Virgin Australia Financially Secure? [Now in Voluntary Administration]

[antycbr]

About a month or two ago Wesfarmers had a list of potential companies that would fit their requirements for investment and Qantas was on the list but not Virgin as far as I know.

A lot has happened in the last month (to say the least!) VA could be acquired cheaper and probably has more upside than QF at this stage.

 

[p--and--t]

A lot has happened in the last month (to say the least!) VA could be acquired cheaper and probably has more upside than QF at this stage.

Wesfarmers is potentially exactly what VA needs, money, new focused board and PS at the helm disencumbered from the baggage he inherited, helped by linkages to Flybuys, smart marketing & buying team.

 

[odysseus]

Tripe. On both counts.

Virgin was a financial basket case before the corona virus dramas. Were the owners able to tip some cash in? Would Virgin have become financially unviable so quickly if their lead-in position was "better"?

If the owners want to keep THEIR business viable the THEY can stump up the cash required. I'm sick of multi-nationals and, for that matter, Australian businesses, going bust and expecting the tax payer to bail them out.

I don't care if it hands QF a monopoly. If it's financially viable to compete with QF post apocalypse then I'm sure some-one will do so. And I'm equally sure the government of the day will be keen for that to happen.

Just you saying tripe doesn't make it so. But apparently you know more than the financiers who were willing to fund them a few months back. I think I'll go with their assessment over yours.

The rest is a tirade that doesn't even relate. This isn't a business going bankrupt in the normal course of events. This is an exceptional situation that no airline - including Qantas - will sail through. Nor many other businesses. That is why governments around the world are giving handouts, because they are essential to a normal functioning economy. Your comment is so far off the mark - even VA never wanted a bail out, just a loan convertible to equity.

And then your conclusion relies on "hope" aka misplaced confidence in being sure. Good luck with that.

 

[melb78]

He did indicate that would be the new owners decision however....

true true buts its hopeful

 

[Borisdog]

Just you saying tripe doesn't make it so. But apparently you know more than the financiers who were willing to fund them a few months back. I think I'll go with their assessment over yours.

The rest is a tirade that doesn't even relate. This isn't a business going bankrupt in the normal course of events. This is an exceptional situation that no airline - including Qantas - will sail through. Nor many other businesses. That is why governments around the world are giving handouts, because they are essential to a normal functioning economy. Your comment is so far off the mark - even VA never wanted a bail out, just a loan convertible to equity.

And then your conclusion relies on "hope" aka misplaced confidence in being sure. Good luck with that.

Ever thought whether the financiers would have been needed in the first place if the business was being successfully run?

The fact the business is going bankrupt in an abnormal course of events doesn't make it less broke.

My point is the government has considerably better things to tip it's money into, purchasing equity in a business that was teetering well before these events seems a financially stupid use of taxpayer funds when there are many, many other businesses in the country in exactly the same boat. And a lot of them WERE profitable, and competing with each other within their fields.

 

[serfty]

My point is the government has considerably better things to tip it's money into, purchasing equity in a business that was teetering well before these events seems a financially stupid use of taxpayer funds when there are many, many other businesses in the country in exactly the same boat. And a lot of them WERE profitable, and competing with each other within their fields.

If Virgin Australia were to be Liquidated, it could cost the federal Government far more than 1.4B$ being FEGS, JobSeeker, loss of revenue from taxation and other costs when 16K+ people no longer have employment.

 

[jakeseven7]

Branson continues to do more harm than good. Now made it to the satire pages!

LOL!! Man Who Doesn’t Pay Any Tax Asks For Government Bailout — The Shovel

In one of his most hilarious stunts yet, British man Richard Branson has asked the government to bailout his airlines. Branson, who relocated to a private Caribbean island in 2007 in order to avoid paying tax and is famous for his cheeky media pranks, released a hilarious video asking Australian...

theshovel.com.au

 

[travel_bug]

Branson continues to do more harm than good. Now made it to the satire pages!

LOL!! Man Who Doesn’t Pay Any Tax Asks For Government Bailout — The Shovel

In one of his most hilarious stunts yet, British man Richard Branson has asked the government to bailout his airlines. Branson, who relocated to a private Caribbean island in 2007 in order to avoid paying tax and is famous for his cheeky media pranks, released a hilarious video asking Australian...

theshovel.com.au

How did he not see this kind of response coming?
The reason why the Gov could sell the Jobseeker/keeper packages and other small and medium business concessions somewhat easily was due to their inate connection to Australians who have otherwise spent their lives paying tax, who now need help.

Compare that to this, and well, it’s easy work for a satirist

 

[Melburnian1]

How did he not see this kind of response coming?..

While it's bad to generalise and there will be exceptions, many who have loads of money and material wealth can be extremely arrogant.

Plus, as you imply, they do not think as what used to be called the 'middle class' do.

There'd be a lot of 'confirmation bias' in the people with whom billionaires like Branson mix. After all, if one was negative, one wouldn't receive another invite to his functions.

 

[Melburnian1]

If Virgin Australia were to be Liquidated, it could cost the federal Government far more than 1.4B$ being FEGS, JobSeeker loss of revenue from taxation and other costs when 16K+ people no longer have employment.

You're forgetting that with Ansett, the precursor to FEGS was IIRC paid for partly by an air ticket levy, so it'd be travellers including you paying for that. However (also with Ansett) the levy stopped earlier than expected due to the administrators successfully selling assets (or being expected to) that would pay for all the staff-related liabilities.

 

[antycbr]

You're forgetting that with Ansett, the precursor to FEGS was IIRC paid for partly by an air ticket levy, so it'd be travellers including you paying for that. However (also with Ansett) the levy stopped earlier than expected due to the administrators successfully selling assets (or being expected to) that would pay for all the staff-related liabilities.

The Air Ticket levy basically went into consolidated revenue.
(link) - the administrators ended up getting enough cash to pay almost all of the staff benefits without having to draw on the levy funds (link)

The predecessor of FEGS was GEERS which was incredibly controversial (link) .

 

[jakeseven7]

How did he not see this kind of response coming?

His PR manager is probably in lock down...

I'm sure VA is dismayed at him continually popping up, he is being absolutely slayed on social media along with VA in tow. All the other foreign owners have been keeping nice and quiet.

It really doesn't help, the public sentiment is already against a bailout and he is just playing right into the governments hands.

What he should be doing (later, not now) IF he is still an owner of VA, is advocating the AU govt to support the airline industry more, not VA specifically.

 

[clarkkent]

The Virgin Brides: fee-fest time in the Virgin Australia showroom - Michael West

Virgin Australia: 10,000 jobs are on the line, government is dithering and Qantas circles, the spectre of a monopoly in its sights. Bailing out the banks.

www.michaelwest.com.au

The Government has now let these types loose on the scene. Crafty media leaks will now ensue about some amazing rescue deal about to happen. And if a deal occurs and liquidation is averted, whichever party prevails will have its paws out for taxpayer support. Routes will be closed, staff sacked when the Jobseeker teat is sucked dry, and assets will be sold.

And that is the good outcome …

 

[ozstamps]

Not just Virgin being cut loose by Feds - South African Government is happy to see SAA vanish - oddly.

The Era of Airline Buccaneers May Be Ending

Virgin Australia won’t be the last to succumb to the coronavirus crisis. State-owned flag carriers will reassert supremacy.

www.bloomberg.com

 

[antycbr]

Not just Virgin being cut loose by Feds - South African Government is happy to see SAA vanish - oddly.

It's a zombie company and flying is still seen as an indulgence in a country where a significant proportion of the population don't have access to clean drinking water.

The country has a viable private operator in Comair operating Kulula and BA affiliated services, and I believe Airlink which was affiliated, but not owned by SAA is still going to continue. International connectivity will come from the ME3 and others.

SAA has been looted and has far too many staff.

The real zombie company is the electricity monopoly Eskom - they have R387 billion (approx $38bn AUD) in debt and can't keep the lights on with rotational load shedding occurring on a daily basis.

Jacob Zuma has a lot to answer for.

Also that means the end of another VA partner (if VA survives). Expect QF to launch PER-JNB sooner than expected once Covid is resolved.

 

[serfty]

You're forgetting that with Ansett, the precursor to FEGS was IIRC paid for partly by an air ticket levy, so it'd be travellers including you paying for that. However (also with Ansett) the levy stopped earlier than expected due to the administrators successfully selling assets (or being expected to) that would pay for all the staff-related liabilities.

No I hadn't - hence the use of 'could'.

The post was more about the cost of letting VA be Liquidated.

 

[antycbr]

No I hadn't - hence the use of 'could'.

The post was more about the cost of letting VA be Liquidated.

Liabilities are one thing that has a capped figure to pay, Jobseeker is indefinite until the staff find new employment.

 

[Borisdog]

If Virgin Australia were to be Liquidated, it could cost the federal Government far more than 1.4B$ being FEGS, JobSeeker loss of revenue from taxation and other costs when 16K+ people no longer have employment.

Maybe, maybe not.

Its crystal ball stuff in both eventualities on which case will cost us more. Does not change my opinion on whose responsibility it is to bail out Virgin though.

And perhaps the bloke throwing poo at the Aus Govt should shut his gob while he resides in a tax haven.

 

[travel_bug]

Appears that Strawbridge (Deloitte administrator) may be heading in against bond holders as an easy target through use of a DOCA: Virgin Australia chief's revival plan faces intense turbulence

The biggest slice of debt is owed to the most attractive target: bondholders who have poured $1.8bn into the company. Some $700m of these were issued only a few months ago, in November, in a deal organised by Swiss bank UBS and sold to rich Australians through advisory groups Escala Partners and Crestone (the latter of which was formerly an arm of UBS).
...
On Tuesday Guardian Australia asked Strawbridge if he was going to stiff the bondholders because they were ideally placed to wear a loss. “That’s an interesting observation,” he said.

Strawbridge said it was his role to “get the best outcome for all creditors” – but in the same breath pointed out that bondholders rank last when it comes to getting paid.
...
He could do this using a deed of company arrangement, or Doca, where all creditors can be forced to accept a deal if more than 50% of creditors, by number and amount owed, agree.

Cooperation from all or some of the aircraft financiers, trade creditors, ticket-holders, banks and unions, representing workers, might therefore enable Strawbridge to cram a deal down the throats of bondholders.

 

[AustraliaPoochie]

Lets just presuppose, **if** 1.4m of the 10 m VFF members chipped in money ($10), it could work to collect the $1.4b, no?