Virgin Australia Financially Secure? [Now in Voluntary Administration]

Status
Not open for further replies.
Another one of those SQ fanboys claiming they're VA's "so-called messiah" when there's been plenty of 'fake news' articles in the past 5 years.

This is on top of SQ's mediocre record of managing their investments in Oceania (Air NZ/Ansett debacle, Tiger Airways Australia and now Virgin Australia)
 
Maybe just Durie talking out his rump at The Australian

I'd go with this theory. SQ has reduced capacity by 96%. The extra cash is to sustain their own operations, I doubt it is about injecting cash into VA (or even Vistara, which they own 49% of.)
 
Surely if VA gives a refund to everybody entitled to one it will go broke before even half its customers get their money back.

As somebody who cancelled flights just a couple of days before VA cancelled them anyway, I'd like to see Australia do the same as what Canada did to protect the value of travel credits and employee entitlements, and suspend the requirement for airline refunds.
 
Very sad but there are probably many people who are now jobless and have bills to pay so they need that money back from any holiday/flights etc they have booked.

The optimist in me would like to think this is the case (that is those who are jobless and in need that are instigating litigation to seek refunds). I hope so.

The realist in me, and some digging on FT would suggest that perhaps not, they do seem reasonably well off (although I know it is impossible to tell on a public forum), flying in premium cabins and the same sorts that are very trigger happy for litigation when airlines or travel agents won't honor mistake fares. I hope not.
 
The optimist in me would like to think this is the case (that is those who are jobless and in need that are instigating litigation to seek refunds). I hope so.

The realist in me, and some digging on FT would suggest that perhaps not, they do seem reasonably well off (although I know it is impossible to tell on a public forum), flying in premium cabins and the same sorts that are very trigger happy for litigation when airlines or travel agents won't honor mistake fares. I hope not.
Yes, I’ve got close to a dozen flights booked with VA between now and the end of June, most are ADL-MEL return in J for the two us for football but I’m not interested in chasing it up and will just let things run their course
 
Yes, I’ve got close to a dozen flights booked with VA between now and the end of June, most are ADL-MEL return in J for the two us for football but I’m not interested in chasing it up and will just let things run their course
Good on you.

I understand some are demanding refunds and chargebacks etc but the more that think like you, the more likely it is that VA will not come under significant financial stress.
 
Fin review today just incase anyone couldn't read it, i highlighted the main points

S&P junks Virgin's credit rating, Fitch less harsh

Rating agency S&P Global has junked Virgin Australia's credit rating but rival agency Fitch remains more optimistic, despite a candid admission by the struggling airline its liquidity "could come under pressure quicker than we previously anticipated".

Virgin is upping the pressure on the federal government for more support.

Both agencies downgraded their views on the airline's debt on Friday, just days after Virgin said it would slash domestic capacity by 90 per cent, stand down 8000 staff and ground budget subsidiary Tigerair Australia indefinitely.

"Despite management initiating decisive measures to preserve cash, we nevertheless believe the scale of the COVID-19 exogenous shock has created an immediate and sizeable cash outflow," S&P said.

Cash flow problems aren't unique to the nation's second-largest airline. The virus – which has infected 531,860 and killed 24,072 globally – has thrown world aviation off-course as travel demand freezes amid widespread panic and border restrictions.

Some airlines have collapsed or moved into state hands – such as significant Virgin shareholder HNA Group – while others plead for government support to help outlast the crisis.

Virgin chief Paul Scurrah is ratcheting up the pressure on the federal government – with support from workers groups and Regional Express – to go further than an initial $715 million fee relief package.

S&P's view does not factor in any taxpayer assistance. It admits timely stimulus could lift its rating, yet any potential benefits seen before the crisis in Virgin are beginning to unwind.
"We estimate that up to half of Virgin Australia's operating costs are fixed and that a reduction in variable costs will not offset the collapse in revenue," S&P says.


"In addition, the positive working capital benefit provided by forward bookings and the Velocity Frequent Flyer business is now likely to partially unwind."

S&P settled on a CCC credit rating for the company, adding a 12-month "Creditwatch" asterisk and valuing Virgin's debt at CCC-. Fitch also downgraded its view. Nevertheless, its B- rating is two notches above S&P's.
"The longer the restrictions remain in place, the larger the impact on [Virgin Australia," Fitch said.

It had previously believed Virgin had enough cash to ride out the crisis, though new restrictions on state-based travel and other issues appear to have had a significant impact on this.

"[Virgin's] liquidity could come under pressure quicker than we previously anticipated should the restrictions on travel be longer than three months or demand remains subdued over the longer term, without the airline obtaining additional liquidity over the coming months."


One option open to Virgin Australia is approaching its five significant shareholders – Singapore Airlines, Nanshan, HNA Group, Etihad and Richard Branson's Virgin Group – for capital. Mr Scurrah has so far ruled this out. But the situation may have changed since Singapore Airlines secured $21 billion of funding to survive the crisis on Friday.

Fitch believed the government would come to the aid of Virgin if needed."We believe that the Australian government wants to ensure that Australia has two viable domestic airlines to avoid a monopolistic market," it said. "We believe VAH's infrastructure will ensure its entrenched position and provide barriers to entry, limiting any risk of loss of market share to new or existing competitors as a result of the current travel restrictions
 
i had a glance of a article in the Australian about SQ got a huge bailout and it say that SQ my buy VA i could not read all as im not a member. if it is true this would be the best time to take over what u guys think
 
i had a glance of a article in the Australian about SQ got a huge bailout and it say that SQ my buy VA i could not read all as im not a member. if it is true this would be the best time to take over what u guys think

99% unlikely. There's been numerous "SQ to take over VA" articles over the past 5 years and in all cases they've all been "fake news".

SQ's bailout money is likely to be used by SQ to keep themselves and their subsidiaries afloat as they're losing plenty of money each day due to C-19.

SQ's investments in VA (20%) and Vistara India (49%), which were money losing before the C-19 crisis, would be the last of SQ's worries right now.
 
The Frequent Flyer Concierge team takes the hard work out of finding reward seat availability. Using their expert knowledge and specialised tools, they'll help you book a great trip that maximises the value for your points.

AFF Supporters can remove this and all advertisements

99% unlikely. There's been numerous "SQ to take over VA" articles over the past 5 years and in all cases they've all been "fake news".

SQ's bailout money is likely to be used by SQ to keep themselves and their subsidiaries afloat as they're losing plenty of money each day due to C-19.

SQ's investments in VA (20%) and Vistara India (49%), which were money losing before the C-19 crisis, would be the last of SQ's worries right now.
Agreed, don’t see this coming into fruition.
Will be interesting to see what happens to HNA’s stake and who gets it when the pie is carved up.
 
i total agree there there has been so many reports it would interesting who would bu HNA stake
 
i total agree there there has been so many reports it would interesting who would bu HNA stake
What if the government took it? The Chinese might be pleased to have nothing to do with it at all.

Instead of having to dilute to give the government equity it could be a potentially neat solution.
 
Not to be alarmist, but I logged into my Bloomberg to check headlines on Virgin and VA is 7th most at risk in the list of global airlines to go bankrupt based on the Altman Z score approach to identify future insolvency. One key assumption here is no government intervention.

VA is just behind the illustrious, debt-laiden likes of Pakistan International Airlines, NOK Air, PNG Air and Spicejet with other household names of Air Asia Indonesia and Kenya Airways.

The Z-score involves five variables measuring liquidity, solvency, profitability, leverage and recent performance. The model initially had accuracy rates of over 95% in predicting bankruptcies, but has come down to between 80% and 90% based on a year before insolvency, Altman said in a 2018 interview
 
Not to be alarmist, but I logged into my Bloomberg to check headlines on Virgin and VA is 7th most at risk in the list of global airlines to go bankrupt based on the Altman Z score approach to identify future insolvency. One key assumption here is no government intervention.

VA is just behind the illustrious, debt-laiden likes of Pakistan International Airlines, NOK Air, PNG Air and Spicejet with other household names of Air Asia Indonesia and Kenya Airways.

The Z-score involves five variables measuring liquidity, solvency, profitability, leverage and recent performance. The model initially had accuracy rates of over 95% in predicting bankruptcies, but has come down to between 80% and 90% based on a year before insolvency, Altman said in a 2018 interview

The government announced help for regional airlines today. When asked regarding the majors the response was they would continue to work with them. How far they will go is anybody's guess.
 
VANZ's Crew Bases closure confirmed. Unclear if VA will return to NZ with Australian Based Crews.

IMO, I'd give it a 95% chance of VA pulling out of NZ for good. 5% chance of VA resuming only AKL.

Source: Virgin Australia hasn't decided whether it will resume flights to New Zealand

Once NZ withdrew their partnership it was only a matter of time before we saw serious rationalisation from VA on TT.
I’m not even sure they made much money even when they had NZ support.

I agree I would not be surprised to see a long, if not indefinite pause on TT routes for VA.

Who knows, could even open the door again for another NZ partnership. Let’s face it NZ and QF are frenemies at best and if VA pulled out of TT they are zero threat to NZ.
 
Sponsored Post

Struggling to use your Frequent Flyer Points?

Frequent Flyer Concierge takes the hard work out of finding award availability and redeeming your frequent flyer or credit card points for flights.

Using their expert knowledge and specialised tools, the Frequent Flyer Concierge team at Frequent Flyer Concierge will help you book a great trip that maximises the value for your points.

i total agree there there has been so many reports it would interesting who would bu HNA stake

VAH shares now at 7.2c, want to pass the hat around on AFF? Own a stake in your own airline - perks include The Club membership with anytime access (no boarding pass required), free J upgrades and free onboard snacks.
 
I hope that Virgin, Qantas and Rex each get a bailout but with the government getting a third of the voting capital so that there is no more grand payments to executives .......
 
Status
Not open for further replies.

Enhance your AFF viewing experience!!

From just $6 we'll remove all advertisements so that you can enjoy a cleaner and uninterupted viewing experience.

And you'll be supporting us so that we can continue to provide this valuable resource :)


Sample AFF with no advertisements? More..
Back
Top