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

[roby]

The Australian reporting the float has been delayed by a further year, with estimated listing now November 2025.

The delay is due to Virgin getting distracted with the Rex collapse.

That explains the silence, certainly would have expected something from Virgin in the last 2 weeks at the latest. Also seems like Jayne Hrdlicka isn’t going anywhere just yet.

Can someone explain why Rex has anything to do with VA selling to QR?

 

[Saab34]

They don’t. For all we know, they might not have been even talking to QR, talks could have stalled, or even put on ice.

Going after parts of Rex is a huge distraction for the Management and Finance teams, no chance they could float at the same time if they wish to pursue Rex assets.

Virgin has been talking to Rex for many months, I’d say they haven’t been talking to QR at all. Unknown if they would announce a QR deal this far out from an IPO or wait until mid next year.

 

[Digicola]

Can someone explain why Rex has anything to do with VA selling to QR?

1. The effect it has on capacity and yields is still to be assessed. It will probably increase the value of VA and thus brighten up its IPO prospects (and price).

2. Whoever swoops in to buy up Rex (if anyone does) might affect the competitive landscape yet again in a positive or negative way.

All these affect the attractiveness of VA.

 

[dajop]

The Australian reporting the float has been delayed by a further year, with estimated listing now November 2025.

You mention "float" specifically here, is that referring to IPO? Could a specific investor purchase a portion of the company directly from Bain without an IPO?

 

[SCM]

You mention "float" specifically here, is that referring to IPO? Could a specific investor purchase a portion of the company directly from Bain without an IPO?

Yes, float = float on the market, in other words via IPO (or SPAC, but we don't do that anymore).

Yes, Bain can sell whatever portion of the company to whomever they want - bearing in mind, the more stake it sells, the harder it will be to align interests in terms of running the company until it's out.

I think here, Bain probably saw an opportunity, it has validated that VA is a fundamentally sound business that can already make money, and it's seeing a lot more money to be made with Bonza and Rex out - and if they can gobble up staff (hard to get in the airline industry right now in AU) and narrowbodies (also hard to get) to mitigate the 737max delays, well there is just way too much opportunity to pass up here.

Bain want a bigger, meaner VA, and they will absolutely go after it. I wouldn't be surprised if they pivoted and redid their entire strategy for the coming years based on this.

So why is the IPO delayed? They believe they can take action now to add a lot more value to VA, fairly easily, plus interest rates falling into next year will give them a higher price "for free".

 

[simmomelb]

Here is the exact headline from The Australian, for anyone interested.

Interest in Rex assets pushes back Virgin IPO​

A float of Virgin Australia has been pushed back by about a year, say sources, after the carrier recently entered talks with Rex about taking on some assets from the failed regional carrier.

I could post the article itself, but it might be taken down for copyright issues.

 

[HS-TQE]

Apart from the 737 simulator and a bunch of 737 leases from SQ and the leases for the 3x 14-year old ex-VA1.0 737s, there's not much unencumbered assets of any value at REX.

On a slight related off-topic note: SQ's leases on their remaining ex-MI 738s are soon to expire with the first two of the 8x SQ 738s leases expiring around the September/October period

 

[simmomelb]

Apart from the 737 simulator and a bunch of 737 leases from SQ and the leases for the 3x 14-year old ex-VA1.0 737s, there's not much unencumbered assets of any value at REX.

I had the same thoughts, I am certain the rest of their aircraft is of no value or interest to VA.

 

[Saab34]

Are Virgin trying to block a new entrant however? They obviously joined Rex talks very early on, attempted to take the 737 operation twice according to one outlet, and when it sunk into administration, they already had their hands on a third of the fleet.

If there was a player out in the market who would have been interested in a takeover, be it before or after administration, Virgin appears to have moved to extinguish that.

Don’t underestimate the upside for Virgin here without RexJet. The Margin improvement is going to be quite considerable, especially during peak periods. This is the first time we are down to three operators on the triangle.

I think VA have been quite active in this space purely for their own balance sheet.

 

[simmomelb]

This is the first time we are down to three operators on the triangle.

3 operators by name only, in reality, 2 operators.

 

[tmdl]

They don’t. For all we know, they might not have been even talking to QR, talks could have stalled, or even put on ice.

Going after parts of Rex is a huge distraction for the Management and Finance teams, no chance they could float at the same time if they wish to pursue Rex assets.

Virgin has been talking to Rex for many months, I’d say they haven’t been talking to QR at all. Unknown if they would announce a QR deal this far out from an IPO or wait until mid next year.

Has there been any news on if QR will be allocated additional flights into Australia? I thought their stake in VA was mainly focused on this?

 

[JessicaTam]

[mod hat]
Off topic posts have been deleted and infractions given.
[/mod hat]

 

[RooFlyer]

So why is the IPO delayed? They believe they can take action now to add a lot more value to VA, fairly easily, plus interest rates falling into next year will give them a higher price "for free".

Plus, I think the general confidence of the IPO buying investor in the airline industry here, with one airline having folded and another one just about.

this would only be one factor of an ongoing assessment of the success or otherwise of a IPO at this time and maybe it was the last straw after Bonza.

Shouldn’t really affect any interest QR ha ( if any) as they would be bit a bit more sophisticated and longer viewing than the average IPO punter.

 

[FruitySnack]

From the AFR today:

"Qatar Airways is close to finalising a deal to acquire a minority stake in Virgin Australia, almost 1½ years after its private equity owner Bain Capital delayed a billion-dollar float of the carrier and pivoted to courting strategic buyers.

Street Talk understands Qatar is within days of signing the deal, although it would be conditional on receiving approval from the Foreign Investment Review Board. The talks were first revealed by The Australian Financial Review in June."

Qatar Airways approaches the landing strip on Virgin Australia stake

 

[jase05]

From the AFR today:

"Qatar Airways is close to finalising a deal to acquire a minority stake in Virgin Australia, almost 1½ years after its private equity owner Bain Capital delayed a billion-dollar float of the carrier and pivoted to courting strategic buyers.

Street Talk understands Qatar is within days of signing the deal, although it would be conditional on receiving approval from the Foreign Investment Review Board. The talks were first revealed by The Australian Financial Review in June."

Qatar Airways approaches the landing strip on Virgin Australia stake

Great news if true but I reckon media have been saying QR are “only days away” for the last year so I’ll believe it when it happens

 

[HS-TQE]

^^
Agreed.
Otherwise, it may end up another "SQ WILL TAEK OVAH VA !!!!11! and will bring them into TeH sTaR aLLiaNcE !!!111!!" type of situation if this drags on for years.

 

[henrus]

Maybe VA will join oneworld (ok I’m joking but same was said when SQ/NZ invested).

I wonder if we could see VA wide bodies back with a QR flight number running AU-DOH.

 

[Saab34]

Days away, weeks away, months away. Might need to find a new source.

 

[p--and--t]

This thread has more reruns than late night secondary TV channels.

 

[HS-TQE]

Well a few of the same sources (plus a few posters across social media including here) were sure that "QR will invest their 20% in VA 'Next Week" not long ago the last time this article dropped across the MSM some months back.