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

[Must...Fly!]

I think the only realistic/sensible option is UA but if it had to mean widebody operations...I do wonder why they'd bother, to be honest. What are they missing that investing in VA acquiring a new fleet and operating to the continental US that they don't already have?

 

[PineappleSkip]

I would back a DL/UA stake on the condition Virgin kicked off LAX ops again. I really do miss VA LH ops.

Well, I miss VA flights to AUH, but don't expect EY to enter the fray. I think QR would be a more likely contender, although the Qatar Government might feel a bit finger burned.

 

[antycbr]

ANZ surely won’t touch it, they have considerable liabilities in the coming years let alone throwing heavy cash at this.

Air NZ is also a majority state owned airline. I doubt NZ taxpayers would look too kindly on investing in an Australian airline.

 

[mt4789]

From what i've seen PE tend to look 2 to 3 years ahead and run companies with accountants for short-term gain - sounds no different to QF lol

 

[HS-TQE]

I think the only realistic/sensible option is UA but if it had to mean widebody operations...I do wonder why they'd bother, to be honest. What are they missing that investing in VA acquiring a new fleet and operating to the continental US that they don't already have?

Considering UA's BNE operations is highly seasonal - ie LAX only operates December to March on UA (and BNE-SFO being subsidised by the Queensland Government for the duration of the AAIF), I would suspect UA would've at least looked at talking to VA, although obviously no guarantee of (about taking over) over some of UA's BNE ops if there is money to be made elsewhere on UA's aircraft.

 

[Saab34]

I think the only realistic/sensible option is UA but if it had to mean widebody operations...I do wonder why they'd bother, to be honest. What are they missing that investing in VA acquiring a new fleet and operating to the continental US that they don't already have?

True. No real reason for either to take a stake, throwing hundreds of millions at a Virgin stake gains them what’s exactly? They already have the big levers in place. The only thing as I mentioned, was Qatar using Virgin to sort out boosting its DOH ops.

 

[pauly7]

Who would buy VA3 though?

Well no one (right now) which is why the IPO show has taken so long / is basically in ultra slow motion / iced depending on what financial journalist you believe

Uncertain economic headwinds and new, growing competitors targeting Virgin’s market segment (Rex investing / unknown quantity in Bonza) have combined to make potential suitors a lot more wary.

(Personal opinions only)

 

[Carrots]

Given their recent knock back, the only obvious benefit I can see today for QR (after approx 12 seconds of considering it) is to essentially gain more slots in/out of Aus by (conspicuous) stealth.

 

[HS-TQE]

Going slightly OT: With financial flow issues at both the wider 777 Partners Aviation Group (Bonza and Flair) as well as the wider REX group reporting a loss, another question is whether a potential REX/Bonza may be feasible or sooner as predicted (which leads to another question on who would be the acquiring Private Equity party in the 'merger' - which I'd tip REX's PAG over Bonza's 777 Partners). The combined group would have to decide from there on their market aims however considering Bonza's regional focus over REX's struggle in the mainline City market.

 

[henrus]

I haven't flown VA domestically for about 6 months until yesterday but was shocked yesterday at the lack of empathy from the ground staff and overall whole ground experience. I noticed it was bad back then but it appears to have gotten worse.

- The cabin crew off my international arrival indicated the ground crew would provide details for short transfers, in reality the VA ground staff had no idea there were even connections and when asked just said collect your luggage and get the T-Bus).

- The lounge staff were just dealing with cancellations by handing out a single piece of paper with a QR code to rebook (I've gotten more help from Jetstar in the past).

- After being kicked out of the lounge at 9:30pm I sat near my gate next to the service desk and a more junior looking staff member (clearly was new to VA) was sitting around, a clearly more senior staff member came and asked how things were and when the junior staff member said things had been crazy due to the cancellations the senior staff member said "when the flights get cancelled, that's when you run". Things got worse when the junior staff member asked the senior one what "gate open" meant, to which he responded with "it means staff are at the gate, but you get customers coming up asking about it all the time". Like out of a comedy about 60 seconds later an older lady came up and asked about gate open, the senior staff member responded saying staff were there and then as she walked away he visibly indicated to the junior colleague that she was crazy - I'm sure this was caught on CCTV but sadly nothing will happen and I know for sure if I did that at work I'd be very quickly in front of HR or fired.

I was going to lodge a compliant about the above, especially the actions of the service desk staff but the online form to submit anything is so complicated and needs so many details I can't be bothered (oh and my last request about an incorrect credit remains unanswered from weeks ago).

It's crazy though because onboard all the crew were excellent but it seems current management don't care and are too busy letting staff get away with the attitude that the customer is the inconvenience.

 

[Saab34]

Standing back it does appear that Virgin is going backwards.

OTP has sunk. Cancellations have increased. Currently the worst performing airline. Domestic Capacity has been cut for this FY according to analysts today. It would appear they are trying to fix the performance issue by pulling back the schedule, not a great time to do doing that the competition actually growing significantly over the coming FY.

It really does reek of PE dump and sell, and obviously that’s the aim here, but they need to invest and run it like an airline, not a milking machine, otherwise they will just slide backwards. They appear to also be having some crewing issues, they could fix the Pilot issue by paying that group more, which will actually be a saving as people will hang around.

I feel like VA is still a long way away from becoming a sustainable, profitable and consistent public company. Which is why my investment dollars will never go near it. I expect the current Management to run off once in a year or two when it’s largely sold off, no different to other PE sell offs. If it starts to sink as a public company, which will be fairly evident very quickly, no reason for any of them to hang around, cash out the tens of millions and get out. But then, what’s next for Virgin.

 

[HS-TQE]

Also to mention VA's direct (smaller) competitors in REX and Bonza both having well-publicised issues of their own internally/financially and with staff issues, a 3-way "merger" between AB/ZL/VA would just form a 'bigger' mess that neither of the 3 Private Equity firms involved in each carrier (777, PAG or Bain) would be interested in.

 

[Saab34]

between AB/ZL/VA would just form a 'bigger' mess that neither of the 3 Private Equity firms involved in each carrier (777, PAG or Bain) would be interested in.

Starts to bring back memories of Virgin 1. So much complexity. What you suggested actually gives me a migraine just even thinking about it.

 

[dajop]

Absolutely a complete mess if the three were to get together. But in fleet terms it would only add one new type to the group - the Saabs (and probably the biggest headache).

 

[HS-TQE]

Absolutely a complete mess if the three were to get together. But in fleet terms it would only add one new type to the group - the Saabs (and probably the biggest headache).

Also the Embraer 190s, the 4x BAE 146s freighters and the Dash 8s from National Jet Express (NJE) which REX recently acquired a majority stake in.

 

[dajop]

Also the Embraer 190s, the 4x BAE 146s freighters and the Dash 8s from National Jet Express (NJE) which REX recently acquired a majority stake in.

True, I was only thinking of the RPT operations. You would have to also include the Westwind 1124, Beechcraft King Air B350C and Beechcraft King Air B200C aircraft operated by Pelair, which is a subsidiary of Rex.

 

[justinbrett]

Also to mention VA's direct (smaller) competitors in REX and Bonza both having well-publicised issues of their own internally/financially and with staff issues, a 3-way "merger" between AB/ZL/VA would just form a 'bigger' mess that neither of the 3 Private Equity firms involved in each carrier (777, PAG or Bain) would be interested in.

I don't think the ACCC will be approving any mergers of domestic airlines.

In an interview with the commissioner the other day, she said she wasn't really worried about international competition (in relation to QR) but is quite concerned about domestic competition.

 

[dajop]

In an interview with the commissioner the other day, she said she wasn't really worried about international competition (in relation to QR) but is quite concerned about domestic competition.

Although I don't think a Rex and Bonza merger would harm competition. In cricket terms, it would be like allowing Denmark and Zimbabwe to team up against Australia and India.

 

[pauly7]

is quite concerned about domestic competition.

I would be too.

The 3 minor players all have structural issues and are converging on the same target market (I put money on Bonza moving closer to more established routes as we’ve already seen). It’s only time before one of them stubs a toe and trips over.

 

[justinbrett]

I would be too.

The 3 minor players all have structural issues and are converging on the same target market (I put money on Bonza moving closer to more established routes as we’ve already seen). It’s only time before one of them stubs a toe and trips over.

Kind of reminds me of the QF-AN-DJ-VQ cough-show of 2001.