Virgin Australia to be sold to Bain Capital

[HS-TQE]

I'm surprised DPS was mentioned considering the extremely low yielding nature of that market.

Although rumours of JQ pulling the 787s off the DPS routes for the foreseeable future would leave space for GA and VA to return to those routes in a limited capacity.

 

[AustraliaPoochie]

If the SQ agreement continues, VAver2 can link Aust - DPS, then can link onto SQ or Scoot at DPS to SIN, and onwards.

 

[AIRwin]

If the SQ agreement continues, VAver2 can link Aust - DPS, then can link onto SQ or Scoot at DPS to SIN, and onwards.

I've tried that and still had to clear immigration at DPS and recheck-in...

 

[QF WP]

From Executive Traveller: Virgin Australia 2.0 to cut fleet, routes and some lounges

The leaner Virgin Australia 2.0 will streamline its fleet and fly only the workhorse Boeing 737 "to realise cost efficiencies and remove operational complexity", with most other jets – including the Airbus A330s and Boeing 777s – dropped.

Well that could be the death knell for me flying VA SYD/PER or MEL/PER, so looks like QF will get that business assuming they go back to using A332's

I'll be coming back to VA Gold from my next renewal.

 

[RAM]

So they say credits and points will be honored, and also they'll be code sharing with international partners.

So it follows when international routes re-open we'll be able to use credits or FF points to book them?

Earlier today a very helpful member posted the link to the 'horse's mouth statement' - worth a read. Answers many of the questions asked.

In today's VFF update email:

Long-haul international travel
Whilst Virgin Australia is continuing with the suspension of international flights to Los Angeles and Japan for the foreseeable future, they intend resuming these when the global travel market recovers. Members with Virgin Australia international redemption bookings to Los Angeles and Japan will be contacted shortly and will be able to rebook domestic travel or receive a refund. When international travel restrictions ease, you’ll still be able to book redemption flights with global airline partners.

There was a comment earlier about the availability of 'premium' seats in VFF.

Not sure what routes were being talked about (but suspect it was SYD LAX).

From our experience, and following the valuable tips in various AFF blogs for the respective VFF partners, we've never had a problem finding seats. Industry surveys always rate premium seat availability for VFF way ahead of QFF for international.

True - we were about to push the button for 2x F rtn to NY with SIA, so an 18m gap since last looking. Things could have changed but have not seen any general reports.

One point noted in the blogs relevant to Aust-US flights is that going via Brisbane (not SYD etc) often saw business seats available. Perhaps not the optimum choice but for 'points' chasers still a pretty decent outcome. One of the biggest issues with the US routes are that there are millions of Americans who also are looking to come to Australia using points....

____________________________________________________________________​

On a positive note, who knew PS from VA & Bain read AFF?

They've adopted my suggestion from some months back - they're giving the approx 3,000 staff they're cutting 'Staff travel pricing for 2 years following their departure.'

That's one way to get the vote from 3,000 people you're firing is it not?
____________________________________________________________________

On a sad note - the B777s are gone.

 

[jakeseven7]

If the SQ agreement continues, VAver2 can link Aust - DPS, then can link onto SQ or Scoot at DPS to SIN, and onwards.

Or they could consider a partnership with AirAsia and its affiliates?

 

[jakeseven7]

I'm surprised DPS was mentioned considering the extremely low yielding nature of that market.

Virgin NZ routes were also loss making, but they would almost *have* to continue to run a basic schedule to pick up some feeder traffic.

Going to be very hard though to fight and survive on trans tasman. You have JQ hoovering up the price conscious, QF skimming away the premium/business flyers mostly, which leaves VA pitted mostly against Air NZ (Air NZ stretches from premium/business down to almost LCC on trans tasman)....

 

[jakeseven7]

Did everyone get the letter from VFF?

Interesting on two angles.

1) ZERO mention of when / whether the Velocity shop will open again... a complete dodge

2) Very 'us' (VFF) and 'them' (Virgin Mark 2) wording, no 'we' or anything.... I wonder if this is the start of VFF being positioned even further apart from VA2....

 

[kamchatsky]

Did everyone get the letter from VFF?

Interesting on two angles.

1) ZERO mention of when / whether the Velocity shop will open again... a complete dodge

2) Very 'us' (VFF) and 'them' (Virgin Mark 2) wording, no 'we' or anything.... I wonder if this is the start of VFF being positioned even further apart from VA2....

Chances are that the shops won't be opened for a while, to stop further run of points.

Even if it opens again, the cost of using points would be a lot higher than before.

I would assume that VA would want people to use points on VA awards instead, which right now is simply domestic as well as very limited international seats. Please note that VA has not yet devalued their VA award chart yet compare to QF. So I would expect one very soon.

 

[scottff]

I han't believed fare class has anything to do with "conditional credits" - thinking a strait $ value based on the original that may be able to be applied to a future booking.

I had not seen anything regarding fare class before.
Good luck with that! You can reject the conditional credit and become an unsecured creditor.

https://www.virginaustralia.com/cs/groups/internetcontent/@wc-salesagenthub/documents/webcontent/~edisp/conditional_credit_qa_v1.pdf

Future Flight credits | Virgin Australia

travel.virginaustralia.com

Thanks for this Trade link, I had not seen it before - unfortunately this appears to only relate to the Administration period which is assumably now over?

"Initially, conditional credits will be valid for travel during the period of administration; however, dependent on how the business is structured in the future, a new owner may honour these tickets after administration."

The VA website now states that these will convert from "conditional credits" to "Future Flight credits" which seems to be some sort of demonic branding for a real hard to use travelbank.

Full text from the VA website:

"We’re pleased to let you know that Virgin Australia will provide customers with a new credit to the value of travel credit balances for bookings made prior to the commencement of the voluntary administration period, including customers with Conditional Credits. Future Flight credits will be available for booking flights up to 31 July 2022 with travel valid until 30 June 2023. We anticipate that the new ‘Future Flight credit will be available for use from 23 September 2020 but will let you know if this date changes.

You will be able to use your Future Flight credit for bookings on Virgin Australia operated flights and any future services we operate as travel market recovers and restrictions ease. Bookings using your credit will be subject to seat availability within the fare class reserved for Future Flight credits on your selected flight and will be subject to its own terms and conditions.

More detail on how Future Flight credits can be used will be provided to customers shortly."

 

[kermatu]

Did everyone get the letter from VFF?

Interesting on two angles.

1) ZERO mention of when / whether the Velocity shop will open again... a complete dodge

2) Very 'us' (VFF) and 'them' (Virgin Mark 2) wording, no 'we' or anything.... I wonder if this is the start of VFF being positioned even further apart from VA2....

I too really noticed the references to "the airline" as a distinct entity.

 

[oz_mark]

Thanks for this Trade link, I had not seen it before - unfortunately this appears to only relate to the Administration period which is assumably now over?

Virgin Australia is still in administration - the second creditors meeting is in about a month, and they will vote on whether to accept the Bain offer or not.

 

[jakeseven7]

Virgin Australia is still in administration - the second creditors meeting is in about a month, and they will vote on whether to accept the Bain offer or not.

Does anyone know, if Bain complete the VA2 acquisition - can people stuck with conditional credits commence chargeback against the new entity?

And was interesting chat on Abc Brissy this AM with a CommBank analyst who said the 6000 worker number is ‘best case’ and they expect more job losses within 6 months.

I think it’s hard to bench because PS had already fired thousands just before VA1 collapsed so I think their starting point was more like 11/12 from memory just pre-collapse, then PS got it down to about 9, and now Bain are taking it down again to 6.

 

[RAM]

I think it’s hard to bench because PS had already fired thousands just before VA1 collapsed so I think their starting point was more like 11/12 from memory just pre-collapse, then PS got it down to about 9, and now Bain are taking it down again to 6.

Not correct in the numbers.

PS had not fired thousands, not even hundreds before things came to a head in April. He had outlined his plans but the bulk had not commenced. PS took over in late March 2019 & started to put his plan together to then present to the international airlines (owners). This would not have been a short process - trying to get them to agree to what he wanted to do, etc etc.

As at 30/6/2019 (including consultants/contractors/temps within VA) there were around 10,600 worldwide, of which a number are/were not full time.

VA had commenced natural attrition - not replacing workers who left & making small schedule cuts. These numbered (I'm led to believe) less than 300. Some were retrenched & still more fired/let go for 'reasons' - similar to Q (such as sexual harassment, theft, poor attendance etc).

Temps etc would not have been renewed (mostly) once volumes started to dry up - no idea how many that may have been but potentially hundreds (Q mentioned a number in one of their annual reports a few years back, was single high digit %).

In April when everything came to a head then PS closed Virgin NZ and that saw around 600+ lose their jobs in NZ predominantly - a decent number of those are/were Australians who had moved across to get a job with Virgin in the hope that after a couple of years they could join Virgin in Australia.

The numbers being bandied about are rounded to the nearest thousand - not to the exact figures.

So roughly 10,600 - 600 (NZ) - 250 (natural attrition) - 150 (others) = 9,600 using my 'guess' figures & then deduct non-renewed temps/contractors/consultants. Not hard to see a low 9000s figure.

Talk has been 3,000 to lose their jobs - it will not be exactly 3,000.... maybe business plan version #78 has 3,117 vs #70 had 3, 052.

The one certainty is VA did not 'fire thousands' in Australia since PS took over. That is still to come.

 

[jakeseven7]

Interesting article today and covers the points we have been discussing - clearly Bain hasn't revealed all of their hand until after the vote, because the plan doesn't sound very clear right now (probably/hopefully intentionally)

---

A fuzzy vision: Virgin's 'new' plan is full of mixed messages

Neither Bain Capital nor Virgin Australia chief executive Paul Scurrah appear stupid, so it is probable that either their vision for the new Virgin wasn’t articulated effectively, it has been misinterpreted or there are strategic reasons for the way the airline's post-administration strategy was described.

The alternative explanation – that they are over-estimating Virgin’s strengths as it emerges from administration, or under-estimating Qantas’ – would almost inevitably lead to Virgin’s failure, for the second time.

While Virgin will have a reduced cost base, Qantas isn’t standing still. It announced in June that it would carve $15 billion of cost outs of its business, with $1 billion a year of on-going benefits.

Qantas has a margin advantage over Virgin as a result of its hold on the corporate market which recent history suggests is structural. That also suggests that an attempt to take share from it via a price-driven strategy would be utterly futile, and very costly.

While Scurrah made it clear that Virgin wasn’t going to retreat to its roots as a low-cost-carrier, that was also never a realistic option. There’s not sufficient room, or profit, for Virgin to compete directly with Jetstar – a formidable low-cost carrier – for low-margin leisure volumes.

Whether you call it a "hybrid" or not, the obvious positioning for Virgin was, and is, in the space between Qantas and Jetstar, using its newly-reduced cost base to offer better value than Qantas and a better experience, at a slightly higher cost, than Jetstar.

A fuzzy vision: Question marks over Virgin's plan

Whatever strategy Virgin adopts, the next two or three years are going to be tough, and bloody, for both it and Qantas. If it were to pursue the wrong strategy, they could be tougher, and a lot bloodier.

www.smh.com.au

 

[ja1]

Interesting article today and covers the points we have been discussing - clearly Bain hasn't revealed all of their hand until after the vote, because the plan doesn't sound very clear right now (probably/hopefully intentionally)

Realistically, everything is so fluid at the moment that anything said now has a good chance of being wrong (in a big or a little way) in the not too distant future.

There's no current model for an airline of VA or QAN size to survive in the shape and size they are in. In VA2's case you'd have to assume they are making a number of assumptions.. because what's the alternative.. but they are still assumptions right ?

It sounds like they have the bones of a framework and very few actual details of implementation as there's no advantage (to the business) in locking things in yet.. and anything you do try to lock in may well end up changing anyway.

It would be useful to see an independent (e.g. what AFF has been doing in these forums) analysis of what a VA2 model of routes+revenue looks like to see what shape the airline ends up taking to fit within that model.

e.g. if they are flying 50 daily routes on a 737 w/ 90% loading for an average per pax revenue of $X.. to give what is a total of $Y per day vs the actual cost to run an airline $Z per day..

If $Z is much larger than $Y..

And what does $X look like now..

 

[lovetravellingoz]

Whether you call it a "hybrid" or not, the obvious positioning for Virgin was, and is, in the space between Qantas and Jetstar, using its newly-reduced cost base to offer better value than Qantas and a better experience, at a slightly higher cost, than Jetstar.

So is this like Goldilocks and Three Airlines ?

 

[MooTime]

Realistically, everything is so fluid at the moment that anything said now has a good chance of being wrong (in a big or a little way) in the not too distant future.

There's no current model for an airline of VA or QAN size to survive in the shape and size they are in. In VA2's case you'd have to assume they are making a number of assumptions.. because what's the alternative.. but they are still assumptions right ?

It sounds like they have the bones of a framework and very few actual details of implementation as there's no advantage (to the business) in locking things in yet.. and anything you do try to lock in may well end up changing anyway.

It would be useful to see an independent (e.g. what AFF has been doing in these forums) analysis of what a VA2 model of routes+revenue looks like to see what shape the airline ends up taking to fit within that model.

e.g. if they are flying 50 daily routes on a 737 w/ 90% loading for an average per pax revenue of $X.. to give what is a total of $Y per day vs the actual cost to run an airline $Z per day..

If $Z is much larger than $Y..

And what does $X look like now..

They are a private company now with Bain, not listed like previously & like Qantas so many of the details & financials we won't be seeing.

They'll just spin the public some sexy PR & real plans re; routes, future plans etc will be ket to themselves I imagine.

I'm reasonable happy with their progress so far.

 

[attimo69]

Any news/gossip on whether the lounge access for certain AMEX holders perk will still apply?

 

[dajop]

There's no current model for an airline of VA or QAN size to survive in the shape and size they are in.

The future is ambiguous at best!

The two airlines with the best model for serving the Australian domestic market right now are probably Qantas Link with a healthy dose of competition from Rex (the current Saab only Rex not the one mooted)