Virgin Australia to be sold to Bain Capital

[BNEFlyer]

Rex has already announced it is looking at the ATRs.

Rex has signed an MoU to purchase new builds from ATR directly.

 

[oz_mark]

Rex has signed an MoU to purchase new builds from ATR directly.

The non binding MOU that was announced is about exploring options. They are studying solutions and financing options.

 

[moa999]

For some reason the media are not reporting Q that way

Assume they are only reporting what the Administrator is telling them.

Leases payments are comprised of effectively capital and interest payments.
There is a fairly recent accounting standard that provides for essentially capitalising a lease on balance sheet to be equivalent to an owned asset and loan.

https://www.aasb.gov.au/admin/file/content105/c9/AASB16_02-16.pdf

 

[Melburnian1]

Not surprising, but "fly less" is a very very loose descriptor. How many of those flew once per year up to the Gold Coast or Cairns for a weeks holiday?

If we're talking weekly road warriors flying less or not at all going forward, then that is a complete paradigm shift. If it's just some holiday makers, well, the airlines should be able to downsize to absorb that without collapsing, obviously that includes Virgin Australia.

That's not a question I can answer. The survey would have obtain a representative number of individuals by sex, age and location, but almost certainly not by frequency of flying. Perhaps a few 'road warriors' were interviewed, although one suspects they'd be concentrated in the higher income suburbs of Oz capital cities, with a smattering in rural cities and areas.

 

[RAM]

Assume they are only reporting what the Administrator is telling them.

Leases payments are comprised of effectively capital and interest payments.
There is a fairly recent accounting standard that provides for essentially capitalising a lease on balance sheet to be equivalent to an owned asset and loan.

https://www.aasb.gov.au/admin/file/content105/c9/AASB16_02-16.pdf

Yes it does make you wonder why they were being described this way AND nobody has queried it publicly....

Doing some reverse financial engineering makes it look extremely likely that the amounts bandied around for 'leases' are not the PV figures but sum of all outstanding payments through to lease expiry.

Mind you it appears Q got a dose of this (but in a positive way) last Friday with one radio report (that I heard) saying they'd received massive over-subscriptions for the Insto part of the capital raising and had taken them up to raise just under $4bn.

Reality - looks like total subscriptions requested were near to $4bn but Q took up max allowable under listing rules (before requiring an EGM) & raised $1.36bn. ASX note (26 June 2020) seems to suggest that there were only bottom to middle ranked institutions (such as FundnMgrs) who took part - no majors?

Q has a near 'free pass' for the Shareholder Purchase Plan going out tomorrow. If someone really wanted to then they can buy up to $30,000 worth of new shares even if they only currently owned 1 at the cut-off date.

The insto amount equates to (seemingly) a 25% increase in shares outstanding vs buybacks since 2015 reducing shares by a little over 33%. Confused enough yet?

So say as at 2015 they had 100 shares on issue, they've bought back 33 and had 67 before this 1st leg of the raising. They've increased the amount by 25% (of 67) so now compared with 2015 levels there are near enough to 84 shares on issue. Looks as if buyback & sale wiped out over $1 billion in net Q equity & retained earnings unfortunately.

Financial engineering at it worst in hindsight but sure boosted EPS (by 49.25%) for remuneration targets while it lasted. Just hope Q execs remuneration targets are not revised down (as they might have been in 2010 but I could be wrong).

Interesting times all round...

 

[jakeseven7]

Oh well seems like one rat escaped the VA1 Titanic and found some money to worm his way back in

——————

Branson’s desperate bid for Virgin Australia 2.0 stake


Richard Branson’s Virgin Group is in active negotiations with Bain Capital over its future involvement in Virgin Australia, which could range from a licensing deal to Virgin taking as much as 10 per cent equity in the new airline.

NoCookies | The Australian

www.theaustralian.com.au

 

[oliver_adl]

VA have seemingly added a few flights into their schedule in the last 24-48 hours. There are now Adelaide - Sydney direct flights available and they are back to 13% of their pre-virus load.
Not sure what else is added as I can't find it documented anywhere was just curious to see this connection from Adelaide since otherwise the only option direct to Sydney was with Jetstar.

 

[Carrots]

VA have seemingly added a few flights into their schedule in the last 24-48 hours. There are now Adelaide - Sydney direct flights available and they are back to 13% of their pre-virus load.
Not sure what else is added as I can't find it documented anywhere was just curious to see this connection from Adelaide since otherwise the only option direct to Sydney was with Jetstar.

To be fair, this is more indicative of the reopening of the SA Borders (excluding Vic) and associated increases in domestic flights into and out of ADL than related to Bain.

 

[oliver_adl]

To be fair, this is more indicative of the reopening of the SA Borders (excluding Vic) and associated increases in domestic flights into and out of ADL than related to Bain.

Yes true, sorry perhaps I posted in the wrong thread. Didn't really see a more relevant one to post what I think is a positive update. I just noticed it after reading this:

First signs of recovery in domestic air travel markets

The International Air Transport Association has noticed a few tentative improvements on some significant domestic routes throughout May.

www.afr.com

 

[Must...Fly!]

Qantas does seem to be adding capacity at a fair rate of knots, especially Jetstar.

Strategic, one might suggest. But then again, they aren't in any sort of position to be playing games so it's probably just defensive moves.

The response from VA will be interesting, because it's going to take a little while for Bain to get their eye in to the operation, and equally I guess those making decisions within VA may not know of the financial ability to add capacity.

 

[jakeseven7]

Qantas does seem to be adding capacity at a fair rate of knots, especially Jetstar.

Strategic, one might suggest. But then again, they aren't in any sort of position to be playing games so it's probably just defensive moves.

The response from VA will be interesting, because it's going to take a little while for Bain to get their eye in to the operation, and equally I guess those making decisions within VA may not know of the financial ability to add capacity.

As I've already posted before we've been booking quite a lot of flights recently for work and VA1 has been blocked from us being able to use while it is in administration - so we are basically booking QF and a bit of JQ.

We've gone through a QF acc mgr (as some are bigger group bookings) and they say they are seeing a strong uptick in bookings and are having to constantly add services back into their system which can only be good news for the industry including the Bain resurrected VA2!

 

[BNEFlyer]

Virgin Australia also have a Happy Hour sale on at the moment. Some good fares from now until August 31. Good to see them starting to get back into sales and drive some business.

 

[ozstamps]

Unless the other current airline shareholders agree, Bain's deal will be going nowhere - correct?

We have 2 x dusty Virgin Platinum cards we have not touched for 4 months, and I sure hope it DOES come off, but burned all our Travel Bank credits today. And moved a million+ Virgin points to SQ the minute this roller coaster started.

Bain ''promising'' to honor them is a promise only if they prevail in the offer surely? If the offer falters who backs the Travel Credits ..... no-one, that is clear - to me anyway.


Aviation analyst Neil Hansford said the acceptance of the Bain proposal did not completely rule out the possibility of a bondholder bid.

"The bondholders, they don't have to be part of this process because, under Australian corporate law as the bondholders, they didn't have to engage in the timetable laid out by Deloittes," he told ABC News.

"They're able to make whatever offer they want to at the creditors meeting, or prior to the creditors meeting."

Such a proposal, if it eventuates, could be put to the second Virgin Australia creditors' meeting, which will have to be held before the end of August to vote on whether to accept the Bain deal.


.

 

[ecole16]

Virgin Australia also have a Happy Hour sale on at the moment. Some good fares from now until August 31. Good to see them starting to get back into sales and drive some business.

 

[oliver_adl]

Virgin Australia also have a Happy Hour sale on at the moment. Some good fares from now until August 31. Good to see them starting to get back into sales and drive some business.

Pretty aggressive pricing; just booked return ADL-SYD for $700 total in late August myself so quite happy with this 'come back'.

 

[RAM]

Seems like Bain & Scurrah have kicked off the VFF comeback.

1st thing today - email 25% bonus VFF points on cc spend (50,000 cards & activate by 6 July).

activating it opened a page of additional offers which had the 'Happy Hour' sale and bonus offer for transferring Flybuys to VFF.

• No limit for amount transferred (July only) but will get counted as meeting yearly cap 138,000 if you transfer more
• 15% bonus if under 100,000 FB points
• 20% bonus if > 100,000 FB points NO UPPER limit
• Runs until COB July 31st

1st email just came through about the FB transfer offer.

However I'm in no rush as I want to know a lot more about how we'll be able to spend VFF in future...

As in, will we be able to redeem them for other airlines' international flights or transfer to SIA (at a rate at least no worse than what it was decreased to).

 

[jakeseven7]

Seems like Bain & Scurrah have kicked off the VFF comeback.

Is the Velocity shop open for redemption (other than flights) yet though? There are a lot of people waiting!

Lets also look on the bright side, at least VA1 is planning on flying to Tassie again! Surely that means when VA2 starts, it may stay....?

 

[desafinado74]

Seems like Bain & Scurrah have kicked off the VFF comeback.

1st thing today - email 25% bonus VFF points on cc spend (50,000 cards & activate by 6 July).

activating it opened a page of additional offers which had the 'Happy Hour' sale and bonus offer for transferring Flybuys to VFF.

• No limit for amount transferred (July only) but will get counted as meeting yearly cap 138,000 if you transfer more
• 15% bonus if under 100,000 FB points
• 20% bonus if > 100,000 FB points NO UPPER limit
• Runs until COB July 31st

1st email just came through about the FB transfer offer.

However I'm in no rush as I want to know a lot more about how we'll be able to spend VFF in future...

As in, will we be able to redeem them for other airlines' international flights or transfer to SIA (at a rate at least no worse than what it was decreased to).

I agree. The offer is tempting, but the key is, whether we can redeem Velocity points for SQ and other airlines' premium flights.

 

[Bagpuss]

Is the Velocity shop open for redemption (other than flights) yet though? There are a lot of people waiting!

Lets also look on the bright side, at least VA1 is planning on flying to Tassie again! Surely that means when VA2 starts, it may stay....?

I'm pretty sure we can bank on the current minimal domestic network ( Domestic schedule ) destinations to remain as part of "VA2".

The business plan going forward is for the company is to make money and not hold a percentage share of the market.

 

[RAM]

Is the Velocity shop open for redemption (other than flights) yet though? There are a lot of people waiting!

Lets also look on the bright side, at least VA1 is planning on flying to Tassie again! Surely that means when VA2 starts, it may stay....?

Don't know about the shop.

This is long but provides some useful information & a surprise link that just got emailed out by VA mk 2 - total flying schedule for domestic over next few months - Tasmania is back soon....

One more data point - Cancelled Amex Velocity Platinum complementary flight booking

Received email saying flight cancelled June 9th, 'will hear more shortly'. Link to 'Customer Guarantees' no longer works.

Flight ticketed for July 3rd to Tas, so rang (& still on phone with extensive hold periods - longest so far 16 minutes.

Background Rang number shown on the email - takes you to AMEX. Odd as AMEX have no access to the comp flight booking system.

CSA then transfered me over to AMEX website help (specialising in travel). Who reiterated what I already knew but I thought perhaps the Vol Admin had changed the situation. Then given new number to ring at VFF specifically (supposedly) for Comp Flight cancellations 1300 153 006.

That gets me the VFF call centre in Queensland not Philipines or any other country.

VFF - 'You can rebook without a change fee as we've waived them as a courtesy BUT will have to pay the difference in fare & surcharges/taxes for the new booking.'

That is contrary to the Amex Comp Flight T&Cs which give me a choice of 11 (guessed #) destinations I can choose from Sydney if available. So should be no additional cost to change it as VA cancelled my flight not me.

VFF - 'You may have heard VA is in administration, everything has changed and we've been instructed to only apply the amount that Amex paid VA when your original flight was booked.'

Ok, so you're saying I now have a flight credit that I must use by Sept 30th (mentioned on web site but nothing about paying a difference)?

VFF - 'Yes'

So what is the amount of the credit?

VFF - 'I am not permitted to tell you.'

But you can tell me how much more I have to pay for another booking?

VFF - 'Yes'

Well let's try a booking that I have no intention of doing so I can get an idea of what my credit is, say SYD to XYZ on Aug Y, returning Aug z.

VFF - 'I will just put you on hold while I work it out.'

16 minutes later...

VFF - 'You need to pay 179.23 and the total airfare cost is $459.99'

<<< Now I did not say this to the CSA but I now know what the credit amount is, simple B - A >>>

VFF - 'Do you want to go ahead with the booking?'

No, as I mentioned I was just suggesting one of the possible destinations available to me with the Amex Comp flight booking to get an idea of what I'd be liable for.

<<< Now wondering how switched on this CSA is I politely ask if I can speak with a team leader >>>

VFF - 'I will see if they're available'

14 minutes later....

VFF - 'Both team leaders say to fill in the online feedback form to make a complaint about your attempted booking'

But I don't want to make a complaint about the dummy booking you just made.... 7 minutes later after a back & forth which revealed the CSA had told the team leaders a very interesting set of details that had nothing to do with what had transpired.

Just before I go, could you please ask the team leaders as I understand the procedures manual for VFF states it is the customer's right to request to speak with a team leader....

6 minutes later...

TVFF - 'Can I help you'

Yes, I am trying to find out exactly what the conditions are for re-booking a comp flight as the email from June 9th said I'd receive more info shortly and the flight VA cancelled was due to fly tomorrow. Gave booking ref etc.

Looking at the VFF site it appears I have to rebook by 30 Sept.

TVFF - 'Let me check that' briefest hold so far....

TVFF - 'As you originally booked on 3 Sep 2019 you have to rebook by 3 Sep 2020, it is all based on the original ticketing date. If you'd booked in Jan 2020 then re-booking date would be by Jan 2021.

Glad you checked for me, as no date on email but mentioned on VFF web site as 30 Sept. Has the policy changed recently, since last week like the VFF points redemption policy has?

TVFF - 'No change, still original policy applies but we are not charging the $90 change admin fee.'

Can I rebook to any destination or is it still a list as per the map - since this is a credit am I able to use this for any destination?

TVFF - 'Sorry to put you on hold again, I will just check'

Much, much longer hold

TVFF - 'Depends on what flight date you want as nothing to Tasmania in the system, can go to Hamilton Island, Cairns, Townsville, Brisbane, Gold Coast, Coffs Harbour, Port Macquarie, Melbourne although you may not want to at the moment, & Adelaide. Sorry it took so long but I needed to check each destination as some destinations seem to be changing from one day to the next.'

BTW - perhaps pass on that the email received said I'd be contacted shortly with more info but my flight date is tomorrow morning and I've received nothing - perhaps this needs to be looked into as it can create a negative image of the new Virgin & VFF.

TVFF - 'Thank you, I'll draft that up shortly and send it off.'

Thank you for your help.....

So, unlike VFF points redemptions where you get exactly back what you paid, with Amex Comp bookings VFF gives you an undisclosed credit to use within 12 months of booking date not a Comp flight at no additional cost to any of the listed destinations.

Tomorrow's adventure will be trying to track down who to speak with at Amex about why I cannot re-book at no charge for any of the destinations since as I now have technically TWO comp flights - last years & this years - why am I expected to pay for one while getting the other for no charge?

Happy days!

C'mon Bain & Amex try to make life a little easier...

Seems they were listening - as after finishing the above thesis - I checked emails and got this from VA showing the future....

COVID-19 (Coronavirus) information hub

travel.virginaustralia.com