into Administration and some level of security given by the government to allow it to trade until a buyer is found. It's obvious the void would be filled.

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

 

[Must...Fly!]

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.

We're not quite there, but it certainly is a growing possibility.

Question for most would be how Velocity gets treated in the event of administration given it is now wholly owned by VA.