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

[kookaburra75]

Recently I sat next to a 2nd officer who had been in Mel for 6 monthly simulator check and was going back to Perth. so plenty of time for a chat... I asked him how Bain/VA were doing and he said emphatically they had already (this was mid Dec) made back thr money they outlaid to buy VA.

One cud argue that a 2/O wouldnt necessarily know the company's full financial position, but he said it was a private but acknowledged fact within the company.

That's been out in the open for a while, although you need to know where to look for it.

Virgin Australia shareholder investments to be fully repaid

Bain Capital, the majority owners of Virgin Australia (VA, Brisbane International), will pocket almost all of a AUD730 million Australian dollar (USD489 million) capital return ahead of an anticipated IPO later this year. The amount is roughly equal to what the US private equity firm paid in...

www.ch-aviation.com

 

[HS-TQE]

I did read elsewhere in the social media space that Bain has loans due by May 2025 in regards to employing people to prepare for the the IPO. You would think they'd want to solve the problems that arose (the self inflicted problems, not the ones outside of their control) during the 'epic' failed IPO attempt of 2023.

 

[Saab34]

PE generally hold for around 3 years~, so they are certainly dragging their feet you could say.

If they get a decent offer from someone they will sell out tomorrow. All the talk of ‘long term’ is utter trash. They will sell whatever stake remains when the price permits, or before the place falls apart, which will be someone else’s problem.

Continued uncertainty in the market and investors sitting on their hands, I doubt much will change in a year. Really would look at the back half of this decade, however they won’t hang on that long. Middle East isn’t helping, US election and continued challenges in Russia, things will be bumpy for a while yet.

 

[AustraliaPoochie]

Wonder if Bain will sell to the public in small lots of shares, if they go onto the ASX, or if a different institutional investor will buy say 3 lots of $25% each, seeing that Bain have (I think) said they will keep a smallish %, and RB will keep 5% so to keep his name on the planes.
Maybe the new owner/s will use VA as a tax writeoff for claiming losses.
Would SQ buy into VA again?
Probably some rich ME (middle east) person might buy into it.
Guesstimation here only.
Don't think VA has any requirements for/of 51% of shares must be Aust owned, edit, just found out that the Aust cabitnet as in Parliament, had decided that the 51% Aust owned in shares of QF, is no longer in effect, news article from 2014.

 

[MooTime]

PE generally hold for around 3 years~, so they are certainly dragging their feet you could say.

If they get a decent offer from someone they will sell out tomorrow. All the talk of ‘long term’ is utter trash. They will sell whatever stake remains when the price permits, or before the place falls apart, which will be someone else’s problem.

Continued uncertainty in the market and investors sitting on their hands, I doubt much will change in a year. Really would look at the back half of this decade, however they won’t hang on that long. Middle East isn’t helping, US election and continued challenges in Russia, things will be bumpy for a while yet.

So much negativity your say.... The world is collapsing yeah!

Yet many markets are at record highs, US, here the asx hit record high....
So they're is some sort of investment happening globally.

Yet Airlines are always, ALWAYS tough for investors to get into, tough sector regardless.

 

[elanshin]

So much negativity your say.... The world is collapsing yeah!

Yet many markets are at record highs, US, here the asx hit record high....
So they're is some sort of investment happening globally.

Yet Airlines are always, ALWAYS tough for investors to get into, tough sector regardless.

We're in a funny spot. While Markets sound like they're doing well, thr average joe driving the economy is doing worse and getting squeezed by those record profit making companies.

In terms of investment, i highly doubt lots of investment is happening. Tech had a huge shrink in the last 12-18 months and thats where generally all the wishy washy investment money are at when things are going well hoping to hit the next unicorn or next pyramid scheme to profit off.

I don't think institutions are investing unless its a solid investment right now.

 

[MooTime]

While Markets sound like they're doing well.

I don't think institutions are investing unless its a solid investment right now.

Insto's aren't investing you think!

So it's the mum n dad investors that are taking the bourses to record level's.... Ok.

You say markets sound like they are doing well..... Sorry but as many indices are at record highs, that sorta says markets are doing well.

Really 101 stuff.

Investing in Airlines another matter completely.

 

[AustraliaPoochie]

Maybe people who had their shares, compulsorily taken off them when VA went into VA, might buy in again, or maybe not.
VA could re monetize their new shareholders, if they wanted, by giving a 5% discount on fares for shareholders.
No, I am only just saying this, no backing, but would be nice if shareholders could be given a benefit in the "new" VA3.

 

[MooTime]

Maybe people who had their shares, compulsorily taken off them when VA went into VA, might buy in again, or maybe not.
VA could re monetize their new shareholders, if they wanted, by giving a 5% discount on fares for shareholders.
No, I am only just saying this, no backing, but would be nice if shareholders could be given a benefit in the "new" VA3.

Us AFF's wouldn't buy in for the 5% cos we get that here thru certain channels.

 

[evanb]

Wonder if Bain will sell to the public in small lots of shares, if they go onto the ASX, or if a different institutional investor will buy say 3 lots of $25% each, seeing that Bain have (I think) said they will keep a smallish %, and RB will keep 5% so to keep his name on the planes.
Maybe the new owner/s will use VA as a tax writeoff for claiming losses.
Would SQ buy into VA again?
Probably some rich ME (middle east) person might buy into it.
Guesstimation here only.
Don't think VA has any requirements for/of 51% of shares must be Aust owned, edit, just found out that the Aust cabitnet as in Parliament, had decided that the 51% Aust owned in shares of QF, is no longer in effect, news article from 2014.

Doesn't work like this at all. The moment a shareholder of a listed company in Australia has 5% they have significant power including the ability to force the company to call a shareholders meeting and vote on certain matters, including the removal of directors. Other shareholders are generally put off by having more than one shareholder with more than 5%.

At 10%, a shareholder can block any other shareholder from compulsorily acquiring 100% following a takeover bid. Also, this is also the threshold for a foreign government investor (including foreign government owned airlines) that would be required to seek prior approval from the the government. This is why many Qatar investments in foreign airlines has been limited to 9.9%.

At 20%, the shareholder is required to make a bit for a total takeover. Also generates anotehr govewrnment barrier for a foreign sharholder.

 

[evanb]

Recently I sat next to a 2nd officer who had been in Mel for 6 monthly simulator check and was going back to Perth. so plenty of time for a chat... I asked him how Bain/VA were doing and he said emphatically they had already (this was mid Dec) made back thr money they outlaid to buy VA.

One cud argue that a 2/O wouldnt necessarily know the company's full financial position, but he said it was a private but acknowledged fact within the company.

One needs to seperate two things, the capital investment that Bain made which they have paid back and the liability they took on by guaranteeing debt and other fiscal obligations. If memory serves me correctly, the direct investment (capital injection) was only about a fifth of the liability they took on.

That was a considerable amount of risk that they took on at the time, especially where capital markets were at the time. In 2020, even airlines with solid balance sheets were struggling to leverage them and those that did had to offer deep discounts (e.g. Qantas). Virgin's position meant that they had no collateral and Bain was essentially providing a guarantee in lieu of that.

 

[RAM]

One needs to seperate two things, the capital investment that Bain made which they have paid back and the liability they took on by guaranteeing debt and other fiscal obligations. If memory serves me correctly, the direct investment (capital injection) was only about a fifth of the liability they took on.

That was a considerable amount of risk that they took on at the time, especially where capital markets were at the time. In 2020, even airlines with solid balance sheets were struggling to leverage them and those that did had to offer deep discounts (e.g. Qantas). Virgin's position meant that they had no collateral and Bain was essentially providing a guarantee in lieu of that.

...and I wonder how much of that debt has susbequently been re-financed? Typical modus operandi sees any 'guaranteed' debt re-financed asap with non-recourse debt.

 

[evanb]

...and I wonder how much of that debt has susbequently been re-financed? Typical modus operandi sees any 'guaranteed' debt re-financed asap with non-recourse debt.

Well they have not issued any marketable debt since.

 

[RAM]

Well they have not issued any marketable debt since.

Wouldn't expect them to, more likely play the banks off against each other along these lines:

"We're currently examining our existing and future banking partnerships (Bain that is implied, but only for VA II). At the same time we are restructuring our debt positions and would like to invite you to apply for inclusion in our future panel. As you know our fleet replenishment will create a lot of opportunity for future share of wallet expansion for the successful entrants."

..and just like lemmings, the lending teams will salivate at the thought of meeting their lending targets for the quarter, half year, year. Anyway (as they mostly think/justify to themself) I'll be long gone with my bonus if this blows up.

 

[AustraliaPoochie]

Rare, but lets just presuppose:
No buyer/no interested party.

 

[twinaisle]

There will be new and exciting partnerships announced soon.

 

[twiningb]

Intriguing

 

[bcworld]

The draft decision and interim authorisation for the Air NZ partnership is overdue (planned February).

 

[Must...Fly!]

Virgin Australia records higher revenues, warns of headwinds ahead

The airline’s chief executive, Jayne Hrdlicka, did not provide additional detail about why was leaving the company later this year.

www.afr.com

Revenue up, solid profit, but headwinds for 2H.

 

[AustraliaPoochie]

They do need a buyer, if no takers, well...?
I mean, bravo that Bain bought it, and didnt change anything to a major degree, but what happens if no one buys it?
---

There will be new and exciting partnerships announced soon.

EML going to offer us their version of a Velocity Prepaid Visa/Mastercard?
That would be nice.