Virgin Australia Financially Secure? [Now in Voluntary Administration]

[OrangeRoughie]

I have to wonder about the timing of Joyce's QF announcement.

I'm sure he could have delayed the dire news of his appreciation of the Australian aviation industry. I'm also sure he would take any opportunity to affect a potential competitor.

I did think similar at the time, but when you're seeking to raise circa $2bn in equity with our continuous disclosure rules I am not sure you can time announcements to affect competitors. But who knows in this current environment!

 

[BCons]

So Cyrus tried to sweeten their offer after the deadline ? (ET quote above from Cyrus statement)

Then its not surprising Deloitte didnt reply.

Gamesmanship..

 

[jakeseven7]

Well, the Creditors still have to decide/vote on whether to accept the offer put to them by the Administrator. There was only ever going to be one put to them.

The alternative being for the creditors.....?

 

[RooFlyer]

The alternative being for the creditors.....?

Liquidation, or some other route they may then embark on.

EDIT: I'm not saying that's likely, or even a good option, but its their decision.

 

[serfty]

[moderator hat]

Please continue on Bain discussion here:​

Virgin Australia to be sold to Bain Capital

I just heard administrators entered agreement with Bain....on ABc24. Did they win?

www.australianfrequentflyer.com.au

​

This thread being retained for comments on VA being Financially Secure as asked when the thread started​

[/moderator hat]

 

[Spongbob]

And what will happen to my VAH shares I bought in 2009 at $0.21?
I guess a statement will be be made they have no value, so I can then claim a CGT loss?

 

[jakeseven7]

And what will happen to my VAH shares I bought in 2009 at $0.21?
I guess a statement will be be made they have no value, so I can then claim a CGT loss?

I believe someone answered this in the other VA collapse thread that Admin closed - I think you can write it off as a loss against other more successful (hopefully!) personal investment gains.

 

[Must...Fly!]

Four Corners tonight is featuring VA. Long article preview below. I'm not sure there will be anything new in it for anyone here but perhaps there will be...

What went wrong at Virgin? The chair, CEO and former CEO reveal the inside story

Top bosses at Virgin Australia give insiders' account of what went wrong at the airline

In an exclusive interview with Four Corners, the chair of Virgin Australia has revealed how the airline entered the COVID-19 era financially vulnerable.

www.abc.net.au

 

[jakeseven7]

Will be very interesting to see what 4 corners shines a light on about the collapse of VA1 and whether it gives any more hints to what a resurrection under Bain may look like...

I haven’t seen if they managed to get someone from Bain on camera but I’m sure there will be some commentary about what lies ahead.

Small points of interest;

- JT is being interviewed and we know he flagged early the JB strategy was failing and needed to be changed, and was booted for it.... he will be interesting to hear from: ‘"When I arrived at the airline, a lot of frontline staff said, 'Look, can we, can we please stop trying to be like Qantas because … Qantas is a great airline. You're never going to beat Qantas at Qantas's game,'" he said.

- Old VA1 Chairman being interviewed and seems like she is suggesting they decided to move on from JB not the other way around and is critical of the business strategy undertaken

- JB refused to be interviewed as he clearly knew all guns would be on him

- For all the Ansett folk this quote sounds eerily similar....... ‘She (old Chairman) believes Mr Borghetti succeeded in building a good airline but he "did not build a good enough business".

- They extracted this In a written statement
from JB... but isn’t this exactly where Bain are going to take VA2? Between JQ and QF??
"I think it was the only strategy because Virgin had found itself placed in the middle between Jetstar and Qantas and it had outgrown the low-cost space but hadn't quite penetrated the corporate space, so you needed to go one way or the other," he said.

—-

Top bosses at Virgin Australia give insiders' account of what went wrong

Top bosses at Virgin Australia give insiders' account of what went wrong at the airline

In an exclusive interview with Four Corners, the chair of Virgin Australia has revealed how the airline entered the COVID-19 era financially vulnerable.

www.abc.net.au

 

[RAM]

And what will happen to my VAH shares I bought in 2009 at $0.21?
I guess a statement will be be made they have no value, so I can then claim a CGT loss?

If they're still listed (? & perhaps not even need to be listed) then for ATO you need to find someone to buy them from you. Quite likely can fill out an off-market transfer TODAY (call the Share Registry or download it), has to be signed by both parties etc & scan/fax it to them today.

I'd say a fair price is $0.0001 per share. So you'll only get a $0.2099 tax deduction (+ purchase broker fees) - no sale brokerage fees. Preferably not a blood relative.

Another post mentioned their accountant 'wrote them down' & claimed a tax deduction.

That may be totally correct but then again not sure that was according to ATO rules... If not then only gets found out if a taxpayer gets audited & then ATO can get quite nasty - such as demanding original documents from day one ACROSS your entire tax history. Recent example (early 2020) I know of required stamped transfer & acceptance forms from 1994 before they accepted it was all ok. That incident had dragged on for 20 months.

Generally if you write down shareholding values on ONE holding then you have to be consistent across ALL holdings as far as I know (DEFINITELY NOT FINANCIAL ADVICE - do your own research).

Funnily enough Q had to do just this (& it made the last 2 Annual Reports - wrote down the value of a shareholding & then had to reverse the write-down in the 2019 AR, in the 2020 AR it looks as if this year's writedown will be 4x as large as the write-back in 2019 unfortunately.

The ATO does not normally like people to choose what they do by cherry-picking aka I'll write this one down and claim a loss but not write this one up to its market value and pay tax on the unrealised gain. There should be some (confusing) explanation on the ATO website about the 'dos & don'ts'.

Be warned ATO explanations make the ASIC ones look deserving of a Nobel Prize in comparison!

 

[muppet]

If they're still listed (? & perhaps not even need to be listed) then for ATO you need to find someone to buy them from you. Quite likely can fill out an off-market transfer TODAY (call the Share Registry or download it), has to be signed by both parties etc & scan/fax it to them today.

I'd say a fair price is $0.0001 per share. So you'll only get a $0.2099 tax deduction (+ purchase broker fees) - no sale brokerage fees. Preferably not a blood relative.

Another post mentioned their accountant 'wrote them down' & claimed a tax deduction.

That may be totally correct but then again not sure that was according to ATO rules... If not then only gets found out if a taxpayer gets audited & then ATO can get quite nasty - such as demanding original documents from day one ACROSS your entire tax history. Recent example (early 2020) I know of required stamped transfer & acceptance forms from 1994 before they accepted it was all ok. That incident had dragged on for 20 months.

Generally if you write down shareholding values on ONE holding then you have to be consistent across ALL holdings as far as I know (DEFINITELY NOT FINANCIAL ADVICE - do your own research).

Funnily enough Q had to do just this (& it made the last 2 Annual Reports - wrote down the value of a shareholding & then had to reverse the write-down in the 2019 AR, in the 2020 AR it looks as if this year's writedown will be 4x as large as the write-back in 2019 unfortunately.

The ATO does not normally like people to choose what they do by cherry-picking aka I'll write this one down and claim a loss but not write this one up to its market value and pay tax on the unrealised gain. There should be some (confusing) explanation on the ATO website about the 'dos & don'ts'.

Be warned ATO explanations make the ASIC ones look deserving of a Nobel Prize in comparison!

Goodness. VAH are not worth $0.001 they are worthless.

ATO has clear advice on shares in administration here:

Page not found | Australian Taxation Office

www.ato.gov.au

Edit: and the Administrator’s statement that it does not anticipate a return to shareholders is here:

https://www.asx.com.au/asxpdf/20200626/pdf/44jzctf6j9b01s.pdf

 

[Stealthflyer]

I’m looking forward to the 4 Corners investigation of Virgin’s woes tonight. It looks like they have some juicy interviews (although no JB). Hopefully it will be more helpful than damaging.


Top bosses at Virgin Australia give insiders' account of what went wrong at the airline

Top bosses at Virgin Australia give insiders' account of what went wrong at the airline

 

[RooFlyer]

Top bosses at Virgin Australia give insiders' account of what went wrong at the airline

TL;DR version ... It wasn't my fault'.

 

[HS-TQE]

Elizabeth may have been a pretty bad chairperson of the board of VAH by having her and her team rubber stamping everything that JB and the shareholder buddies such as Hogan (EY) and the SQ buddies had put through.

BUT, I do wonder (and also shudder) at the thought of Jayne potentially replacing Elizabeth as chairperson..

 

[jakeseven7]

TL;DR version ... It wasn't my fault'.

I wonder if JT will have his revenge on JB

Ultimately though its appropriate the VA1 board are HEAVILY scrutinised. After all they approved all of JB's misadventures. To date they have skipped under the radar with JB shouldering 99.99% of the blame.

 

[ja1]

Elizabeth may have been a pretty bad chairperson of the board of VAH by having her and her team rubber stamping everything that JB and the shareholder buddies such as Hogan (EY) and the SQ buddies had put through.

BUT, I do wonder (and also shudder) at the thought of Jayne potentially replacing Elizabeth as chairperson..

This seems to be literally the opposite of what was covered in the 7:30 report..

Her view was that they (the board) wasn't happy with where JB was going with VA and made the decision to change - which in effect meant they replaced him.

However she pointed out that doing this took time (presumably for both VA and JB to come to grips with an exit strategy).

My read would be that this simply didn't happen quick enough for PS to have enough time to adjust strategy where it might have had a more material effect on VA's financial well being. Paying down $5B in debt was never going to happen quickly - especially for an airline that made only one statutory profit in the last.. 10 years ?

In any case, even with a plan and making some headway, in the timeframe available he might have added weeks or maybe a few months before administration/receivership/liquidation.. i.e not enough to have saved the airline.

Even if VA had been debt free, they would still have a business... with no business.

So I guess I'm taking away that there are two sides to this story from the board POV ?

 

[RAM]

This seems to be literally the opposite of what was covered in the 7:30 report..

Her view was that they (the board) wasn't happy with where JB was going with VA and made the decision to change - which in effect meant they replaced him.

However she pointed out that doing this took time (presumably for both VA and JB to come to grips with an exit strategy).

My read would be that this simply didn't happen quick enough for PS to have enough time to adjust strategy where it might have had a more material effect on VA's financial well being. Paying down $5B in debt was never going to happen quickly - especially for an airline that made only one statutory profit in the last.. 10 years ?

In any case, even with a plan and making some headway, in the timeframe available he might have added weeks or maybe a few months before administration/receivership/liquidation.. i.e not enough to have saved the airline.

Even if VA had been debt free, they would still have a business... with no business.

So I guess I'm taking away that there are two sides to this story from the board POV ?

Very interested to see if anyone addresses one of the suspected 'elephants in the room' - that the owners (airlines) who appointed the majority of the directors ran VA as a loss leader to funnel business & profits to their airlines & not VA?

Unlikely it will ever come out as it could effectively amount to transfer pricing (illegal & would catch the eye of the ATO) but does seem one possible explanation for what happened and why that seemingly bad CEO was around for such an extended period. Since the group of which the Adminisitrator belongs had received multiple income streams from VA previously (as declared) it muddies the picture somewhat.

There's been much said about the A330s lease costs being too expensive - does anyone know more detail on exactly who/where they were leased from etc? I confess I'm being lazy and don't want to trawl through each plane's history...

As the saying goes - it is the victor who creates the history not the truth.

 

[jakeseven7]

This seems to be literally the opposite of what was covered in the 7:30 report..

Her view was that they (the board) wasn't happy with where JB was going with VA and made the decision to change - which in effect meant they replaced him.

However she pointed out that doing this took time (presumably for both VA and JB to come to grips with an exit strategy).

My read would be that this simply didn't happen quick enough for PS to have enough time to adjust strategy where it might have had a more material effect on VA's financial well being. Paying down $5B in debt was never going to happen quickly - especially for an airline that made only one statutory profit in the last.. 10 years ?

In any case, even with a plan and making some headway, in the timeframe available he might have added weeks or maybe a few months before administration/receivership/liquidation.. i.e not enough to have saved the airline.

Even if VA had been debt free, they would still have a business... with no business.

So I guess I'm taking away that there are two sides to this story from the board POV ?

Really interesting points...

JB defends himself (in writing as unwilling to appear on camera) by saying the notice was more like 2-3 years depending who you listen to. So don't tell me that the board couldn't put their heads together and figure out an exit plan of their failed strategy in that amount of time? If they couldn't they should all have sacked themselves for being grossly incompetent.... so clearly that can't be the case right.... (maybe the board had ulterior motives per @RAM post....)

Then there is the curious case of JT, who was CLEARLY brought in early on to 'fix' JB's mistakes, backed by the board and take over from JB. But somehow, JB managed to roll him out the door and hang on for another couple of years. I am most interested to hear from JT but I'm sure he has signed 1000 NDA's about what he can say about what really happened.... but I suspect there was MAJOR dirty business there too.

All in all the collapse of VA is a hot sticky mess with alot of twists, turns and knifes to the back (and front)...

I hope they don't dwell on the AJ V JB personal thing too much - that is so boringly predictable and tabloid. AJ simply ran rings around their strategy pure and simple, I highly doubt there was anything personal in it. Maybe there was from JB's side.... but how dumb would he have to be to let that happen....

 

[BNEFlyer]

Very interested to see if anyone addresses one of the suspected 'elephants in the room' - that the owners (airlines) who appointed the majority of the directors ran VA as a loss leader to funnel business & profits to their airlines & not VA?

Unlikely it will ever come out as it could effectively amount to transfer pricing (illegal & would catch the eye of the ATO) but does seem one possible explanation for what happened and why that seemingly bad CEO was around for such an extended period. Since the group of which the Adminisitrator belongs had received multiple income streams from VA previously (as declared) it muddies the picture somewhat.

There's been much said about the A330s lease costs being too expensive - does anyone know more detail on exactly who/where they were leased from etc? I confess I'm being lazy and don't want to trawl through each plane's history...

As the saying goes - it is the victor who creates the history not the truth.

XFC leased from Sulaco Aircraft Leasing.
XFD/XFE leased from CIT.
XFG/XFH/XFJ leased from Wells Fargo.

 

[The Flying Brick]

I owned shares in a small company that went into Administration a few years ago. I knew they were stuffed, so the accountant wrote off the value if the shares ( if they came good, the value would be written back in). Fast forward to a few months ago and I realised I hadn’t heard anything, so I contacted the Administrator.

Oh, they were put into Liquidation a year ago - there was a notice in the paper . They sent me a Declaration of nil expected return to shareholders, so the accountant will ditch them formally ( I guess same as selling at nil value). This Declaration was NOT automatically sent to shareholders, for a reason I couldnt find out. I don’t expEct that will happen with Virgin

Unfortunately had shares in companies in similar straits and you are right - no notices ever get sent out.

If you don’t know how, or where to chase it up then your own loss is realised and no capital loss is recorded for offset in the current or future years.

Too often, i have had to carry forward capital losses on these Declarations and although painful at least there is the offset against future gains to help (in a small way)