Virgin Australia to be sold to Bain Capital

[jakeseven7]

A few days later (!), Elizabeth Knight in 'SMH'/'The Age' has a similar contention.

From having one of the strongest bargaining positions in Australia in say January this year - perhaps eclipsed only by the CFMMEU wharfies, as we're seeing at present in Sydney - airline pilots have emerged into an environment where they arguably have rather less such sway (although not 'nil', as robotics cannot replace this human capital).

Qantas will be keen upon EBAs expiring to reduce pilots' salaries plus allowances and other conditions to keep it competitive with VA 2.0.

Simply comes down to supply and demand at the end of the day doesn't it..... and Bain/VA2 will do all the dirty work for Australia, then QF, Rex and all will just 'mirror' market conditions....

 

[Melburnian1]

I am not a Queenslander and so am a long way away, and don't read about its current affairs every day, but the $200m deal that state's government is signing today, the day before it enters caretaker mode, with VA 2.0 to see the HO stay in Brisbane (and give govt 10pc equity) seems like another example of an Australian govt throwing away taxpayers' funds.

A very poor investment, and inappropriate.

Why won't the govt let the community vote on it and if it is reelected, then decide whether to fritter this money away?

 

[HappyFlyerFamily]

I am not a Queenslander and so am a long way away, and don't read about its current affairs every day, but the $200m deal that state's government is signing today, the day before it enters caretaker mode, with VA 2.0 to see the HO stay in Brisbane (and give govt 10pc equity) seems like another example of an Australian govt throwing away taxpayers' funds.

A very poor investment, and inappropriate.

Why won't the govt let the community vote on it and if it is reelected, then decide whether to fritter this money away?

I’d be interested in getting confirmation it’s 10% stake. I read that it was a mixture of debt/equity and that Qld getting a 7% return (on the debt I assume, interest)

Branson gets 5% stake

 

[jakeseven7]

I’d be interested in getting confirmation it’s 10% stake. I read that it was a mixture of debt/equity and that Qld getting a 7% return (on the debt I assume, interest)

Branson gets 5% stake

Whatever the bare minimum he has to invest to force them to keep the Virgin name and those fat royalty checks rolling in. I hope Bain screwed him down at least.

 

[HappyFlyerFamily]

Whatever the bare minimum he has to invest to force them to keep the Virgin name and those fat royalty checks rolling in. I hope Bain screwed him down at least.

Well Branson is never selling and I doubt there is any dividend....whether there is royalty, likely but don’t know. Arguably 5% could be the royalty??

 

[moa999]

Suspect it will be a tradeoff for a cheap/no annual license fee for the name

 

[RAM]

I am not a Queenslander and so am a long way away, and don't read about its current affairs every day, but the $200m deal that state's government is signing today, the day before it enters caretaker mode, with VA 2.0 to see the HO stay in Brisbane (and give govt 10pc equity) seems like another example of an Australian govt throwing away taxpayers' funds.

A very poor investment, and inappropriate.

Why won't the govt let the community vote on it and if it is reelected, then decide whether to fritter this money away?

The $200m (or whatever it is) was offered back in May this year. It has taken until today for the latest round of approvals - not anything to do with the impending state election at the last minute.

Looking at the asset side that the Qld Govt is now a part owner of - the Velocity Frequent Flier scheme is (still) valued at around $2bn itself and was generating over $300m in net profits per year. So this seems like a deal that should stack up favourably compared with most political deals which too often see money given out (even before terms & conditions have evn been created) to 'favoured' groups (sport rorts etc).

 

[HappyFlyerFamily]

The $200m (or whatever it is) was offered back in May this year. It has taken until today for the latest round of approvals - not anything to do with the impending state election at the last minute.

Looking at the asset side that the Qld Govt is now a part owner of - the Velocity Frequent Flier scheme is (still) valued at around $2bn itself and was generating over $300m in net profits per year. So this seems like a deal that should stack up favourably compared with most political deals which too often see money given out (even before terms & conditions have evn been created) to 'favoured' groups (sport rorts etc).

All I am allowed to say is that the proposal has been around since May, but the rest of your first paragraph is not true.

With the second paragraph, I’m not sure how Qld will benefit with an equity stake if there are no dividends (likely) unless the owner after Bain buys the Qld stake.

 

[HS-TQE]

Reportedly the $200m from the Qld Government also involved a minority 2% equity stake rather than 7%.

 

[HappyFlyerFamily]

Reportedly the $200m from the Qld Government also involved a minority 2% equity stake rather than 7%.

Wow, only 2%. I’m sure someone will find out the numbers on the equity/debt split of the $200m.

Who said 7%? I read Qld claiming a 7% return, presumably on the debt component. Someone else indicated the $200m was for 10% equity.

 

[jakeseven7]

Looks like Bain and Branson fighting already. Good start.

Bain don’t want him to have higher than 5% and as predicted are screwing him down on the royalty


——

Branson, Bain at loggerheads over Virgin stake as QLD seals investment

Richard Branson's Virgin Group and Bain Capital are at loggerheads over how much of a stake in Virgin Australia the private equity firm is willing to give the airline's British billionaire co-founder.

The disagreement over the airline's equity make-up came as the Queensland government said on Monday it was close to finalising its own minority investment of about 2 per cent in Virgin.

The Australian Financial Review first reported on Monday that Virgin Group was set to emerge with 5 per cent of the company.

The Age and Sydney Morning Herald has confirmed that while Bain has offered Virgin Group 5 per cent, Mr Branson's investment vehicle is pushing for a more significant stake and has offered up to $100 million to retain a tenth of the airline.

The Virgin Group has the leverage of the iconic Virgin brand, for which Virgin Australia was paying it an annual licence fee of about $15 million. Bain is also negotiating a new licensing agreement, without which it will face the significant cost of rebranding the carrier.

The Virgin Group owned just under 10 per cent of the ASX-listed Virgin Australia before it went into administration in Apriland has said it wanted to maintain a similar stake under any new owners.

But Bain, which won a fierce bidding war for the airline in June, has offered Virgin Group only a 5 per cent stake, according to a source with knowledge of the deal.

Branson, Bain at loggerheads over Virgin stake as QLD seals investment

Richard Branson's Virgin Group and Bain Capital are at loggerheads over how much of an ownership stake in Virgin Australia the private equity firm is willing to give the airline's British billionaire co-founder.

www.smh.com.au

 

[HappyFlyerFamily]

Looks like Bain and Branson fighting already. Good start.

Bain don’t want him to have higher than 5% and as predicted are screwing him down on the royalty


——

Branson, Bain at loggerheads over Virgin stake as QLD seals investment

Richard Branson's Virgin Group and Bain Capital are at loggerheads over how much of a stake in Virgin Australia the private equity firm is willing to give the airline's British billionaire co-founder.

The disagreement over the airline's equity make-up came as the Queensland government said on Monday it was close to finalising its own minority investment of about 2 per cent in Virgin.

The Australian Financial Review first reported on Monday that Virgin Group was set to emerge with 5 per cent of the company.

The Age and Sydney Morning Herald has confirmed that while Bain has offered Virgin Group 5 per cent, Mr Branson's investment vehicle is pushing for a more significant stake and has offered up to $100 million to retain a tenth of the airline.

The Virgin Group has the leverage of the iconic Virgin brand, for which Virgin Australia was paying it an annual licence fee of about $15 million. Bain is also negotiating a new licensing agreement, without which it will face the significant cost of rebranding the carrier.

The Virgin Group owned just under 10 per cent of the ASX-listed Virgin Australia before it went into administration in Apriland has said it wanted to maintain a similar stake under any new owners.

But Bain, which won a fierce bidding war for the airline in June, has offered Virgin Group only a 5 per cent stake, according to a source with knowledge of the deal.

Branson, Bain at loggerheads over Virgin stake as QLD seals investment

Richard Branson's Virgin Group and Bain Capital are at loggerheads over how much of an ownership stake in Virgin Australia the private equity firm is willing to give the airline's British billionaire co-founder.

www.smh.com.au

10% = $100m is my reading of the article.

So does that mean Qld 2% = $20 m?

So basically 100% is $1bn??

 

[HS-TQE]

EY had just cancelled BNE flights in their latest round of cuts. They will continue to fly from SYD and MEL.

Not surprisingly, EY are still cleaning up Hogan's mess.

It may open the door for a potential VA/QR partnership considering that QR/QF are "hostile enemies" despite being in the same alliance.

 

[jakeseven7]

EY had just cancelled BNE flights in their latest round of cuts. They will continue to fly from SYD and MEL.

Not surprisingly, EY are still cleaning up Hogan's mess.

It may open the door for a potential VA/QR partnership considering that QR/QF are "hostile enemies" despite being in the same alliance.

Doubt it, QR is so often all hot air.

Anyway EY is a reasonable fit for VA2 still.

 

[antycbr]

Doubt it, QR is so often all hot air.

Anyway EY is a reasonable fit for VA2 still.

I think westbound from Australia most people probably preferred SQ particularly if not on the EY A380.

If EYs network keeps reducing the number of Europe destinations not covered by SQ will drop. Who knows though what long haul international travel will look like.

 

[ozstamps]

Here is a fast way for Bain to save $15m licence fee a year to Branson.

AND save them handing over 5% to 10% of equity to him.

Pick a familiar name they need no fee for, like .....................

TIGER

With no lounges nationally, and no promises of any, or even HINTS of any, seems like they are headed that way already. Sad but true.

Near all paid Biz travel has gone to QF for months, and most forward booked trips too I'd guess. Who would bother with Virgin - truly?

My shiny Virgin Platinum card has tarnished from non use like most others, and with business being so bad even now, they better dangle some darn big carrots, real soon, to the Elites, or Bain themselves will be gone sadly.

If Qantas are struggling super badly, and Rex grabbing the Regional routes Virgin dropped, and also planning doing inter-Capitals flights, Bain really have their backs to the wall before they take the reins.

When Bain started this buy out many months back, everyone assumed things would be near normal by Xmas I bet.

 

[HS-TQE]

If I recall, the Tiger trademark owned by Scoot Singapore (the successor to Tiger Singapore when Scoot and Tiger Singapore merged a few years ago).
Although independently managed (like Jetstar is for Qantas), Scoot is the wholly owned LCC of SIA.

Virgin were paying branding fees (significantly less) to them to use the Tiger name.

Another suggested name is V Australia (although it's a flash back to the past as this name was used for VB long haul in the Godfrey era).

 

[andrewpf]

If I recall, the Tiger trademark owned by Scoot Singapore (the successor to Tiger Singapore when Scoot and Tiger Singapore merged a few years ago).
Although independently managed (like Jetstar is for Qantas), Scoot is the wholly owned LCC of SIA.

Virgin were paying branding fees (significantly less) to them to use the Tiger name.

Another suggested name is V Australia (although it's a flash back to the past as this name was used for VB long haul in the Godfrey era).

I would think that Velocity Australia makes the most sense as an alternative name.

 

[Jacques Vert]

I would think that Velocity Australia makes the most sense as an alternative name.

Why not just Velocity?

 

[Bagpuss]

I would think that Velocity Australia makes the most sense as an alternative name.

Velocity is also the radio callsign for Virgin Australia.