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

[ozstamps]

'Devolved to same Alpha, Baker, Charlie approach and after perhaps 10 to 15 minutes they understood what I was after'


Maybe using Alpha, Bravo, Charlie might have worked faster to the Filipinos.

But yes, it seems like a mess.

 

[pauly7]

So basically it’s a very polite way of saying it’s managements job (in this case VA2’s) to manage reactions to external environment changes .

Yup and clearly they’ve fluffed some of it, especially in the IR area.

Well yes, I’m just polite. Not saying it’s easy of course it’s a killer of a game but there have been some own goals that’s for sure - they probably could have positioned a lot more aggressively to take advantage of some of the competitions troubles but all data indicates that hasn’t been the case.

I do suspect so much focus was on keeping the lipstick on for the sale this year that focus on the operational business slipped away… after all those bonuses when you clock that sale will buy you a small island in QLD

 

[Bagpuss]

They’re being phased out of RPT services pretty soon, apart from the Onslow flights and the odd Newman run.

3 aircraft are apparently sticking around until 2025 to serve the FIFO ports waiting for upgrades to 737/A320 capability.

Remember that the F100's are fully owned outright.
The seating refresh of the -700's maybe why they stick around a bit as well.

That said they now have two MAX's and the third must be on it's way shortly.

 

[Bagpuss]

I do suspect so much focus was on keeping the lipstick on for the sale this year that focus on the operational business slipped away… after all those bonuses when you clock that sale will buy you a small island in QLD

A year of comments about an IPO which isn't going happen in 2023 and doubt will happen until mid 2024, by then that would have been 4 years since acquiring the company

 

[HS-TQE]

Indeed. Predictions of Bain "offloading" in 2023 at the start of this year were quite premature considering the mentioned outside circumstances (not within their control) occurring towards the end of 2022 combined with the "own goals" VA 2.0 had.

It's similar to the "REX will release their FF program in late 2021, oops 2022, September 2023 oops" - October rolls around, okay we'll open the pogram.

 

[AustraliaPoochie]

Lets just say, in regards to VAd and VAi, let operate at the cheapest cost.
Saving money/or not spending money, but collecting taxes at the same rate as before T3 and T4 combo in MEL.
There are a lot of things that they took away, even before covid and then, they used covid as an excuse, but if you have indepth look at it, its all to do with financials.
Ie, flying to other parts of NZ apart from ZQN, as they do now.
They must be saving more, by not flying to CHC/WLG/AKL.
They might make some rev flying to these 3 cities, but maybe not enough pax to make it really financially sound to do so.
Charging us for all the basics that they used to include in the fare, basic food on board in non J class.
Making the lower fare not eligible to be counted as "eligible sector" for status.
MEL airport combining T3 and T4, also saved VAd a lot of money, eventhough its the flying pax that pays the sec staff via the sec levy in fares, but still, VA can now spread it out with ZL and JQ, as to the dom sec screening charge at the combo T3 and T4, prior to the combo, VA just had to cover the 2 screening points.
Etc, etc, etc.

 

[RooFlyer]

One of the things Private Equity likes is that it's private. They don't have to tell a damn soul about their intentions except as required by law. They might be ready to hit the button at short notice, if, say a key investor gets over the line, or they might just be chilling and enjoying and unexpected run of profits (presumably).

All these breathless reports about ' 'roadshows' coming and being pulled etc. I mean - really?

 

[jakeseven7]

I do suspect so much focus was on keeping the lipstick on for the sale this year that focus on the operational business slipped away…

I agree and think this is the key to what why we have seen such a slippage in performance and reliability and then some of the weird patches to try and paper over the issues.

I also wonder how many of the Bain implants who were betting on a big pay day lost their roles in the HQ restructure v the ‘true blue’ VA2 folk!?

 

[TAK]

Great insights - And the future value of velocity points in the newly acquired Virgin (whenever/however)??

 

[Must...Fly!]

Great insights - And the future value of velocity points in the newly acquired Virgin (whenever/however)??

Well changes have only recently been made with the introduction of the 3 tier system.

If you decouple the FF programs financially from the main airline operation, I think Velocity is probably more protected from devaluations than QFF. Primarily because they have (relatively hefty) surcharges attached to partner airline rewards, and these are denominated in USD so Velocity as an entity is not nearly as exposed to currency movements.

 

[Saab34]

IPO will certainly be next year, bridging loan to be paid by May 2025. That will be too late for FY25 H1 so it seems like FY24 H2 will be the base, that would put a listing around Oct/Nov 2024.

https://www.theaustralian.com.au/business/aviation/virgin-australia-back-in-black-after-11years-of-losses/news-story/9479cb8225765e5cb93bbb5ff909e067?amp&nk=952291751dadfa45ed69d738c64e78b9-1696910291

 

[Bagpuss]

IPO will certainly be next year, bridging loan to be paid by May 2025. That will be too late for FY25 H1 so it seems like FY24 H2 will be the base, that would put a listing around Oct/Nov 2024.

https://www.theaustralian.com.au/business/aviation/virgin-australia-back-in-black-after-11years-of-losses/news-story/9479cb8225765e5cb93bbb5ff909e067?amp&nk=952291751dadfa45ed69d738c64e78b9-1696910291

Fundies have five demands for the Virgin Australia float

Virgin Australia’s IPO isn’t going to happen until the new calendar year, but local investors already have their Christmas wish-lists ready.

www.afr.com

"Fourth, they want Virgin’s financial sponsors at Bain Capital to be locked up in the stock for a period of time."

-----------------------------------------------------------------------------------------------------------------------------------------------------------------

Virgin Newsroom link : Virgin Australia returns to profitability in FY23, transformation plan well underway

“Virgin Australia is now in a very strong capital position, with total debt including leases now $2.3 billion and over $1bn of cash on balance sheet, providing the platform for future investment in transformation and growth. Our transformation plan is well underway and has set up the business for the future.”

 

[Harrison_133]

Behind a paywall.....

Non-paywalled:

Virgin Australia turns a profit for the first time in 11 years

Virgin has reported underlying profits of $129.1 million and a 124 per cent improvement in revenue to $5 billion.

www.smh.com.au

 

[RooFlyer]

"Fourth, they want Virgin’s financial sponsors at Bain Capital to be locked up in the stock for a period of time."

After Myer, you'd hope so!

The next one (from the AFR article, linked above) probably goes under the label of "well, they would say that, wouldn't they?"

And finally, all of them demand Virgin shares be priced at a deep discount to Qantas.

To that end, the last few weeks’ trading might actually help to convince shareholders they are getting a bargain by piling into the Virgin float if it happens soon.

Qantas shares have tanked by 25 per cent since the airline’s former chief executive Alan Joyce sold 2.5 million of his shares on June 1 for $6.75 a share, earning himself $16.975 million.

The share sale came two days after Qantas promised investors it would keep on growing its margins in a supercharged fare environment and amid historically low levels of competition in the international market, as airlines globally struggle to bring planes back to the sky.

The current Qantas PE seems to be around 5, from the site linked below (seems to be typical of sites that came up). They want a deep discount on that?

Qantas Airways PE Ratio

In depth view into Qantas Airways PE Ratio including historical data from 2000, charts and stats.

ycharts.com

 

[HS-TQE]

Seems Virgin Australia still has a number of issues for Bain to work through before considering a "IPO in 2024".

Don't want to get some 'own goals' again (on top of the issues outside their control) after the "The IPO will be in 2023" claim.

Virgin profit ‘tainted’ by workplace issues, says TWU

The union’s national secretary, Michael Kaine, said the patience of Virgin staff currently involved in enterprise bargaining with the carrier is running out and that pilots are jumping ship for higher-paying jobs overseas while cabin and ground crews are taking on second jobs.

australianaviation.com.au

 

[MooTime]

Seems Virgin Australia still has a number of issues for Bain to work through before considering a "IPO in 2024".

Don't want to get some 'own goals' again (on top of the issues outside their control) after the "The IPO will be in 2023" claim.

Virgin profit ‘tainted’ by workplace issues, says TWU

The union’s national secretary, Michael Kaine, said the patience of Virgin staff currently involved in enterprise bargaining with the carrier is running out and that pilots are jumping ship for higher-paying jobs overseas while cabin and ground crews are taking on second jobs.

australianaviation.com.au

Surely this info publicity does damage in a way potential investors can see thru the Broadway IPO show.

Just pay the employees fairly, give them a pay increase then you can answer these critics with, but we just increased their pay, we believe we are fair blah blah.

Same applies for the other mob, although that's a dead set losing battle.

 

[Must...Fly!]

Surely this info publicity does damage in a way potential investors can see thru the Broadway IPO show.

Just pay the employees fairly, give them a pay increase then you can answer these critics with, but we just increased their pay, we believe we are fair blah blah.

Same applies for the other mob, although that's a dead set losing battle.

Anyone who is getting a "roadshow" visit knows all the issues beforehand anyway.

VA management have to keep the cost base down in order to protect their margins and future profitability.

Also, a reality check...

They are the ONLY airline to employ their own customer service and ramp staff at major ports in this country.

 

[eastwest101]

Will be interesting to see how they go. I think they have missed their brief window myself.

All the macro's are going against them now, from interest rates, the cost of money, labour costs and shortages, loss of access to the Alliance fleet, exchange rates falling, discretionary spending and falling demand, cost of fuel, tight new and used aircraft market, stabilization of competitors (Qantas, Jetstar looking to exert their market power and even maybe Rex and Bonza surviving). Some don't realize it yet but the pilot shortage has been exacerbated by Covid retirements and all airlines worldwide are going to be scrambling for experienced pilots as more airlines bring on many more smaller aircraft, and larger aircraft sizes retire (e.g. A380 & B747 fleets) so they are all going to be losing economy of scale with overheads and competing with another for crew. Remember - many remaining staff took a major haircut to save Virgin and save their own jobs and there is a limited amount of time that this is sustainable.

If they couldn't make money post covid with low capacity and high demand, then they were never going to make money, with high demand, Qantas lighting an exploding cigar on the PR front, they have had an opportunity to try to take market share off Qantas but probably haven't had the tools/equipment/people to do so.

 

[bernardblack]

Do investors take unions' ambit claims at face value, though?

Absolutely it's possible some of the stuff the union wants might be reasonable, but it seems like if you're considering becoming a shareholder, you probably don't want the company conceding everything the union asks for.

 

[Bagpuss]

Will be interesting to see how they go. I think they have missed their brief window myself.

"Brief window"? In my opinion the commentary about imminent IPO's came from this site amongst others and the media.

Virgin Australia says “no pressure” for IPO after January announcement

Virgin boss Hrdlicka said economic headwinds still dictated the direction of travel for Virgin Australia and there is no rush to its IPO.

www.airport-technology.com

This weekend Virgin Australia’s CEO Jayne Hrdlicka said the company was in “no rush” to begin its initial public offering (IPO) despite the airline announcing its intention at the start of the year.