Virgin Australia Financially Secure? [Now in Voluntary Administration] | Page 49 | Australian Frequent Flyer
Australian Frequent Flyer

Welcome to Australia's leading independent Frequent Flyer and Travel Resource since 1998!
Our site contains tons of information that will improve your travel experience.

Joining AFF is fast, simple & absolutely free - register now and take immediate advantage of these great BENEFITS.

Once registered, this box will disappear. And you will see fewer advertisements :)

Login Now to remove this and all advertisements (GOLD and SILVER members)
Not a member? Register Now for free

Virgin Australia Financially Secure? [Now in Voluntary Administration]

Doctore1003

Member
Joined
Jul 27, 2015
Messages
478
Stuff Ryanair. This could be SQ's golden chance to own a domestic carrier that ties into the Star Alliance network. Maybe not by taking over Virgin but rather waiting for it to collapse and maybe buying some key assets. It's what we've all been waiting for!
 

Must...Fly!

Established Member
Joined
Jan 12, 2010
Messages
3,834
Qantas
Bronze
Virgin
Platinum
Don't fall for the trap - one poorly managed business does not mean all businesses are in the same predicament. There are planty of people / businesses chock - full of cash.

Take a look at this. Jeez, if the thing falls a little further - I could buy it :p

Yes but how many wish to expose themselves to an aviation sector riddled with corpses, especially given they would almost certainly have zero expertise in the industry?

Stuff Ryanair. This could be SQ's golden chance to own a domestic carrier that ties into the Star Alliance network. Maybe not by taking over Virgin but rather waiting for it to collapse and maybe buying some key assets. It's what we've all been waiting for!
Paging @HS-TQE your order is ready for collection
 

amaroo

Enthusiast
Joined
Sep 22, 2011
Messages
12,183
Qantas
Platinum 1
Flights
My Map
Yes but how many wish to expose themselves to an aviation sector riddled with corpses, especially given they would almost certainly have zero expertise in the industry?
IMO every interested party, including government will let it fail, then pick the meat from the carcass. Its the way these things work.
 

HS-TQE

Member
Joined
Apr 5, 2018
Messages
324
Stuff Ryanair. This could be SQ's golden chance to own a domestic carrier that ties into the Star Alliance network. Maybe not by taking over Virgin but rather waiting for it to collapse and maybe buying some key assets. It's what we've all been waiting for!
Judging by SQ's previous failures in the Australian Market (Air New Zealand/Ansett Australia and Tiger Airways Australia), plus the previous 100000+ "SQ to the rescue" articles over the past 5 years which all fizzled out.. There are only two words to this reply.

"Fake News"

--

On another note: Singapore Airlines just got a bailout by their government parent Tesamek, and their main priority for using their bailout funds is 'survival' during the COVID-19 crisis. They won't be buying anything or anyone until that passes.

Source: Singapore Airlines latest to get massive bailout amid coronavirus crisis
 

dajop

Enthusiast
Joined
Jul 1, 2002
Messages
10,336
Flights
My Map
Mods, maybe we need a Wiki at the top of thread With instructions to read the wiki before posting then we might stop this SQ is the saviour stuff that is very repetitive. At the least HS-TQE could just respond ... please read the wiki! :p
 

p--and--t

Established Member
Joined
Sep 28, 2008
Messages
2,024
Qantas
Bronze
Virgin
Red
Mods, maybe we need a Wiki at the top of thread With instructions to read the wiki before posting then we might stop this SQ is the saviour stuff that is very repetitive. At the least HS-TQE could just respond ... please read the wiki! :p
.....is wishful thinking more infectious amongst VA patriots than Covid-19?
 

odysseus

Established Member
Joined
Feb 16, 2009
Messages
1,185
Don't fall for the trap - one poorly managed business does not mean all businesses are in the same predicament. There are planty of people / businesses chock - full of cash.

Take a look at this. Jeez, if the thing falls a little further - I could buy it :p

Just because they have the cash doesn't mean they're willing to use it. Airlines are a capital intensive business, they can readily see the returns in VA's history and regulatory hurdles - oh, and Joyce's obstructionism - and the travel outlook is bleak in the near term.

There are also a chock full selection of opportunities to use that cash; VA isn't the only listed entity which has had a price plunge. I'd say it's very unlikely anyone would find it enticing - let alone Ryanair lol!
 

bulldog88

Junior Member
Joined
Feb 7, 2013
Messages
39
I don't think Australian taxpayers should be bailing out other wealthy governments (who could be argued to control VA's shareholders SQ, Etihad, etc).

I'm betting that, unless Covid is resolved within the coming months, VA will go into administration - perhaps with Government assistance to keep a barebones operation running - with Singapore bidding against cashed-up US Private Equity firms for the assets (of which Velocity FF will be key).

If Private Equity takes control I expect VA will become a pure low cost carrier, like Southwest , Ryanair , Wizzair .. why not relaunch as "Velocity AIr" and stop paying royalties to Billionaire Branson ?
 

bcworld

Established Member
Joined
May 26, 2010
Messages
2,419
Flights
My Map
If Private Equity takes control I expect VA will become a pure low cost carrier, like Southwest , Ryanair , Wizzair ..
I really struggle to consider Southwest low cost...they're certainly not in the same league as the others you mentioned. 2 free checked bags, complimentary drinks & snacks, no change fees on the cheapest fares, a frequent flyer program, checking in at the kerb for a couple of bucks.
 

pauly7

Established Member
Joined
Dec 8, 2004
Messages
4,915
Scurrah makes an excellent point. Where on earth is the investment/seed money going to come from in a post-COVID world to set up a second carrier quickly? And be able to absorb losses? Alan Joyce would be all too aware of this I am sure.
It’s an excellent PR point for the press and media to swallow, and for certain government ministers as well :)

But let me assure you that there are investment firms, VCs, PEs, capital groups etc with billions and billions of dollars ready to go to snap up faltering companies with reasonable chances of becoming successful again.

That’s why the government has slammed the breaks on foreign investment - everything goes under the ruler now, regardless of $ involved.

People on here also seem to be absolutely obsessed with the idea another airline would buy VA / or what remains of VA. I think it would be far more likely a non airline group would recapitalise VA in my personal opinion :)
 

pauly7

Established Member
Joined
Dec 8, 2004
Messages
4,915
Can we page @pauly7 our resident expert consultant back to this thread to share any 'observations' ;)
Hi, I’m monitoring sporadically :) Working also in healthcare - that is understandably taking up more of my time at the moment.

Now the situation with VA has progressed significantly it’s beginning to stray into the area of potential conflict now for me so I’m posting lightly in due course and only giving personal opinions :)
 

HS-TQE

Member
Joined
Apr 5, 2018
Messages
324
"Virgin Australia boss Paul Scurrah has rubbished claims a new entrant to the Australian market could buy his airline's infrastructure on the cheap and be up and running quickly in the event of a collapse."

"Virgin Australia CEO Paul Scurrah has dismissed suggestions that the struggling airline is seeking a federal government bailout. He argues that the $1.4 billion loan facility that Virgin is seeking would have to be repaid eventually. Scurrah also warns that Qantas could emerge with a long-term monopoly in the domestic market if Virgin collapses. The government would allow a new entrant to the market, but CAPA Centre for Aviation chairman Peter Harbison says regulatory approvals would take some time, which would further entrench Qantas’s market dominance"

Paywall Article: Virgin boss warns of Qantas monopoly in event of collapse
 

hada88

Junior Member
Joined
Dec 5, 2019
Messages
31
I would think it's more likely that a PE fund would acquire Virgin if it becomes distressed or even prior to this. Sharks are probably beginning to circle, but all of that becomes moot if PS can pull it off. I'm 60:40 to think he will.

I've seen (and worked on) many examples of distressed assets being purchased by PE funds. I'm sure this is one of the options PS is looking at dependent on whether its major stakeholders want to sell down (which would at least give some return of capital to EY, SQ, HNA etc).
 

dajop

Enthusiast
Joined
Jul 1, 2002
Messages
10,336
Flights
My Map
If Private Equity takes control I expect VA will become a pure low cost carrier, like Southwest , Ryanair , Wizzair ..
Or go back to the circa 2007-8 "new world" carrier model of Virgin Blue. Whilst it didn't compete head to head with QF in the corporate market, it did in the budget concious (smaller?) business market, looking for value.
 

HS-TQE

Member
Joined
Apr 5, 2018
Messages
324
Or go back to the circa 2007-8 "new world" carrier model of Virgin Blue. Whilst it didn't compete head to head with QF in the corporate market, it did in the budget concious (smaller?) business market, looking for value.
I personally call that the Godfrey 'Hybrid Model', where the front 2-3 rows were Euro-Business Class, or really "Premium Economy" with Extra Legroom and the middle seat empty.

That also allowed DJ to remove the middle seat block when the aircraft gets rotated from a trunk route to a leisure route such as MEL-MCY or BNE-TSV to name example. Thus, quickly reconfiguring back to a all-Y layout for the leisure markets with extra legroom rows.
 

woodborer

Active Member
Joined
Nov 17, 2013
Messages
957
My guess is that they will engineer something to keep Virgin alive. No idea what, but I am sure they are working through a range of options.
 

BAM1748

Senior Member
Joined
Jul 22, 2008
Messages
5,738
There is already a 2nd airline and it's a discount one at that. Virgin tried to position themselves between them and 10 years later that hasn't worked from a earnings side. Maybe tweaking routes (cutting some) but then you need the feeder traffic as well.

I would think an equity fund is already talking to Virgin's current stake holders, it will be a matter of if they want to ride it out or cut and run.
 

jase05

Established Member
Joined
Jan 24, 2018
Messages
2,162
Qantas
Gold
Virgin
Platinum
Unfortunately it looks like we won’t get to see how this would’ve played out

Fitch analyst Kelly Amato said it would like to see Virgin raise additional funding over the next three months. “(Coronavirus) has come just as they were making headwinds in terms of getting a new structure in place, taking costs out of the business, reducing debt levels and making Virgin a viable airline,” Ms Amato said.

“We did see them on the path to becoming profitable, and the way they’ve responded to this pandemic shows they are really committed to making the airline survive.”
 

Bagpuss

Active Member
Joined
Feb 24, 2014
Messages
956
"Virgin Australia boss Paul Scurrah has rubbished claims a new entrant to the Australian market could buy his airline's infrastructure on the cheap and be up and running quickly in the event of a collapse."
Well he IS the CEO and the CEO would want to maintain the company to exist.
However, I think it's more likely to go into administration, exit bad debt and re-emerge.
 

eastwest101

Established Member
Joined
Oct 26, 2010
Messages
2,803
Flights
My Map
There is already a 2nd airline and it's a discount one at that. Virgin tried to position themselves between them and 10 years later that hasn't worked from a earnings side. Maybe tweaking routes (cutting some) but then you need the feeder traffic as well.

I would think an equity fund is already talking to Virgin's current stake holders, it will be a matter of if they want to ride it out or cut and run.
There is a second airline - but its owned by Qantas and is actually a high fare low service airline, that has never really satisfactorily explained itself in balance sheets or profitability as to where its parent ends and the subsidiary begins. I reckon it would still be a live option that should VA fail, and not be restructured and flying again as a domestic competitor that a forced divestment/separation of Jetstar could be a long-shot option that the government and the ACCC would consider. That would be somewhat "karmic" given the history of Qantas' CEO.
 
Top