Virgin Australia Financially Secure? [Now in Voluntary Administration]

[melb78]

Agreed, Bain's record suggests they would asset strip and look to reduce employment costs substantially rather than care about a viable long term investment.

yep Even tho ATM people will slam VA if it was brought by Chinese but least it will keep QF airfares down and have 2 full services carries

 

[Doctore1003]

The Age is reporting that, “as Virgin Australia scrambles to stay intact and afloat, more than a dozen private equity funds are hovering in the hope the airline will call it a day so they can pick up the carcass on the cheap.“
Wow.

New players circle ailing Virgin

If Virgin fails to get a lifeline, it will be placed into administration and private equity holders will wield the knife.

www.theage.com.au

 

[melb78]

If this is true i think all VA staff will like Chinese to buy VA

 

[jakeseven7]

Well if the Chinese airlines buy VA we call be all assured that Va will be able to give QF run for there money. I rather an airline buy VA then going to a PVT investment or equity group any day

Being About 40% Chinese owned hasn’t helped them to date what is going to change so drastically do we think?

 

[oz_mark]

Being About 40% Chinese owned hasn’t helped them to date what is going to change so drastically do we think?

If it all ends up with a simplified ownership structure, with Singapore and Etihad shareholding being taken out, then just that may help.

 

[jase05]

Being About 40% Chinese owned hasn’t helped them to date what is going to change so drastically do we think?

Poor management from the previous CEO hasn’t helped. Eliminating other owners would help aswell as the current structure is just a mess

 

[moa999]

Agreed, Bain's record suggests they would asset strip and look to reduce employment costs substantially rather than care about a viable long term investment.

Different scenario. Much harder to asset strip when you're walking into a situation where you've already got too much debt

 

[andrewpf]

Oh Ma Gawd! Pauline and the Daily Mail called it weeks ago

Pauline Hanson warns of a mass Chinese buy up of Australia

One Nation leader Pauline Hanson has warned of a 'mass foreign buy-up' as Australia's economy crashes amid the coronavirus crisis.

www.dailymail.co.uk

 

[AustraliaPoochie]

If VA has not been a profitable entity or paid dividend for many years, what would those China govt owned airlines gain, by buying into VA?
Its not like as if they don't know what they are getting into?

 

[travel_bug]

Oh Ma Gawd! Pauline and the Daily Mail called it weeks ago

Pauline Hanson warns of a mass Chinese buy up of Australia

One Nation leader Pauline Hanson has warned of a 'mass foreign buy-up' as Australia's economy crashes amid the coronavirus crisis.

www.dailymail.co.uk

Even a busted clock is right twice a day

 

[jase05]

If VA has not been a profitable entity or paid dividend for many years, what would those China govt owned airlines gain, by buying into VA?
Its not like as if they don't know what they are getting into?

Maybe they can see that there is scope for VA to make money and that it has previously been mismanaged. There were several financial experts that had stated that with the moves PS had made they believed VA could become profitable in the not too distant future. Obviously things changed due to Coronavirus.

 

[Doctore1003]

The fact so many private equity firms would be interested *if* Virgin goes into voluntary administration tells you there's money to be made if the debt/equity are restructured, costs are cut, and unprofitable routes are jettisoned.

 

[EzioAuditore]

If VA has not been a profitable entity or paid dividend for many years, what would those China govt owned airlines gain, by buying into VA?
Its not like as if they don't know what they are getting into?

Tourism interest as well. For example, currently only HNA flies to Cairns directly from Shenzhen, China. Not one of the Chinese big three (airchina, china eastern, china southern) flies directly to CNS.

Most of the bundled Chinese tour groups start at Cairns then travel down the coast to Brisbane, Gold Coast, Sydney, Melbourne or across to New Zealand. If they buy VA, they would have greater access to the AU and NZ domestic routes.

 

[antycbr]

The fact so many private equity firms would be interested *if* Virgin goes into voluntary administration tells you there's money to be made if the debt/equity are restructured, costs are cut, and unprofitable routes are jettisoned.

Even with the likely downturn in travel due to less leisure and also some businesses switching to online meetings, in my opinion there's still money to be made. It's not like there's an alternative to fliying for all but the shortest sectors on the east coast.

I can understand why the QLD government wants in not just from the headquarters perspective. There's domestic tourism from interstate, the resources industry in central Queensland which needs to remain globally competitive with FIFO costs and simply keeping the state running as an effective unit requires air service with such a dispersed population for all sorts of reasons including intrastate government travel, people needing to go to BNE, TSV and ROK for medical services etc. A QF monoploy is bad for lots of Queenslanders. VA service just about every airport from Coolangatta to Cairns up the coast.

Qld Gov already extensively subsidise Rex inside Queensland.

 

[HS-TQE]

Another private equity operator also outlined his/their plan.

This person wants VA to be 2-class domestic only operator, wants SIA To get involved (I'm assuming 5th freedom to NZ in some cases), whilst having VAi reduced to only the 'lucrative' Australia-USA route with Delta with the 4x 777-300ERs.

Edit: I suspect this guy has some involvement with the Star Alliance carriers, and knowing the Australian government won't budge on 5th freedom rights, and UA also downsizing themselves on the Trans-Pacific corridor, the "partnership" with the DL is the 'next best thing'.

New players circle ailing Virgin

If Virgin fails to get a lifeline, it will be placed into administration and private equity holders will wield the knife.

www.theage.com.au

"Strip it back to .. a domestic operator... a full-service airline focused on key routes and simplify the aircraft and staff arrangements."
-Private equity operator

Contracts could also be rewritten, including the $15 million a year in payments to Branson for use of the Virgin name and logo

Internationally, it would likely close its international arm and do a deal with the government to allow Singapore Airlines to step into the breach but Virgin keep three wide-body planes and continue to run the lucrative Australia to the United States route.
.

 

[antycbr]

Another private equity operator also outlined his/their plan.

This person wants VA to be 2-class domestic only operator, wants SIA To get involved (I'm assuming 5th freedom to NZ in some cases), whilst having VAi reduced to only the 'lucrative' Australia-USA route with Delta with the 4x 777-300ERs.

This actualy sounds pretty much what most of us have been saying since before HKG started!

 

[travel_bug]

T

Another private equity operator also outlined his/their plan.

This person wants VA to be 2-class domestic only operator, wants SIA To get involved (I'm assuming 5th freedom to NZ in some cases), whilst having VAi reduced to only the 'lucrative' Australia-USA route with Delta with the 4x 777-300ERs.

Edit: I suspect this guy has some involvement with the Star Alliance carriers, and knowing the Australian government won't budge on 5th freedom rights, and UA also downsizing themselves on the Trans-Pacific corridor, the "partnership" with the DL is the 'next best thing'.

New players circle ailing Virgin

If Virgin fails to get a lifeline, it will be placed into administration and private equity holders will wield the knife.

www.theage.com.au

That sounds like an incredibly reasonable plan considering their international losses. VAs strength has always been in their domestic competition, and if it wasn’t for them in Canberra we’d be paying ridiculous prices with Qantas as there’s no Jetstar.

 

[antycbr]

T

That sounds like an incredibly reasonable plan considering their international losses. VAs strength has always been in their domestic competition, and if it wasn’t for them in Canberra we’d be paying ridiculous prices with Qantas as there’s no Jetstar.

Particularly if they can split the operation into Good VA and Bad VA - keep all of the leases and debt in the bad VA. Perhaps one of the AOCs (TT) might get used? Shades of the transform of Crossair into Swiss when Swissair went broke perhaps?

 

[Isochronous]

Do they get any subsidy for the various Pacific Islands services?

 

[antycbr]

Do they get any subsidy for the various Pacific Islands services?

You'd bl**dy well hope they got a subsidy for Honiara with a typical load factor in the 30s...

Remember that VA has a very complex corporate structure to allow the "notionally" 51% Australian owned VA(I) to operate internationally given that VA Holdings is 90+% foreign. I'd expect all of that to go to save cash. It's corporate overhead.

Edit: makes the AU-LAX services difficult too but they'll find a way somehow as they own the assets (777s).