What is Virgin Australia's strategy (post-administration)?

[Saab34]

They would likely need 3 months to cycle through a sale from the last auditable date, which is either Dec 31 or June 30. Allow 4/6 weeks for the numbers to be presented.

So they would be starting about now going off the last half however they seem to be silent, so a kickoff would be either next Feb or August.

Still a long way off. At the earliest a listing would be next May or November 2024. Really starts to drag then, generally PE won’t hang on for that long, especially 25/26

 

[AustraliaPoochie]

Thanks for that one Harrison_133, I just had a look at the late night ADL - PER, and its a 737-8 with a J cabin for $599.01

 

[Must...Fly!]

Thanks for that one Harrison_133, I just had a look at the late night ADL - PER, and its a 737-8 with a J cabin for $599.01

That's a decent deal.

 

[RooFlyer]

Per the other VA2 financial thread, Bain have not been able to sell VA2, roadshow has been an embarrassing failure for Jayne/Bain, was supposed to be wrapped up months and months ago…

<redacted> Bain have not been able to sell VA2'.

[Do you] Know your way around an IPO process? Been through three myself - two on investment bank advisory side and one of my own company# and anyone who thinks its a straight line process is [wrong] <redacted>.

# copped the start of the GFC at the end of the exposure period - but got it away.

They would likely need 3 months to cycle through a sale from the last auditable date, which is either Dec 31 or June 30. Allow 4/6 weeks for the numbers to be presented.

So they would be starting about now going off the last half however they seem to be silent, so a kickoff would be either next Feb or August.

Still a long way off. At the earliest a listing would be next May or November 2024. Really starts to drag then, generally PE won’t hang on for that long, especially 25/26

Much more realistic commentary.

One of the reasons to delay an IPO would be if the business is doing better than expected. Dunno what their expectations were, but there seems to be a bit of coin rolling about. (Speaking generally) if a business happens to be doing exceptionally well (or badly) in the 6-12 months prior to a float, then the forecasts (especially PEs) become awkward. Do you use those 'exceptional' results or ignore them and use some other 'usual' figures? Either way people are going to be unhappy.

If there is one (or two) key o/s investors that you want on board strategically (not just for the investment), then volatility in anything - FX, aviation market etc increases in significance. And if, for any reason, one such says "Have to wait a month or two ....", and you can, then you will wait.

I agree re the PE investment time-frame though - except if the business throws off more cash than their initial investment models; then they can hold onto it for longer, for 'free'.

Is the aviation market stronger now than Bain would have modelled when they bought the thing? And/or stronger than would have been projected a year ago?

 

[Saab34]

Is the aviation market stronger now than Bain would have modelled when they bought the thing? And/or stronger than would have been projected a year ago?

I think so, but the poor operational performance at the moment surely would be an issue. Some reports suggest they are reducing capacity this current FY to sort that out.

So many up and coming wage agreements that might get messy, who knows as to what they will brief potential buyers about that, and IR action would be troublesome in preparing a float. Unknown as to what they suggest the wage bill is now, vs what it might be in say 2 years. They have had to wave through the Fair Work minimum wage hikes recently, so costs have certainly creeped since the last roadshow. Going on another roadshow with some variable numbers vs the last roadshow would also have investors asking questions.

Might be wise just to sit it out for another year or two, however the place does appear run down and under invested, wouldn’t want to go too long in its current form. By the time they cycle out all the wage agreements, fix the performance issues, a safe period to present to investors would be the June-Dec Half 2024. Roadshow in Feb 25, and a listing in May 2025.

 

[Must...Fly!]

Question about the capacity cuts for me - are they real enough to present a concern? Is it golden triangle, real money stuff? Or is it the not even secondary but tertiary routes that came about only because of the opportunity presented by covid?

 

[33kft]

VA can probably afford to be a bit sloppy right now and until AJ leaves at the absolute minimum given the shocking QF PR that has been ongoing for how long now. They could be cancelling four out of five flights and still wouldn't make the front page.

 

[Harrison_133]

Question about the capacity cuts for me - are they real enough to present a concern? Is it golden triangle, real money stuff? Or is it the not even secondary but tertiary routes that came about only because of the opportunity presented by covid?

ADL-CNS/DRW are the only routes that were seasonally cut for the summer schedule. After a quick skim, I can’t see too much else as yet. Maybe there are slight frequency cuts here and there. Some examples I found for MEL on peak days: MEL-HBA 4 flights instead of 5. MEL-PER 6 flights instead of 7. MEL-OOL 8 flights instead of 9. There are probably more out there, but I’d say they’d be minor.

They could be cancelling four out of five flights and still wouldn't make the front page.

Indeed. Just do a Google news search for Virgin and all you’ll find are hits for articles about the government rejecting the extra Qatar flights or the recent Flight Frenzy sale. Not a peep about their terrible OTP and cancellation rates. For whatever reason, Virgin have been able to remain out of the media spotlight.

 

[Saab34]

It doesn’t make the news, however it still won’t escape the minds of the any investors when the horrid numbers are produced at any roadshow.

Question about the capacity cuts for me - are they real enough to present a concern? Is it golden triangle, real money stuff?

Not much info around the which and what, analysts at a recent briefing talked about VAs plans to cut capacity this year, Alan must know about it because him and Vanessa talked about VA cutting capacity to fix its issues etc at the recent briefing…

Virgin are not obliged to say anything really, would just create negative media stories if they went public with its plans.

 

[pauly7]

There has clearly been a challenge(s) with the IPO. They’ve missed the target window now, and there is clearly a plan B in play - personally I’m not really worried what that is (although all the conjecture is fun to talk about of course!).

But certainly now the actual operations are suffering at the moment which is a pity, for all of us even if you don’t fly Virgin.

 

[pauly7]

I have to laugh, a survey comes out on the idea of baggage tags and the usual suspect says now cost cutting, haha.

I think you may have misread. I also did the market research referred to, Virgin are looking at cutting (or cutting down) the actual plastic Velocity membership card and cutting the baggage tags too. There was also a question around copying Qantas’s bag tag set up as well, that serves more than an ID purpose, which will be interesting to see if that progresses.

So yes they would cut costs by reducing all those plastic cards, I don’t see how cutting that kind of cost is a bad thing commercially or for the environment personally.

 

[HS-TQE]

ADL-CNS/DRW are the only routes that were seasonally cut for the summer schedule. After a quick skim, I can’t see too much else as yet. Maybe there are slight frequency cuts here and there. Some examples I found for MEL on peak days: MEL-HBA 4 flights instead of 5. MEL-PER 6 flights instead of 7. MEL-OOL 8 flights instead of 9. There are probably more out there, but I’d say they’d be minor.

Indeed. Just do a Google news search for Virgin and all you’ll find are hits for articles about the government rejecting the extra Qatar flights or the recent Flight Frenzy sale. Not a peep about their terrible OTP and cancellation rates. For whatever reason, Virgin have been able to remain out of the media spotlight.

VA were also able to keep out of the spotlight during the early JB era. It was only the continual losses at VA 1.0 under JB is when finally started getting the torch onto the airline and eventually himself, HQ moral was reportedly down and eventually toxic due to said losses, which did give AJ some relief for a while before JB stood down for PS (only to get the spotlight back when VA 1.0 eventually went into administration in 2020).

 

[RooFlyer]

Might be wise just to sit it out for another year or two, however the place does appear run down and under invested, wouldn’t want to go too long in its current form. By the time they cycle out all the wage agreements, fix the performance issues, a safe period to present to investors would be the June-Dec Half 2024. Roadshow in Feb 25, and a listing in May 2025.

Absolutely. The key for an IPO is 'steady state' beforehand where the offeror can show consistent performance and therefore justify projections and pricing. Big gyrations in costs and incomes, FX and other critical factors at the time of forecasts risk a skeptical reception.

Agree also that they cannot leave it too long with under-investment. Trouble is, if you commit to significant investment before the IPO, you limit the options a potential major investor will have and therefore may drop them out of the equation. Although if its only a year or so into a longer investment cycle, the new player could curtail it if they didn't like it.

As I said, if the thing is throwing off cash (and IIRC Bain already has taken its investment back?) then things get a bit more flexible.

No-one should fixate on 'roadshows'. They are done to make up the statutory spreads and to generate fund goodwill, liquidity and support in the aftermarket The float will be made or be broken on investment decisions and discussions taken about 20 floors higher than any 'roadshow'.

They’ve missed the target window now, and there is clearly a plan B in play

Well, its probably Plan E, but we haven't noticed the other plans as they have come and gone without our notice. On the IPOs I was involved in, the decision tree changed the direction and 'go' point on an almost weekly basis for four and six months. Once the stars align, you can get things going pretty quickly.

I'd hazard a guess that they is a key investor, also a strategic industry partner who they are trying to accommodate as the numbers change, and are prepared to wait for them. But if that investor is still not ready when the other stars align, it might be interesting!

 

[Must...Fly!]

Not a peep about their terrible OTP and cancellation rates

Indeed and I'm sure they're happy. FWIW I've been a victim a few times lately but the recovery has been fine each time, thanks to the lounge staff. I am paradoxically looking forward to trying out the new rapid rebook tool, one day.

 

[Harrison_133]

FWIW I've been a victim a few times lately but the recovery has been fine each time, thanks to the lounge staff. I am paradoxically looking forward to trying out the new rapid rebook tool, one day.

Same here. I had cancellations 3 trips in a row in July which was definitely frustrating, but luckily they were all on MELSYD or v.v. and I was rebooked on a service within 30min of my original flight each time, so I consider myself relatively unscathed in the grand scheme of things. August I’ve faired pretty well. Haven’t been caught out by any cancellations and only had 1 delay of just 20 mins. Hopefully I haven’t jinxed myself now…

 

[MEL_Traveller]

Same here. I had cancellations 3 trips in a row in July which was definitely frustrating, but luckily they were all on MELSYD or v.v. and I was rebooked on a service within 30min of my original flight each time, so I consider myself relatively unscathed in the grand scheme of things. August I’ve faired pretty well. Haven’t been caught out by any cancellations and only had 1 delay of just 20 mins. Hopefully I haven’t jinxed myself now…

I know. 30 mins doesn’t sound like much but… if you arrive at the airport like I do 15 mins before boarding, all of a sudden you have 45 mins to wait instead of 15. And those delays usually drag out by a good 15 minutes anyway.

Multiply that by 70-80 flights a year and VA has wasted a substantial block of my time

 

[FlyingKangaroo]

I know. 30 mins doesn’t sound like much but… if you arrive at the airport like I do 15 mins before boarding, all of a sudden you have 45 mins to wait instead of 15. And those delays usually drag out by a good 15 minutes anyway.

+1. SYD-BNE pushed back two minutes early yesterday but BNE-SYD today just delayed 35 minutes, and how could it not? The inbound flight was on time but officially scheduled with an impossible 30-minute turn.

And it's not even midday. Just one or two more of those throughout the arvo and this aircraft will easily end the day 90+ minutes behind schedule. Things can go wrong, but when you're pencilling in things going wrong from the outset with impossible turnaround times, it's just silly.

 

[Must...Fly!]

30 minutes is not impossible but I believe the VA standard is 40? perhaps short on crew or aircraft hence the shorter than normal turn time

 

[jakeseven7]

Similar experiences here - both my MEL/SYD/MEL canceled in both directions last week.

Same per above was delayed 90 min on the outbound and 45 min on the inbound. Outbound was a little annoying as landed me in peak hour which then led me to being late for a catch up, return wasn’t that much of a hassle.

Tried to call to change to earlier flights, but nothings they could change and tried at airport to change but queues were long because of the cancellations I expect and hardly any humans at airports anymore - so just gave up. The end.

Most annoying thing for me was I lost my special upfront seat on both legs and moved down the back to a middle seat... First world problem I know but still irritating when you hold status to be treated like that.

So yes the ongoing operational issues and high cancellation rates are annoying.

 

[FlyingKangaroo]

30 minutes is not impossible but I believe the VA standard is 40? perhaps short on crew or aircraft hence the shorter than normal turn time

40 is indeed common but still asking for trouble. I typically resign myself to at least a brief delay if the turn is less then 50.

Most annoying thing for me was I lost my special upfront seat on both legs and moved down the back to a middle seat... First world problem I know but still irritating when you hold status to be treated like that.

So yes the ongoing operational issues and high cancellation rates are annoying.

First world problem indeed but still relevant given how high cancellation rates are especially on the triangle routes.

My recent experience has been that when the flight is on time, it’s almost always because the turnaround from the previous flight was at least 60 min, and when the delays hit, things start cascading fast and there is little hurrying to make much of it back up. If anything, it’s suddenly as if everything goes even slower.