Virgin Australia Financially Secure? [Now in Voluntary Administration]

[andrewpf]

It's actually a completely different quote to the one you posted earlier, which is what I responded to. This still doesn't say what you claimed earlier. He's been arguing all along that the govt shouldn't be giving preferential support to VA. For some reason you have chosen to de-emphasise the key part at the beginning of this quote: "Governments aren’t there to pick winners and losers".

AJ is also on record as saying he'd be ok with the govt giving VA the $1.4 billion they asked for, as long as they also give QF an equivalent amount, taking into account the relative size of the businesses. His views on this issue really at all aren't controversial IMHO. I don't think any CEO on the planet would accept their main competitor being given public money while they get none.

Firstly, they're both quotes from the same article.

Secondly I think you're splitting hairs.

My original point in all this is that people were saying that there is a lot of 'negative' posting online (e.g. Facebook) opposing giving Virgin Government assistance. I was pointing out that I had thought I read Joyce had encouraged his staff to do this kind of thing. I'm not saying that means everyone writing those is a Qantas staff member - far from it - but it is a factor worth keeping in mind.

Having re-read it, I think my point was pretty much correct. You may disagree around the specifics of the wording and the like, but as I said, particularly in the context, I think that is splitting hairs.

 

[Bagpuss]

It seems Virgin were looking at debt restructure for some time. What they have been working on isn't two week's worth of work.
They managed to keep that secret so I'm confused as to why they went public with the $1.4billion government assistance request as it really hasn't helped them.
Though to make matters worse, more comments are now coming out about the dramatic ongoing downturn in regards to travel post covid-19 (whenever that maybe). So, maybe now they need $1.6 / $1.7 billion????

 

[oz_mark]

It seems Virgin were looking at debt restructure for some time. What they have been working on isn't two week's worth of work.
They managed to keep that secret so I'm confused as to why they went public with the $1.4billion government assistance request as it really hasn't helped them.

I have a suspicion (but can't confirm) that there may have been a leak that they decided to confirm.

 

[pauly7]

Best guess would be to lobby for incentives and concessions? This could also very easily be a negotiation tactic to force the QLD Gov's hand.

Exactly my suspicion.

VA has been subsidised by millions and millions of dollars to establish and remain in BNE from the QLD state government. They are probably twisting their arm / fishing for the same from the VIC government.... I would be if I was them!

But they have struggled with key talent in BNE for key head office roles, moving to MEL, soon to be AU’s largest city would help with that - much bigger talent pool.

They already in the past moved some corporate functions and marketing to SYD for this reason amongst others (Although you could argue the SYD marketing team behind ‘Wiggy’ aren’t exactly setting the world on fire )

 

[Carrots]

but I don't think anyone outside VA and it's banking consultants at UBS & Morgan Stanley know what that eventuality really looks like.

Most accurate comment in 71 pages of speculation and diatribe!

 

[jakeseven7]

My original point in all this is that people were saying that there is a lot of 'negative' posting online (e.g. Facebook) opposing giving Virgin Government assistance.

There definitely is a huge majority of people on social comments saying they don't think they should be bailed out and reading few (Admittedly only 100 or so) I don't think its actually 100% because its VA and people don't specifically care that much about VA, it seems to be because people in general oppose the Government specifically stepping in and saving 'a company' rather than 'a industry'. Especially with so many industries decimated.

There were quite a lot of comments about VA being poorly managed, wasting money for years etc etc as we all know. And a few about being owned by large government backed airlines and of course Mr Branson who is shrieking for money for VS as well.

But most from the SAMPLE I read were more opposed to the idea in principle.

 

[jase05]

There definitely is a huge majority of people on social comments saying they don't think they should be bailed out and reading few (Admittedly only 100 or so) I don't think its actually 100% because its VA and people don't specifically care that much about VA, it seems to be because people in general oppose the Government specifically stepping in and saving 'a company' rather than 'a industry'. Especially with so many industries decimated.

There were quite a lot of comments about VA being poorly managed, wasting money for years etc etc as we all know. And a few about being owned by large government backed airlines and of course Mr Branson who is shrieking for money for VS as well.

But most from the SAMPLE I read were more opposed to the idea in principle.

I would bet most that are against VA getting help were only too happy to see that “Aussie Icon” Holden get propped up by the government for the last few decades despite being 100% foreign owned.

 

[Fortheloveofflying]

Is someone able to explain how moving the HQ to MEL can save the company?

Virgin Australia mulls interstate move to help save company

Virgin Australia is considering moving its corporate head office and Velocity Frequent Flyer businesses to Melbourne as part of its bid to save the company.

www.afr.com

 

[Jack_OC]

Firstly, they're both quotes from the same article.

Perhaps, but it's an article behind a paywall, which I can't access, so I was only able to read and respond on the basis of the quote that you posted.

In any case, the other quote that you and someone else subsequently posted is not inconsistent with the quote you posted first time.

Secondly I think you're splitting hairs.

My original point in all this is that people were saying that there is a lot of 'negative' posting online (e.g. Facebook) opposing giving Virgin Government assistance. I was pointing out that I had thought I read Joyce had encouraged his staff to do this kind of thing. I'm not saying that means everyone writing those is a Qantas staff member - far from it - but it is a factor worth keeping in mind.

Having re-read it, I think my point was pretty much correct. You may disagree around the specifics of the wording and the like, but as I said, particularly in the context, I think that is splitting hairs.

I'm not splitting hairs at all. You are still saying that AJ is opposed to the govt giving VA assistance. He is not, and has clearly said this on more than one occasion. He is opposed to the govt selectively and/or preferentially giving VA assistance without offering equivalent assistance to QF. This is a huge difference, and that is all I sought to point out.

 

[TheInsider]

Is someone able to explain how moving the HQ to MEL can save the company?

Virgin Australia mulls interstate move to help save company

Virgin Australia is considering moving its corporate head office and Velocity Frequent Flyer businesses to Melbourne as part of its bid to save the company.

www.afr.com

state government might offer to waive payroll tax for a period of time? Maybe lease discounts somewhere along the line for office space?

 

[oz_mark]

Maybe they should work from home!

 

[Must...Fly!]

Is someone able to explain how moving the HQ to MEL can save the company?

Virgin Australia mulls interstate move to help save company

Virgin Australia is considering moving its corporate head office and Velocity Frequent Flyer businesses to Melbourne as part of its bid to save the company.

www.afr.com

As @pauly7 notes, they have struggled at times to attract the right people in to roles at Virgin and the Sydney office has kept growing over time as a result. The decentralised nature of the HQ has created duplication because of the way the airline has grown as well, incorporating Skywest in to the operation in WA and way back, the launch of V Australia. I think they own the Virgin Village as well? Probably worth a bit of money by now too if you could sell off and lease in Melbourne instead.

All a bit academic though, there are far more pressing issues. I think it's more a way of showing intention to potential investors and creditors (including lessors and potentially the federal government) that the management are fully ready to shake up the airline and make seismic changes.

 

[odysseus]

It's now a voluntary suspension, which is different from a trading halt. A trading halt can only last 2 trading days. I previously posted that trading halts are quite common on the ASX, but voluntary suspensions are less so. Suspensions have some longer term implications, if they last for 5 days or more (as this one will). For example, their ability to issue new shares without a prospectus will be restricted for 12 months. Probably the least of their worries now, but companies generally don't go into a voluntary suspension lightly. In any case, it seems like they had no real choice - per ASX rules they had to either make an announcement this morning and resume trading, or request a suspension, and clearly there is no outcome to their discussions that they can announce yet.

Agree with your statements that it's SOP, but would still point out it's not that uncommon. As the next stage, it's necessarily rarer than a trading halt, but there isn't any way around it so many companies go into suspension when there are corporate actions still in play.

 

[odysseus]

Sorry, but the govt support that VA asked for would not have resulted in any change to the company ownership, unless things continue to go wrong in the future. They asked for a govt loan to essentially allow them to continue to exist in their current form. It would only convert to equity if they can't repay it in a few years. In other words, the foreign owners get the upside if it the plan works, while the govt (or us taxpayers in reality) would end up owning a big chunk of a worthless company if it doesn't.

Actually, the government and us taxpayers get the upside if the plan works - a continued operating duopoly aviation environment, without disruption and without a monopoly and its resultant inefficiencies and cost increases to the rest of the economy.

 

[dajop]

Actually, the government and us taxpayers get the upside if the plan works - a continued operating duopoly aviation environment, without disruption and without a monopoly and its resultant inefficiencies and cost increases to the rest of the economy.

Agree totally, and I think it's probably worthwhile for the government to do something.

But upon reflection it's probably an almost impossible sell. News media won't be supportive, and I doubt Alan Jones would be which will make it really difficult. Many people, uninformed because they have no interest, will just see "foreign owners" and particularly "Chinese, Singaporean and Arab" and be disgusted at any thought of assistance to VA. That is how the narrative is being played out already.

 

[drron]

state government might offer to waive payroll tax for a period of time? Maybe lease discounts somewhere along the line for office space?

Premier Dan has already said there will be a waiver of payroll tax in Victoria whereas Premier Annastacia has only said she would defer payment of payroll tax.Premier Dan wins.

 

[flyer89]

and I doubt Alan Jones would be which will make it really difficult.

He’s stated a couple of times over the last day or so he supports Virgin receiving government assistance. We really are living in bizarro world!

Labor urges government to 'get on with the job' and save Virgin

The Opposition is calling on the government to help keep Virgin Australia in business after it announced a trading halt. The airline has grounded its fleet as it struggles to survive the industry slowdown as a result of coronavirus. CEO Paul Scurrah is asking the Federal Government to help it...

www.2gb.com

Scroll to the bottom to listen.

 

[Must...Fly!]

He’s stated a couple of times over the last day or so he supports Virgin receiving government assistance. We really are living in bizarro world!

Labor urges government to 'get on with the job' and save Virgin

The Opposition is calling on the government to help keep Virgin Australia in business after it announced a trading halt. The airline has grounded its fleet as it struggles to survive the industry slowdown as a result of coronavirus. CEO Paul Scurrah is asking the Federal Government to help it...

www.2gb.com

Scroll to the bottom to listen.

Several weeks ago Paul Scurrah was on his show and he rightfully gave Joyce a hiding over his comments in the call to Qantas staff standing them down while simultaneously asking them to lobby their MPs to not save Virgin

 

[jakeseven7]

Premier Dan has already said there will be a waiver of payroll tax in Victoria whereas Premier Annastacia has only said she would defer payment of payroll tax.Premier Dan wins.

Premiers in QLD have given a lot more than payroll tax waivers in the past!

 

[Doctore1003]

Some interesting points in this opinion piece in the AFR, arguing for a government rescue:

• The government's two-airline policy is sound because it ensures that one of the most urbanised and widely spread populations in the developed world has a choice of carriers between capital cities.
• Rescuing Virgin would drag the company back from the brink of a financial disaster created by the federal government's own lockdown laws.
• Not backing Virgin's balance sheet with a $1 billion loan opens the door to the potential disintegration of its extensive national infrastructure built up over 20 years at a cost of $10 billion.
• Chief executive Paul Scurrah has been busily talking to the aircraft lessors. It is believed he believes he can cut costs at Virgin by $300 million to $400 million.
• The federal government rescue is critical to Virgin's survival because it means the company can save about $600 million in interest over four years.
• It is not as if Virgin was so badly run it was headed for insolvency before the coronavirus struck. While it is true it had about $1 billion too much in debt, Scurrah was implementing a plan to deal with that.
• If private equity gets its hands on the airline it will follow the usual playbook and gear it up to the hilt and concentrate only on the profitable routes. Don't expect a highly leveraged Virgin Mark II to offer the services taken for granted now as part of the two airlines policy.

Clock is ticking on Virgin's survival

The government should be careful not to let ideology get in the way of helping to keep two viable full-service carriers operating in Australia.

www.afr.com