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Bain Capital takes Control of Virgin Australia

kamchatsky

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VA should look at providing the following instant noodles in their domestic J so that they can provide Michelin Star meals in the air:


 

moa999

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The Instagram post may work with the Millennial/meme generation.
But I suspect the opposite reaction amongst the majority who fly up the front

Remember those 8 seats up front can probably deliver the equivalent income of 40-50 down back.

I reckon this may well become a case study in how to screw up a brand before you even take ownership.
 

jakeseven7

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The Instagram post may work with the Millennial/meme generation.
But I suspect the opposite reaction amongst the majority who fly up the front

Remember those 8 seats up front can probably deliver the equivalent income of 40-50 down back.

I reckon this may well become a case study in how to screw up a brand before you even take ownership.

It’s probably targeted at their new ‘value’ customer base they are repositioning too.
 

jakeseven7

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Not unsurprising and they did oversee a very poorly run business, why bother to keep any...

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Virgin Australia’s board wiped clean with mass resignations

Nine members of Virgin Australia’s board, including chairperson Elizabeth Bryan, have tendered or indicated their resignations, while the airline finalises a sale to Bain Capital.

Bryan and five others – Trevor Bourne, Kenneth Dean, Allan Houston, Judith Swales, and Marvin Tan – have resigned as the company’s directors effective 20 October, the company said today in a disclosure to the Australian Securities Exchange.

“Accordingly, so as to ensure that reconstitution of the board takes effect immediately, the deed administrators have exercised their powers to replace those directors who cease to hold office as a director on today’s date,” Virgin Australia states.

The airline’s website indicates the company had 11 board members, including outgoing chief executive Paul Scurrah and non-executive director Warwick Negus, as Bain continues its clean out of senior Virgin management.

 

AustraliaPoochie

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I am just biding the time to see what "rabbits" they will bring out of their hats, when they start their blurb on encouraging us to return to flying with them, "under new management" indeed.
Guess they would at this point in time, not as yet have access to the membership list of the (...ir) VFF system.
 

Melburnian1

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I am just biding the time to see what "rabbits" they will bring out of their hats, when they start their blurb on encouraging us to return to flying with them, "under new management" indeed.
Guess they would at this point in time, not as yet have access to the membership list of the (...ir) VFF system.

Once all the publicly listed shares (last valued IIRC at 8.6 cents each) are declared worthless and transferred to Bain, it may have the access you speak of.
 

HS-TQE

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Not unsurprising and they did oversee a very poorly run business, why bother to keep any...

——
Virgin Australia’s board wiped clean with mass resignations

Nine members of Virgin Australia’s board, including chairperson Elizabeth Bryan, have tendered or indicated their resignations, while the airline finalises a sale to Bain Capital.

Bryan and five others – Trevor Bourne, Kenneth Dean, Allan Houston, Judith Swales, and Marvin Tan – have resigned as the company’s directors effective 20 October, the company said today in a disclosure to the Australian Securities Exchange.

Not really surprising, most of them oversaw the entire Borghetti era, especially when SQ and EY spurred Borghetti on rather than be responsible shareholders.

As for Bryan, it was best for her to move on IMO. Doing the blame game on TV and not having the fortitude to tell JB and the shareholders on how the company was being run into the ground also contributed to VA's current situation. It's no wonder that former NZ CEO Luxon wanted out of VA when he had the chance.
 

jakeseven7

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Not really surprising, most of them oversaw the entire Borghetti era, especially when SQ and EY spurred Borghetti on rather than be responsible shareholders.

As for Bryan, it was best for her to move on IMO. Doing the blame game on TV and not having the fortitude to tell JB and the shareholders on how the company was being run into the ground also contributed to VA's current situation. It's no wonder that former NZ CEO Luxon wanted out of VA when he had the chance.

Agree the board and chairperson appeared to be a waste of space anyway. And yes they didn’t cover themselves in glory when they came out and said ‘oh yes we knew it was a terrible business but we just didn’t do much about it for a few years’ on 4corners. That was a train wreck.
 

antycbr

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Agree the board and chairperson appeared to be a waste of space anyway. And yes they didn’t cover themselves in glory when they came out and said ‘oh yes we knew it was a terrible business but we just didn’t do much about it for a few years’ on 4corners. That was a train wreck.
It was a terrible business that suited their purpose as a feeder to their networks (NZ, SQ, EY). The rot set in more so when the cash started to run out and Hainan and Nanshan came on board, which confused the strategy even more. NZ wanted an exit from transpac and all passengers hubbed through AKL, which I actually think would have made sense and kept VA profitable on shorthaul. No 777s and A330s would have saved hundreds of millions of dollars in losses.

Taking the company private will allow Bain to drive the outcomes they want with minimal transparency, and save the costs of being a publicly listed company.
 
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HS-TQE

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It was a terrible business that suited their purpose as a feeder to their networks (NZ, SQ, EY). The rot set in more so when the cash started to run out and Hainan and Nanshan came on board, which confused the strategy even more. NZ wanted an exit from transpac and all passengers hubbed through AKL, which I actually think would have made sense and kept VA profitable on shorthaul. No 777s and A330s would have saved hundreds of millions of dollars in losses.

Taking the company private will allow Bain to drive the outcomes they want with minimal transparency, and save the costs of being a publicly listed company.

Nanshan and HNA came onboard after NZ's exit. NZ's stake was sold to Nanshan, whereas HNA was through issuing of new shares for a 13% stake.

Luxon/NZ should've had the fortitude to initiate a takeover had they wanted to implement their proposal, considering they were the "third wheel" and was clearly not getting along with the other VA shareholders (as reported in the media with NZ getting outvoted by the other shareholders when the alleged no confidence vote against JB was being cast). However all of that would be moot when NZ's own board and shareholders (including the NZ government) doesn't have the funds to take over VA
 

jakeseven7

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I am just biding the time to see what "rabbits" they will bring out of their hats, when they start their blurb on encouraging us to return to flying with them, "under new management" indeed.
Guess they would at this point in time, not as yet have access to the membership list of the (...ir) VFF system.

Well they dropped a massive sale with fares between locked border states..... hmmmm.... bit desperate.

Now they’ve gotten rid of all their smaller aircraft they have no choice but to fly their gas guzzlers up against QFLink which is buzzing around regional NSW and QLD especially at least keeping the lights on (dimly...!).
 

mrmerc500

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Well they dropped a massive sale with fares between locked border states..... hmmmm.... bit desperate.

Now they’ve gotten rid of all their smaller aircraft they have no choice but to fly their gas guzzlers up against QFLink which is buzzing around regional NSW and QLD especially at least keeping the lights on (dimly...!).

Agree that it isn’t necessarily right timing, it is very enlightening though to see a good sale for 2021 domestic travel at a time when the PM has confirmed 7/8 borders will be open by Xmas. Also if others are like me, without no travel & more spare time, you get the urge to book travel so VA may of been banking on this recent Government news & various factors that influence one to travel. Also a good way to start writing down those VA credits.

The Sale Fares have been good tough & certainly attracted myself to review the pricing for travel from the West especially just before Easter.

However the News in the West is certainly not encouraging for interstate travel for another 6 months so those cheap flights will bypass us right now.

I do feel tough that VA will end up with more of my cash as I no longer have any velocity points since I transferred to SQ and with an abundance of QF points, the Sale Fares right now are $100 cheaper for us Perth residents to travel East.

I do hope VA survive in one way or another as they’re so important for monopoly or subsidised routes regionally and for the general public, fare pricing is certainly going to be key to create a domestic travel boom with a level of choice.
 

AustraliaPoochie

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Wait till Nov for the keys to change hands before getting too excited, VA2 might still fly, but the small things probably will change.
Who knows what Bain will do with fares.
Re: Getaway and Elevate, Flex and J, reduce it to only one discY subclass, no more econX, one Flex subclass and one J fare subclass.
Maybe no VFF points and VFF SC on Getaway.
No lounge, maybe they will come back, maybe they won't, maybe no entry for the 2 as it was for VFF PS (pleb Silver that is), no ability to buy entry into the lounge as it was able to be done in the past at Aud$65 per casual entry.
I can see a lot of ways that Bain can do to recoup their money, or to not spend any more in "non core activities". ie to get us to buy/pay more for ancillaries.
 

antycbr

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Wait till Nov for the keys to change hands before getting too excited, VA2 might still fly, but the small things probably will change.
Who knows what Bain will do with fares.
Re: Getaway and Elevate, Flex and J, reduce it to only one discY subclass, no more econX, one Flex subclass and one J fare subclass.
Maybe no VFF points and VFF SC on Getaway.
No lounge, maybe they will come back, maybe they won't, maybe no entry for the 2 as it was for VFF PS (pleb Silver that is), no ability to buy entry into the lounge as it was able to be done in the past at Aud$65 per casual entry.
I can see a lot of ways that Bain can do to recoup their money, or to not spend any more in "non core activities". ie to get us to buy/pay more for ancillaries.
I don't think they'll get rid of economyx, as it's basically monetising exit rows for 12 seats down the back. Row 3 can't change while the bulkhead is there as it's a safety issue, and rows 4 and 5 maybe could change but you would struggle to fit an extra row into the aircraft anyway. Given that most flights probably wont be 100% load factor for a while, I don't think it makes sense to change EconX and incur the expense of reconfiguring the aircraft.

No VFF points and SC on Getaway fares would be a big disincentive, I do think they may unbundle and create a light fare below getaway with strict capacity control, with no checked luggage and points/SC. The number of points you earn on a Getaway is pretty inconsequential anyway in the scheme of things.

Lounge membership is a big incentive to keep directing spend to one airline. There may be tweaks around the edges but if you get rid of lounges you gut the value of Velocity.
 

Brissy1

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a lot of ways that Bain can do to recoup their money
Yes, Private Equity do not take over a business in order for it to become a profitable sustainable business per se. It is to take out capital (if any, does VA still own SYD T2?), get in a few good annual accounting "profits" then sell it on that yield (PE) to gullible retail "investors" spruiked by self interested bankers posing as independent advisors who have the ethics of a used car salesman with a gold tooth. I think we all know this. So any speculation on the new business/loyalty/lounges has little to do with what would be best for a sustainable business. Just saying.
 

HS-TQE

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Yes, Private Equity do not take over a business in order for it to become a profitable sustainable business per se. It is to take out capital (if any, does VA still own SYD T2?), get in a few good annual accounting "profits" then sell it on that yield (PE) to gullible retail "investors" spruiked by self interested bankers posing as independent advisors who have the ethics of a used car salesman with a gold tooth. I think we all know this. So any speculation on the new business/loyalty/lounges has little to do with what would be best for a sustainable business. Just saying.

VA (and QF for that matter) doesn't own the terminals in the East Coast capitals. They're leased from the airport authorities in all of those cities.

Overall, VA has very little assets for Bain to "strip", and the owned fleet (737/777s) was already 'stripped' by the previous owners of VA through using them as collateral for bank loans.

Am open to correction in regards to the Airport terminals, but that's from what I undertand.
 

RAM

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VA (and QF for that matter) doesn't own the terminals in the East Coast capitals. They're leased from the airport authorities in all of those cities.

Overall, VA has very little assets for Bain to "strip", and the owned fleet (737/777s) was already 'stripped' by the previous owners of VA through using them as collateral for bank loans.

Am open to correction in regards to the Airport terminals, but that's from what I undertand.
Q has stripped its assets to the bone. Q has not owned terminals or on-airport (or for that matter off airport) land & buildings of any note for years. They even asset-stripped by selling off their remaining long term leases for terminals etc some with only 18 months left to run on them - to raise around $1bn in cash (& paid tax on it to generate franking credits) to fund their buybacks.

Q instantly entered into new long term leases each time they sold.

Does anyone think that Sydney Airport would donate $200m to Q out of the goodness of their heart? Or did Q sign a new long term lease at much higher rates to offset the cash buyout on their remaining term by Sydney Airport? Or Melbourne or Brisbane? Q even sold off Q catering to help fund the Nov 2019 buyback, & did so much tax planning that they have now owe the ATO over $140m (I think figure is) of Franking Debits (looks like Q may have used more Franking credits than they estimated they would have for the Nov 2019 buyback?).

Q's August preliminary final results mention on pg 3 that despite raising > 88 cents per share on issues on June 26th - by June 30th Q's Net Tangible Assets were down to 17 cents per share or less than 5 weeks operating cash losses. Or look at it another way - if Q had not managed to raise the $1.3bn from institutions on June 26th - then Q would have owed > $1bn more than it had tangible assets to pay for it by June 30th ceteris paribus.

VA was similarly indebted & locked into (reportedly) overly expensive leases for its A330s. Now however they're much better placed.

It is worth remembering that VA stated that all the VFF points owed were cash backed in a separate trust vehicle. Q has never mentioned anything about QFF points being cash backed/quarantined like that. Recall that Q restricted QFF redemptions before VA did.

Q has around $2.8bn in outstanding QFF points (at Q's value) as of June 30th & looks to have assumed that ay type of redemption will be at a fraction to the proportion done in the period from later March through to June 30th.
 

jakeseven7

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Yes, Private Equity do not take over a business in order for it to become a profitable sustainable business per se. It is to take out capital (if any, does VA still own SYD T2?), get in a few good annual accounting "profits" then sell it on that yield (PE) to gullible retail "investors" spruiked by self interested bankers posing as independent advisors who have the ethics of a used car salesman with a gold tooth. I think we all know this. So any speculation on the new business/loyalty/lounges has little to do with what would be best for a sustainable business. Just saying.

Yes, they take a business to make it look shiny and nice in a defined period of time (I think the average flip time for PE is 5 years or so?) and they do not care whatsoever what happens after this period of time once they offload it.
 

melb78

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Well I guess last week was PS last week as the CEO of VA and possibly tomorrow or in a few days will be JH in the cockpit. Wish PS all the best in the future
 

oz_mark

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Well I guess last week was PS last week as the CEO of VA and possibly tomorrow or in a few days will be JH in the cockpit. Wish PS all the best in the future

I think he has a couple of weeks to go. The Federal Court hearing re share transfers in on 10 Nov.
 

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