Virgin Australia Financially Secure? [Now in Voluntary Administration]

[hydrabyss]

Age of QFs and VAs fleet has more to do with tax depreciation policies in Australia (20 years on aircraft) and growth..
Faster growing airlines will by their nature have lower fleet ages.

The government can do certain things to support the airlines, but indirect support is limited compared to places where the government owns the airports and could reduce leases and rents for example.

Aircraft lessors are also in a tough position.
12 months ago if an airline went broke that aircraft was released as soon as you could fly it away.
Call a lease for non-payment today and you might be sitting with an empty aircraft for years. They are arguably better off agreeing to lease reductions.

Simarirly much of the secured debt. What use to the lessor is a plane that you can't sell.

Will only work if all of the various parties come to the table, and would think it will take a combination of lease restructures, debt to equity conversions and additional equity injections

I read an article about a smaller leasing company that owned a number of ATR's offering loans over reduced payments due to their own financing issues.

 

[jase05]

If VA goes, then they cannot later save QF.

Exactly.
They can’t take sides remember

 

[RAM]

Exactly.
They can’t take sides remember

Theory and reality rarely coincide.

Just as Scomo criticised the ALP GFC measures for over a decade - at the appropriate moment he executed a perfect '10' backflip.

He is just as likely to do the same with VA unfortunately if he gets the opportunity. The Chairman's Club cannot be sacrificed at ANY COST!

 

[hydrabyss]

Exactly.
They can’t take sides remember

When there is only one airline left in 6 months it would no longer be taking sides.

 

[HS-TQE]

Virgin Australia considers going into administration as Labor calls for government rescue

Virgin Australia considers going into administration as Labor calls for government rescue

The grounded airline is in a trading halt after hiring insolvency and turnaround experts amid the coronavirus crisis

www.theguardian.com

Grounded airline Virgin Australia is considering going into administration as it races against time to get out from under a $4.8bn debt pile.

Amid calls from the federal opposition leader, Anthony Albanese, for the government to rescue the airline, it has hired insolvency and turnaround experts at Deloitte to work on restructure scenarios, Guardian Australia has learned.

 

[hydrabyss]

https://www.afr.com/street-talk/virgin-australia-taps-two-investment-banks-for-equity-solution-20200414-p54jpg

It is paywalled.

 

[pauly7]

Strap in everyone, this flight is about to hit some turbulence.

 

[deebens]

Latest from The Australian

Virgin Australia ‘closing in’ on restructure funding: sources

Virgin Australia’s proposed restructure is understood to involve a convertible note offered by the federal government that will convert to equity if the airline breaches its debt covenant.

Terms of the deal were said to be announced by Wednesday evening and it is understood to involve both lenders and equity holders taking a haircut if the covenants are breached.

Should the plan for a government loan gain approval, as expected, Virgin will receive funding worth about $1.4bn from the government in total, including the money collectively made available to the airline industry.

 

[bulldog88]

What about all the small business owners who are suffering worse than VA (or QF) , but don't have a big Public Relations team to feed "friendly" journalists with warm photos and heart-tugging stories?

VA needs to reorganise itself (and its debt) to meet the new reality. Let them sell some aircraft and raise cash instead of making us all pay with higher taxes for who knows how long.

 

[dajop]

instead of making us all pay with higher taxes for who knows how long.

Any assistance to VA will be a rounding error compared to the overall outlay and higher taxes that will need to be paid for who knows how long to deal with the overall support provided to the economy ....

 

[Solid]

That law changed due to COVID-19.

It is now $20k and you have six months to respond to the stat demand.

edit - was in response to @BAM1748 post about stat demands but quote didn’t insert.

 

[Must...Fly!]

What about all the small business owners who are suffering worse than VA (or QF) , but don't have a big Public Relations team to feed "friendly" journalists with warm photos and heart-tugging stories?

VA needs to reorganise itself (and its debt) to meet the new reality. Let them sell some aircraft and raise cash instead of making us all pay with higher taxes for who knows how long.

Well that's exactly what it's doing.

To be fair small businesses don't have huge debts or huge Capex requirements either so maybe the response should be scaled.

At the end of the day it's impossible to argue that competition in the aviation sector will be bad for economic development and for both big and small business alike. The taxpayer funded travel bill would be reduced relative a QF monopoly as well...

 

[coyote25]

Latest from The Australian

Virgin Australia ‘closing in’ on restructure funding: sources

Excellent let’s hope it works out.

 

[juddles]

I am not trying to be a doomsayer, nor a person that is "against" Virgin - on the contrary I am an avid believer that aussie having a second local option has always been a good thing to keep any Qantas gouging minimal.

But these are new times.

This is a huge thing. Almost like a real war. The government is bailing out the general people to the tune of "X" hundred billion. All industries are hit - in the overall economy Virgin is small fry. But a costly fish at that. I would forget funding an overseas company like they are unless there was a clear benefit in the overall plan. Surely government priorities should be using their dollars on backing what they think will be a benefit to all?

 

[Bagpuss]

Latest from The Australian

Virgin Australia ‘closing in’ on restructure funding: sources

 

[juddles]

paywalled?

 

[AustraliaPoochie]

The Aust govt though has an option of putting in a levy, like the PMC when we go out of Aust, or the former AN staff entitlement levy, and the govt allows airports to levy security recoup charges, as well as airport use charges, so if the Aust govt does back up either or both or 3 of the Aust majors, or all of the airlines, the govt has an opportunity to recoup their outlay.
There are just too many similarities to AN, between VA and the former AN.
Scary.
As for if VA will survive, maybe, maybe not.
At least they have a small sum of money coming in, of course, not really enough, but a savvy operator might decide to buy VA/VFF or both.
Publicly, at this stage, all the major players, (other airlines) are crying poor.
But there is money to be made out of VA/VFF (think of the data that VFF has on us (!))...
Maybe VA might come back, leaner and cheaper to run, with many benefits for us, costs for them gotten rid of.
Remember the original VBA when we didn't get a lot of things we now take for granted.
Aust Aviation (as the other website) has some mentions of the story of AN going kaput in 2001.
**VA could have saved a lot of $ if it didn't get involved with TT as in Tiger Air.
**AN also spent a lot of money, getting involved with the Olympics marketing, for Sydney in 2000.
Unnecessary.

 

[HS-TQE]

Probably time the likes of SQ, Etihad and the management of the past (and to some extent some of the present) let their pride go by letting go of VA if the current teams aren't willing to help financially overall.

Branson also isn't also that popular back in his home country recently due to the staff fiasco at VS during the COVID-19 pandemic. The fact that's he's 'deferring' licensing fees to his struggling companies (most of which he only has minority stakes in) just says it all.

If SQ still wants an Australian presence in the future, they'll either have to start building up again themselves for a 4th attempt (overall) at the Australian market once demand recovers COVID-19. For the meantime they can just renew their basic interline agreement with QF and if SQ's wants to, they could also sort an interline with the "VA mk II" successor domestic LCC airline should VA enter administration and a domestic LCC re-emerges from what's left of VA.

 

[jakeseven7]

If VA goes, then they cannot later save QF.

Sure they can , and would.

Post automatically merged: Apr 14, 2020

The Aust govt though has an option of putting in a levy, like the PMC when we go out of Aust, or the former AN staff entitlement levy, and the govt allows airports to levy security recoup charges, as well as airport use charges, so if the Aust govt does back up either or both or 3 of the Aust majors, or all of the airlines, the govt has an opportunity to recoup their outlay.
There are just too many similarities to AN, between VA and the former AN.
Scary.
As for if VA will survive, maybe, maybe not.
At least they have a small sum of money coming in, of course, not really enough, but a savvy operator might decide to buy VA/VFF or both.
Publicly, at this stage, all the major players, (other airlines) are crying poor.
But there is money to be made out of VA/VFF (think of the data that VFF has on us (!))...
Maybe VA might come back, leaner and cheaper to run, with many benefits for us, costs for them gotten rid of.
Remember the original VBA when we didn't get a lot of things we now take for granted.
Aust Aviation (as the other website) has some mentions of the story of AN going kaput in 2001.
**VA could have saved a lot of $ if it didn't get involved with TT as in Tiger Air.
**AN also spent a lot of money, getting involved with the Olympics marketing, for Sydney in 2000.
Unnecessary.

Wasn’t around for Ansett (really, was just a kid) but I read up on the history and yes there are some eerie parallels but also some big differences. At least VA has a better fleet mix than Ansett!

 

[oz_mark]

When there is only one airline left in 6 months it would no longer be taking sides.

If it gets to that point, they've already taken sides.