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

[twinaisle]

Hopefully Jayne takes ‘Wonderful’ out in her handbag when she takes the one way walk off the plank

If it wasn't for her work there wouldn't be a current profit making VA as much as everyone bashes her.

 

[ozstamps]

Not ‘nice to see me’ in Melbourne however

If I wear my Sydney Swans scarf, the same story. Wonder why?

 

[airlinemn]

I believe that Alaska was possibly looking at Bonza and that is fuelling the speculation they want VA.

Talking to a few people and seeing the media reports these last few days, I understand they are the front runners at this time.

 

[justinbrett]

The Alaska talk is nonsense. They have never bought a foreign airline and every acquisition they have made has been folded into AS. Even with HA that will run operationally as part of AS, just with different branding on the door. In fact this is a good argument why they won’t take VA is they did not want to run two different airlines.

Seems someone just googled “airline acquisitions“ and completely ignored the context. You have to ask the question, why, why would another airline buy VA? As a narrow body airline the profit margin isn’t huge (and non existent for much of VA1), so would have to be more to fit in with the larger airline‘s strategy, which makes sense for SQ or QR. But AS/HA? The latter has a single flight to SYD. Why?

 

[dajop]

Seems someone just googled “airline acquisitions“ and completely ignored the context.

I mean I can see how someone might get confused, Alaska, acquisition and Virgin would definitely fit together in one article. But the article would have to be a few years old now and well VA, that’s an abbreviation for Virign America, right?

Or someone’s drawn a conclusion that Alaska Air just likes Virgins.

 

[airlinemn]

But the article would have to be a few years old now and well VA, that’s an abbreviation for Virign America, right?

I mean 19/06/24 is hardly a few days ago yet alone a few years ago.

 

[AIRwin]

I mean 19/06/24 is hardly a few days ago yet alone a few years ago.

June 24, 2019?

 

[MooTime]

Handy that we have the Alaska Airlines CEO posting on AFF.

 

[Saab34]

Alaska wouldn’t be able to finance any Virgin deal. They are still sorting out the finance arrangements for the HA deal let alone trying to find a few more billion for a random purchase down under.

They have also made it clear the focus moving forward is the HA consolidation, and hinting at looking at moving AS into widebody capability in the medium term, as well as looking at what the widebody fleet will look like group wide, in the long run. Simply, whatever cash they have is well and truly tied up for the next decade.

Virgin isn’t being sold for a song here. Bain will likely hold it….and hold it….until it gets it’s sky high price.

which makes sense for SQ or QR. But AS/HA? The latter has a single flight to SYD. Why?

I really think the same could be said of QR. Buying a stake in Virgin won’t really achieve anything except any potential plan to launch widebody ops. By the time that happens, which would be a multi year project, they likely might have been granted an increase in rights regardless.

They would be better off investing more into IAG vs chucking billions into some Oz Domestic player.

SQ. Well, probably. Just what they have always wanted. And it’s a cleaner balance sheet this time. But again, it’s a multi billion dollar investment. Hard to see.

 

[RooFlyer]

But again, it’s a multi billion dollar investment. Hard to see.

I hear what you are saying, but depending on the price, Bain and the buyer can come with all sorts of imaginative ways to finance maybe includind some performances bonuses/hurdles.

 

[Saab34]

They would have made connections with a whole range of potential suitors on the roadshows, so continued talks with a whole range of different potential buyers could be playing out. Bain has considerable connections globally, not like it’s the local management team trying to sell it off.

 

[HS-TQE]

As said, SQ attempted multiple times in the Australian market including VA 1.0 and failed massively losing billions of dollars combined.
SQ are also a known tyre kicker in Australian market with multiple "SQ will buy and TAEK OVAH VA !!!!!!1111!!!!" articles all turning out to be fake news everytime.

If SQ are the "so called saviours" they'd be making billions on their investments, but considering they've been involved in multiple bankruptcies/administrations on their investments and liquidating NokScoot, suggests they should just stick to running their own airline group well, which they are good at in their own space.

 

[Saab34]

I think SQ has proven that the old stick to your own backyard, is a wise investment.

They didn’t appear to inject much success into Virgin previously, doubt any future attempt would be much different.

Bit like QF trying to play in Singapore. Jetstar Asia is a basket case.

 

[justinbrett]

SQ could do it and tear up the QR deal, thereby forcing pax on to SQ metal. There’s a tangible benefit for the outlay.

QR? Perhaps if they’re good at yoga they could structure so they can do international VA flights to DOH and get more pax flying QR. Probably more money than its worth, but there’s plenty more where that came from.

DL and/or VS? Well then you would have a global airline based in the three major regions of the Anglosphere.

Somebody please tell me how AS/HA would benefit?

 

[ben95]

SQ could do it and tear up the QR deal, thereby forcing pax on to SQ metal. There’s a tangible benefit for the outlay.

I disagree. SQ is not struggling to compete for traffic in the AUS-EU market. In fact it’s a very strong competitor in this market and is able to command a significant premium.

It doesn’t need to buy VA to funnel traffic onto its own metal. For the high yielding corporate accounts most companies will be directly contracted with SQ/QF/EK/EY/QR or other major international airlines, they won’t be booking via VA because VA won’t be able to offer the same pricing discount on the codeshare as an airline would flying its own metal or in a metal neutral JV.

 

[HS-TQE]

It doesn’t need to buy VA to funnel traffic onto its own metal. For the high yielding corporate accounts most companies will be directly contracted with SQ/QF/EY/QR, won’t be via VA.

I think you meant EK instead of EY. EY is the smallest of the ME3 (and is a minor largely unilateral partner of VA in the wider scheme of things).

 

[ben95]

EK instead of EY

EK and EY. EY is usually willing to offer the biggest discount going to EU for smaller spend target. EK of course is one of the strongest in this market, but of course usually the priciest but offer the most flights/destinations.

 

[Saab34]

You could essentially argue that no airline should buy Virgin, one can get what they need from being a partner, why spend billions?

SQ buying just to tear up a QR deal? They would never reap the gains from that, by shelling out billions for the privilege.

The issue for Virgin is nobody appears willing to buy it, and invest in it over the long term, for its own financial purposes. Virgin needs a partner that will be around for decades, willing to tip the cash in when needed, and stick around for the ups and downs. Delta got burnt with VS, no chance of that happening.

 

[jakeseven7]

And Rex is slowly slowly ratcheting up the pressure on VA2, literally one plane at a time, which is keeping VA2 prices honest on some key routes so they can’t really take much more margin.

QF keep the corporates / business / premium crowd, JQ undercuts everyone and Rex increasingly merges into the VA2 space it’s going to be very interesting to see what happens in that middle/lower cost ground.

 

[Saab34]

And Rex is slowly slowly ratcheting up the pressure on VA2, literally one plane at a time, which is keeping VA2 prices honest on some key routes so they can’t really take much more margin.

Rex won’t be doing anything soon, cash available is nearly out, looking at what they have been burning, and what is available according to the latest results, they won’t get through the next FY. Not sure what is next for Rex, but a long term competitor to Virgin is unlikely.