Virgin Australia Financially Secure? [Now in Voluntary Administration]

[jakeseven7]

Basically it should be a goer aside from startup costs, which happen everywhere any business tries to enter new markets.

John? JB? Brett? Is that you? Sounds like the CEO ghosts of VAi's past Should be a goer was about the extent of their international strategy Hahah made me laugh

 

[HS-TQE]

The irony is that VAi was started back in the Brett Godfrey era, in the days of Pacific Blue.

Long Haul was also started by Godfrey, initially with LAX and the short lived MEL-JNB and BNE-HKT. The later two gone (in favor of the owner's 'AUH' hub and going daily BNE-LAX) when JB first took over.

 

[RooFlyer]

I don't think it's been discussed yet, but Middleton J made orders in the Fed Court that the administrators are off the personal liability hook for some debts incurred through administration, including the conditional credits (paras 14 and 15). That's pretty huge.

In large administrations, it is not unheard of for the Court to provide an extension to the 5 day "risk-free" period provided under the Corps Act, but this is huge.

Could you give us a 'sec and explain how Administrators are usually limited in incurring debts, and liability for them? And the reasons (if given) why the Court has given an exception in this case?

 

[Must...Fly!]

JNB was a lame duck from the start, from memory chosen for little reason other than finding somewhere to fly to other than the US that they could try to make some money on. HKT never really worked from BNE or from PER (B737 too limited).

AUH worked as EY wet-leased the aircraft to fly AUH-KUL-AUH in between SYD-AUH-SYD.

 

[grubbidok]

VA1 were on the record as saying most of their NZ routes were not profitable so will be interesting to see what VA2 will do, if they decide to operate to NZ.

I wonder if this "reboot" would be enough for NZ and VA to kiss and make up? Letting NZ handle TT with VA as the feeder and would give QF some grief as a bonus

 

[HS-TQE]

I wonder if this "reboot" would be enough for NZ and VA to kiss and make up? Letting NZ handle TT with VA as the feeder and would give QF some grief as a bonus

It may depend if there are legacy Luxon right-hand men still at NZ. Don't think they are many still there though.

 

[travel_bug]

Could you give us a 'sec and explain how Administrators are usually limited in incurring debts, and liability for them? And the reasons (if given) why the Court has given an exception in this case?

Sure, though I'll try to keep off the word "huge", I didn't realise I used it twice when describing this issue!

There aren't necessarily limitations placed on administrators incurring any debt during the administration, it's simply that they are to be mindful of any debt they incur after a 5 day period (one business week) as they will be personally liable for it if it is not appropriately discharged or paid for by the end of administration process (like through a Deed of Company Agreement).

The threat of personal liability is to protect the interests of both secured and unsecured creditors, and to essentially keep administrators to task - that being either a successful restructure, a sale of a going concern, or liquidation. This is particularly prudent as the voluntary administration process can "free" an entity from otherwise prohibitive existing contracts (e.g. leases), that would otherwise continue to accrue debt, so why contract into new debt that would worsen the creditors' position?

Going off the above example of leases, VA's administrators would have looked quite early on at VA's aircraft leases and started assessing if they were still required in the current operation of the business, or if the leases should be re-negotiated or exited.

However, the Court (and only the Court), can limit an administrator's personal liability if there are extenuating circumstances (for example, the sheer size of the entity or group of corporations, or that there's an ongoing pandemic). At the end of the day, the Court is going to be looking at whether such an exemption is in the interests of the creditors and if it would lead to; for example, an entity continuing trading so as to fulfil certain acts that would allow a better payment for creditors.

This article goes through the above pretty well in relation to another administration matter where a personal liability exemption was provided for a loan agreement: A prudent approach to reducing the risk of personal liability | Mills Oakley

I can't say for certain why the Court has provided it in this case, but it would be inline with the principles addressed above; and the pandemic is the best extenuating circumstances I've seen to date.

 

[TheInsider]

So the non binding bids should've closed by now (or soon), any idea as to who yet?

 

[drron]

2

Slightly OT...

How big is he population for Los Angeles, San Francisco vs say Sydney & Melbourne?

Would be interested in your honest guesses before you read on.

The answer is not what the Australian Developers' lobby would have us believe...

Sydney 4.63m

Melbourne 4.25m

Los Angeles 3.97m AND is the 2nd largest city in the US!!

San Francisco 0.86m

I was shocked/amazed/disappointed with how various vested interest groups had caused me to be so wrong in my estimations of the population size of Australian vs supposedly huge overseas cities oft quoted as excuses for putting up 20+ storey towers in Melbourne & Sydney especially.

Also explains much about why flying to/from San Francisco would be nowhere near as attractive...

Plus Orange,Ventura,San Bernadino and Riverside counties and the LA population is now 18.79 million. and that area is 12,562 sq Km with a GDP of $US 1.25 trillion.

Greater Sydney Population 5.31 million,area is 12368 sq Km with a GDP of $A 460 billion-$US 296 billion.
We just don't compare.

 

[woodborer]

So the non binding bids should've closed by now (or soon), any idea as to who yet?

Think they were due at 6pm, so should know tonight

Then they will whittle them down to 3 by Monday.

 

[tomlee1986]

Think they were due at 6pm.

Then they will whittle them down to 3.

I wonder which bids will make the "cut" - using golf speak lol !

 

[melb78]

now I heard that VA is down to its last 100 mil does not look good

 

[tomlee1986]

now I heard that VA is down to its last 100 mil does not look good

I heard that news too.. i have a feeling the books doesnt look good either - I mean worse than expected (just opinion with no basis of fact lol)

 

[woodborer]

I wonder which bids will make the "cut" - using golf speak lol !

Certainly will be, as will the proposed business plans. I expect that some of the reported parties will end up combining with others.

 

[tomlee1986]

Certainly will be, as will the proposed business plans. I expect that some of the reported parties will end up combining with others.

Lets hope the potential buyers will be good buyers that will look after Australian interest as well as their own... i mean by retaining as many VA current staff as possible

 

[p--and--t]

Lets hope the potential buyers will be good buyers that will look after Australian interest as well as their own... i mean by retaining as many VA current staff as possible

Building a strong and healthy domestic market share will guarantee more aussies keep their jobs.
The international market ended up diverting funds to overseas suppliers & workers for little to no profit so far for VA1.

 

[tomlee1986]

Building a strong and healthy domestic market share will guarantee more aussies keep their jobs.
The international market ended up diverting funds to overseas suppliers & workers for little to no profit so far for VA1.

I hope that will become true with the new buyer... I believe that is a wish for all people related to VA

 

[deepblerg]

I also hope some level of altruism comes into the equation but you know, it's all about the money (or lack thereof in VA's case )

 

[RooFlyer]

Sure, though I'll try to keep off the word "huge", I didn't realise I used it twice when describing this issue!

Thanks, much appreciated.

 

[serfty]

Interesting AFR article I saw: (it may be paywalled, perhaps Google or find it via facebook).

Inside the failure at Virgin Australia

Virgin Australia CEO Paul Scurrah's "a-ha" moment came when New Zealand Prime Minister Jacinda Ardern stepped up on the evening of March 19 to announce that her country was closing its borders that night.

www.afr.com