Keep Virgin Australia in the Skies

[hydrabyss]

It was only a matter of time before the Government needed to guarantee a domestic network after reading stories from people not being able to get home after leaving quarantine as one example of the need of this service.

https://www.executivetraveller.com/news/govt-set-to-subsidise-domestic-flights-by-qantas-virgin-australia

 

[aurelia]

I won't be signing, and here is why, there are multiple Australian small business operators out there that due to what they do, while affected by COVID-19 restrictions, they fall through the cracks. Until that can be addressed, there is no way I could support an airline that is majority overseas owned be propped up with Australian tax payers money. It has been documented that Virgin Australia has had management issues for many years, and there is no guarantee that a bail out would fix this root cause of its problems.

 

[Jeffrey O'Neill]

My perception is virgin has been run by foreign airlines as a feeder to their international routes, limiting virgin's ability to make economically rational choices.

I'd also highlight the many years of losses that virgin has racked up. Keeping a loss making tiger running long after the brand should have been axed.

If we are going to load even more debt onto the govt then at a minimum all senior management should be sacked. The foreign control should be removed.

I do question if virgin can ever be made profitable. Maybe under better management. Virgin definitely needs to get a better international strategy.

If QF becomes a monopoly then maybe the ACCC needs to be given powers to limit QFs pricing power.

 

[Mattg]

I won't be signing, and here is why, there are multiple Australian small business operators out there that due to what they do, while affected by COVID-19 restrictions, they fall through the cracks. Until that can be addressed, there is no way I could support an airline that is majority overseas owned be propped up with Australian tax payers money. It has been documented that Virgin Australia has had management issues for many years, and there is no guarantee that a bail out would fix this root cause of its problems.

How many of those Australian businesses, particularly in the tourism industry, would be worse off though if we didn't have a competitive airline industry to support tourism and enable domestic air travel?

 

[serfty]

. Until that can be addressed, there is no way I could support an airline that is majority overseas owned be propped up with Australian tax payers money

What about their 10,000+ employees and the annual $5B+ revenue they contribute to the economy?

 

[smittykittyflying]

I have signed the petition but we all know here on AFF that VA has been very poorly run for a very long time so I do dispute some of the statements in the petition like the clearly PR sanitised wording of 'Beyond our door the obsession is customer service' - great PR words but actions in this area clearly demonstrate this isn't really the obsession... Pity couldn't be less 'marketing' and more from the heart.

SO have signed, and shared and I sincerely hope both VA and QF get through this.

I totally agree, I hope they survive but the lack of customer service and support shown over the last few weeks will have me seriously reviewing my travel habits when we can fly again. I have had multiple flights effected by the COVID issue and have had customer service agents that are either uneducated about the flexibility of fares or are lying in the hope customers don’t understand the fare rules.

 

[Lynnelanne]

I would sign, because I believe that Qantas will not do any of us any favours if they are left with no competition. However, to the best of my knowledge, Change.org petitions are useless. You need to use the accepted government format to petition the government, as per the Federal government website at:

Petitions

Petitions

www.aph.gov.au

 

[dajop]

My perception is virgin has been run by foreign airlines as a feeder to their international routes, limiting virgin's ability to make economically rational choices.

I think the real problems is that each of the foreign airlines have a different purpose for investing in VA. Too many investors with unaligned objectives.

For example SQ, doesn't really need much "feed" as such from the domestic network (as in connecting passengers), as it has (had) comprehensive coverage of most of Australia - with at leat 4x daily to BNE, MEL, PER & SYD and daily (or almost daily) to CBR, ADL, CNS & DRW (plus a group service, by Scoot, to OOL thrown in for good measure). But what it needed was "handcuffs" (i.e. the domestic road warriors automatically choosing SQ for the Asia/Europe travel), in the same way that QF has handcuffs for its domestic road warriors to choose QFi. EY, probably this also, plus some good domestic feed, as it's network is more limited. Chinese carriers, more about feed from their traffic to Australia than the other way around. NZ originally, feed as well, although their vision was probably the most commercially astute for the carrier, but were unable to persuade the eclectic mix of investors to support their vision.

Virgin has been making profits in both it's domestic and Velocity divisions - it has been Tiger and International, that in recent times, have been really racking up the losses.

 

[pauly7]

I wonder if people actually care to what point the government will go to to preserve a second player in any industry severely impacted by the Coronavirus. Is it survival at any cost?

A survival scenario for VA for example could be that if their foreign state government backed / billionaire business owners can’t cough up $ and they do go into voluntary administration - the AU government could step in and fund the QF group to operate VA (keep the lights on) for a period of time until a new capitalisation / sale was organised and they could be spun off.

One could argue QF are in the best place to do this rather than some administrator who doesn’t know what they are doing and a management team at VA with precious few runs on the board (though PS seems to have some common sense - just not enough time or money to execute anything before corona hit).

I don’t think anyone really wants to see our government owning any part of VA (or QF for that matter) and the above approach if structured correctly could be much cheaper and less labour intensive for the government than getting involved directly which would be a mess.

 

[samh004]

So what if VA is majority foreign owned? That's the way of the world now isn't it. If people in the government don't like domestic airlines to be majority foreign owned then they should have never allowed it in the first place. The liberal party are neo-liberal right? Rumors have it that some in the federal government want to make room for another airline. What business in this current climate would want to take up that opportunity? Furthermore, it will be a foreign owned airline, understand the stupidity?

If it's the way of the world (I don't have a problem with it personally) then the playing field should be level and Qantas should be able to do the same, after all, they're not the national carrier, right? We don't have one of those anymore as the government doesn't own an airline. They should have no issues treating both airlines the same... not that foreign ownership has done VA much good, of course.

There will be a period of time in this country (maybe a year) where we will only be able to travel domestically and we need all the airlines we can to help the failing local tourism sector blossom again.

That is assuming there is enough demand to sustain all those airlines. It would be nice if travel just went straight back to the level it was previously, but many have lost jobs, lost savings and probably been screwed over in some way or another by a travel company. They're not going to be as eager as the members on this website to just start spending again. With less spending on travel it will be hard to sustain them both.

International travel will be redefined in the next 12 months and we can either support our national airlines - or we can fly everyone else and watch these two duke it out to the death.

Which is exactly the point... will there be a market immediately or in the short to medium term for two Australian major players? Even if there is, if the public chooses the cheapest options (historically overseas airlines) then neither airline will be able to survive very long and the loan/bailout will be for nothing as they both collapse.

What about ... the annual $5B+ revenue they contribute to the economy?

I imagine even if they are bailed out now it's going to be far less than that for the next few years...

NZ originally, feed as well, although their vision was probably the most commercially astute for the carrier, but were unable to persuade the eclectic mix of investors to support their vision.

I thought the NZ vision initially was to kill off Pacific Blue as it was the third player in the NZ market and starting to hurt NZ as fares were dragged lower.

 

[33kft]

I would sign, because I believe that Qantas will not do any of us any favours if they are left with no competition. However, to the best of my knowledge, Change.org petitions are useless. You need to use the accepted government format to petition the government, as per the Federal government website at:

Yes. All the creator of the petition has done is emailed it to the PM's email address. This is not going to go anywhere. They need to ensure that the relevant minister is actually aware of it at very minimum, and that involves more effort than just sending a link to their aph email address. It has been a waste of everyone's time, frankly.

 

[11sjw]

If taxpayer money goes into either airline I'd like it to be in exchange for equity.

 

[dajop]

If taxpayer money goes into either airline I'd like it to be in exchange for equity.

There's several ways money to go into either airline:

1. Underwriting air services to maintain limited connectivity across Australia (i.e. government paying for air services)
2. Jobkeeper allowances
3. Loans
4. Direct injections of cash

I think 1) and 2) don't need to be in exchange for equity. 1) is just paying for operations, like a charter and 2) is what many businesses are getting - and is going to employees anyway. For 3) Equity comes if loans are not serviced - but one could argue that then the equity is worthless anyway if they can't service the loan 4) I don't think anyone is suggesting this.

 

[Rembrandt]

Virgin has been making profits in both it's domestic and Velocity divisions - it has been Tiger and International, that in recent times, have been really racking up the losses.

So it looks Tiger is no more. However, I wonder if VA will morph into more of a no thrills airline somewhere between Qantas and Jetstar. Similar to Virgin Blue.
I also wonder if they will cut international all together and concentrate on what was the profitable domestic market.

I clearly don't know what the VA executive team know. However, considering the world wide tourism market and lack of money from the general public it would make sense to turn VA into a domestic only airline with a more no thrills service.

 

[chali]

Give VA the $1.4B loan and hold parent companies' shares as security. 5% from each company would be worth more than $1.4B. If VA goes bankrupt in 3 years, australian taxpayers are still covered. Dunno if such a deal is possible and those foreign companies would never agree to it.

 

[33kft]

If VA goes bankrupt in 3 years, australian taxpayers are still covered.

The state of some of those parent companies (especially Etihad and HNA) are not much of a better prospect than being saddled with VA shares at the end of this. At least we'd have a chance of perhaps 2 out of 4 being solvent, but it is largely academic as it's the Australian government that needs VA to remain solvent more than they do. Imagine SIA handing out 1/10 of the equity that the Singaporean sovereign wealth fund holds to save one lower cap failing investment. Now is a great time to write down a bad investment, with governments pumping billions into airlines to keep them afloat.

 

[Bagpuss]

Give VA the $1.4B loan and hold parent companies' shares as security. 5% from each company would be worth more than $1.4B. If VA goes bankrupt in 3 years, australian taxpayers are still covered. Dunno if such a deal is possible and those foreign companies would never agree to it.

To illustrate the value of Virgin Australia: If you bought all of Virgin Australia shares today so you owned the company 100% it would cost you $648 million.

VAH share price and company information for ASX:VAH

View today’s VAH share price, options, bonds, hybrids and warrants. View announcements, advanced pricing charts, trading status, fundamentals, dividend information, peer analysis and key company information.

www.asx.com.au

That $648m also means that you are taking on all the company’s liabilities and assets whilst still being an unsecured creditor of the company.

You probably wouldn’t get much value from HNA Group who are “bankrupt“.

The issue with Virgin Australia is it was in poor financial shape prior to covid. I used to defend them a fair bit always pointing their $1bn in the bank. Cash is king, but not great in you are raking up more debts and no/little source of income.

I’m pretty sure if Virgin can’t pay it’s known payments over a timeframe which I think is a month you are trading insolvent and that’s a big no-no.

Also, what Hong Kong did I think is the right approach: Hong Kong Supports Cathay Pacific With HK$1 Million Per Plane - Simple Flying

 

[lwcarden]

I love Virgin and they kill QANTAS and Jetstar for service, availability and comfortable seating especially when you are disabled!! We have to support them!

 

[oz_mark]

Seems to me that the only argument people have for not supporting Virgin is their foreign ownership. But the only reason Qantas is not foreign owned is a legal restriction. Without that, they'd have long gone into foreign ownership.

As for Virgin, I am pretty sure that they were largely casting around for what sort of support may be available - and I am sure (or at least would hope), that their CEO is talking to multiple parties trying to find what options that have available. There'd be far more going on behind the scenes than we'll ever know.

On balance, I think we are better off trying to find a way to keep Virgin in the sky - whatever the model for doing that ends up being.

 

[jase05]

Seems to me that the only argument people have for not supporting Virgin is their foreign ownership. But the only reason Qantas is not foreign owned is a legal restriction. Without that, they'd have long gone into foreign ownership.

As for Virgin, I am pretty sure that they were largely casting around for what sort of support may be available - and I am sure (or at least would hope), that their CEO is talking to multiple parties trying to find what options that have available. There'd be far more going on behind the scenes than we'll ever know.

On balance, I think we are better off trying to find a way to keep Virgin in the sky - whatever the model for doing that ends up being.

QF are currently about 35% foreign owned by my understanding and AJ wanted legal restrictions preventing foreign ownership lifted didn’t he?