The story with Velocity seems much better than many posts are thinking above.
The loan is described as a 'secured loan' and the Velocity business model has been generating consistent profits since early on. 9 to 10 million relatively active members tied into it throught flying, Coles Group, Amex, ANZ etc etc - is a bankable business with huge 'big data' opportunities.
VA owns roughly half their fleet and it is likely the Velocity loan could be secured against a portfolio of planes - hopefully the B777s ideally. The debt holders (bond holders really) who funded VA's buy back of the share of Velocity, they sold off a few years earlier, are unsecured - so VFF members are way ahead of them in the queue. A week or so prior to the move to administration those bonds traded as low as 34 cents per $1.00 face value. Now they're probably value at 0.5 cents I'd wager.
Compared to them, we're laughing!
The delays for shipping ANYTHING are widely publicised and I would not put it past many of the 'suppliers' to have a go slow on shipping to help their own cash flow situation perhaps. A bit like a Q 'enhancement'?
As to how safe QFF points are, well, typically Q's revenue split is 52 to 53% international and 48-47% domestic. Until a vaccine is proven (this time may be different BUT there's never been a successful & safe corona virus vaccine) then hard to see international travel resuming in any meaningful way in any direction (NZ possibly excluded but volumes...).
Also Q has an older fleet = much higher maintenance costs even when aircraft are sitting idle. Q cashed out their terminal leases to raise $1.4bn which was used to part fund their over 30% share buy-back since 2014. Q's balance sheet does not have cash/liquid securities/short term assets to cover their QFF liabilities and their pre-sold tickets. Short by a billion or two.... Which is why back in March Q began restricting QFF redemptions.
Meanwhile Q has pretty high overheads that remain, AJ & co don't come cheap, nor do their call centre costs which have spiked dramatically.
Q's earnings per share have been going backwards for a couple of years (adjusted for the buy back effect) DESPITE the last sales of their terminal leases (and booking >$100mn profits) as well as writing back the unrealised loss they'd recorded against a listed travel agent they owned a swag of. Currently looking at about 60% additional loss since they took that as 'earnings' in their 2018/19 financial year.
All up - interesting times.
One thing for sure, Q has massive staff liabilities that make VA's seem minor in comparison due to the avg tenure of Q staff. Valuing a company as a going concern is very different to valuing it on an administration or liquidation basis. The age of Q's fleet and the albatross effect of the A380s (secondary market value not far from EUR 20-30m each AFTER repainting to remove all signage/colour scheme now for 10yr+ planes 'parted out' with no buyers for the parts) - will put a lot of pressure on the external auditors and the 2019/20 Annual Report sign-off.
CV has changed the future irrevocably.
The loan is described as a 'secured loan' and the Velocity business model has been generating consistent profits since early on. 9 to 10 million relatively active members tied into it throught flying, Coles Group, Amex, ANZ etc etc - is a bankable business with huge 'big data' opportunities.
VA owns roughly half their fleet and it is likely the Velocity loan could be secured against a portfolio of planes - hopefully the B777s ideally. The debt holders (bond holders really) who funded VA's buy back of the share of Velocity, they sold off a few years earlier, are unsecured - so VFF members are way ahead of them in the queue. A week or so prior to the move to administration those bonds traded as low as 34 cents per $1.00 face value. Now they're probably value at 0.5 cents I'd wager.
Compared to them, we're laughing!
The delays for shipping ANYTHING are widely publicised and I would not put it past many of the 'suppliers' to have a go slow on shipping to help their own cash flow situation perhaps. A bit like a Q 'enhancement'?
As to how safe QFF points are, well, typically Q's revenue split is 52 to 53% international and 48-47% domestic. Until a vaccine is proven (this time may be different BUT there's never been a successful & safe corona virus vaccine) then hard to see international travel resuming in any meaningful way in any direction (NZ possibly excluded but volumes...).
Also Q has an older fleet = much higher maintenance costs even when aircraft are sitting idle. Q cashed out their terminal leases to raise $1.4bn which was used to part fund their over 30% share buy-back since 2014. Q's balance sheet does not have cash/liquid securities/short term assets to cover their QFF liabilities and their pre-sold tickets. Short by a billion or two.... Which is why back in March Q began restricting QFF redemptions.
Meanwhile Q has pretty high overheads that remain, AJ & co don't come cheap, nor do their call centre costs which have spiked dramatically.
Q's earnings per share have been going backwards for a couple of years (adjusted for the buy back effect) DESPITE the last sales of their terminal leases (and booking >$100mn profits) as well as writing back the unrealised loss they'd recorded against a listed travel agent they owned a swag of. Currently looking at about 60% additional loss since they took that as 'earnings' in their 2018/19 financial year.
All up - interesting times.
One thing for sure, Q has massive staff liabilities that make VA's seem minor in comparison due to the avg tenure of Q staff. Valuing a company as a going concern is very different to valuing it on an administration or liquidation basis. The age of Q's fleet and the albatross effect of the A380s (secondary market value not far from EUR 20-30m each AFTER repainting to remove all signage/colour scheme now for 10yr+ planes 'parted out' with no buyers for the parts) - will put a lot of pressure on the external auditors and the 2019/20 Annual Report sign-off.
CV has changed the future irrevocably.
