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Virgin Australia to be sold to Bain Capital

antycbr

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I thought the courts had already ruled on that. Going to be expensive, and presumably other lease returns will have the same issue
More reflective of the extent that Deloitte went to - to maximise their position. The engines are scattered all over the place on different aircraft too.

 

jakeseven7

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DOCAs are expected to be signed on Friday. This will see the Companies transition from “In Voluntary Administration”, to “Subject to Deed of Company Arrangement”.
So does that officially mean the ‘end’ of VA1? And Bain/VA2 era beginning?
 
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Melburnian1

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Story in the Australian this evening that Deloitte deliberately withheld the release of engine maintenance records to the leasing companies - using it as a bargaining chip. Without the documents the engines are worthless.

Now the argument is that VA are supposed to return the engines back to the US which they don’t want to do despite the lease terms requiring it.
Sounds to me like the administrators and VA have a weak legal case, but we'll see what the Federal Court says.
 

HS-TQE

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I'm coming more and more to the view that a few of Virgin's shareholders never saw the airline as a serious business proposition, merely a convenience to sell domestic connections and make their network look better,

Sort of reminds me of a retailer buying shares in a local courier company because they get better delivery rates and couldn't give a toss about the operations of the courier company or struggles it might have.

Anyone who didn't see the cuts to pay and conditions when Bain was announced must have been a cultist, or came down in the last shower.
It could also be argued that the former owners also 'beaten' Bain to the "asset-stripping", most of VA's assets (especially the owned 737 and 777 fleets) were found by administrators to be encumbered with loans/mortgages against them courtesy of EY/SQ/HNA led under JB.

There's not much assets (if any) left at VA for Bain to strip - the Fokkers value (IIRC the only non-encumbered owned fleet) would be very close to zero, and I suspect the handful of non-encumbered 737s would be the oldest in the fleet.
 

AIRwin

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Some update on the new Future Flight Credits:
 

jakeseven7

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Well the love in didn't last long.... Wow....

But really, what did anyone expect from the Bain/VA2 era?

And with patchwork border openings only just starting to resolve, I think its probably prudent they only start operating with a few planes.... makes sense?

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VIRGIN UNIONS JOIN TOGETHER FOR STRONG ATTACK ON BAIN


Virgin’s relationship with unions appears to have broken down after eight organisations joined together to issue a strongly-worded rebuke of the airline’s new owner Bain.

The unions, including the TWU and AFAP, said they were “concerned over the direction Virgin is taking” and appeared to suggest they are worried more staff cuts are coming because not enough aircraft are ready to fly.

The strongly-worded statement reads: “Workers are concerned over the direction Virgin is taking and over promises Bain made during the sale of the airline.

“Workers are alarmed at the shortfall in aircraft designated and ready for flying. Despite a promise of 75 aircraft there are just 56 ready for flying

“We have seen some worrying changes at Virgin since Bain Capital secured the sale of the airline. Unions at the first meeting of the advisory council will raise the issue of governance and we will be holding Bain Capital to account over the promises it made.

“We will be seeking a plan for how the airline will return to promised capacity in terms of aircraft as soon as possible. If Bain is preparing less aircraft for flying than promised we want to know how it is planning to keep 6,000 workers employed.

“Virgin pilot unions are concerned that the change of culture combined with savage reductions terms and conditions will lead to an erosion of training and safety standards.

 

Melburnian1

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Well the love in didn't last long.... Wow....

But really, what did anyone expect from the Bain/VA2 era?

And with patchwork border openings only just starting to resolve, I think its probably prudent they only start operating with a few planes.... makes sense?

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VIRGIN UNIONS JOIN TOGETHER FOR STRONG ATTACK ON BAIN


Virgin’s relationship with unions appears to have broken down after eight organisations joined together to issue a strongly-worded rebuke of the airline’s new owner Bain.

The unions, including the TWU and AFAP, said they were “concerned over the direction Virgin is taking” and appeared to suggest they are worried more staff cuts are coming because not enough aircraft are ready to fly.

The strongly-worded statement reads: “Workers are concerned over the direction Virgin is taking and over promises Bain made during the sale of the airline.

“Workers are alarmed at the shortfall in aircraft designated and ready for flying. Despite a promise of 75 aircraft there are just 56 ready for flying

“We have seen some worrying changes at Virgin since Bain Capital secured the sale of the airline. Unions at the first meeting of the advisory council will raise the issue of governance and we will be holding Bain Capital to account over the promises it made.

“We will be seeking a plan for how the airline will return to promised capacity in terms of aircraft as soon as possible. If Bain is preparing less aircraft for flying than promised we want to know how it is planning to keep 6,000 workers employed.

“Virgin pilot unions are concerned that the change of culture combined with savage reductions terms and conditions will lead to an erosion of training and safety standards.

The unions should not be allowed to 'hold Bain to account' unless these unionists are risking their own, or their organisation's, capital.
 

jakeseven7

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BAIN DEFENDS NEW STAFF TERMS AFTER JOINT UNION ATTACK


Virgin has defended the new terms it has offered employees after unions yesterday branded them “savage” and claimed they would lower safety standards.

“The changes we are seeking will shape a future for our airline that is sustainable for the long term and will mean we can save more jobs,” a spokesman told Australian Aviation.

“The COVID-19 pandemic has decimated our industry and the impacts are expected to last for a number of years, and this makes the need for change even greater,” said Virgin.

Yesterday’s letter made a series of claims, including that Virgin are using the new enterprise agreements to “drive down conditions”, that there was a “lack of knowledge” of the business’ traditional brand and culture, and even hints they believe a lack of airplanes available to fly suggests more job cuts are coming.

“Workers are alarmed at the shortfall in aircraft designated and ready for flying,” said the statement. “Despite a promise of 75 aircraft there are just 56 ready for flying. They will be questioning Bain on how it plans to keep 6,000 workers employed with less aircraft operating.

 

ric_melb

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I can find reports in early September of Bain saying they would start with 56 737's and increase to 75 if demand warranted it.
The figure of around 56 may also have been discussed before that.
I really can't see what the unions are complaining about, now!
Like Dajop I also think they may not be needing 56 right now.
 

jakeseven7

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Rex sticks the knife into Bain/VA2 again....

Not a lot of love there 😂

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REX CLOSES IN ON ‘ABANDONED’ VIRGIN ROUTES


Rex has revealed it’s now in advanced discussions to launch flights to a number of cities it says have been “abandoned” by Virgin’s decision to trim its network, including Port Macquarie and Canberra.

The update comes after Virgin recently revealed it would stop flying to a number of regional destinations including Albury, Tamworth, Hervey Bay, Mildura and Cloncurry. It meant some faced having only one carrier providing services.

Rex’s general manager for network strategy, Warrick Lodge, said on Thursday, “Rex has been in discussions with community leaders and government representatives desperate for an airline to fill the gap left by Virgin Australia.


 

RAM

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It could also be argued that the former owners also 'beaten' Bain to the "asset-stripping", most of VA's assets (especially the owned 737 and 777 fleets) were found by administrators to be encumbered with loans/mortgages against them courtesy of EY/SQ/HNA led under JB.

There's not much assets (if any) left at VA for Bain to strip - the Fokkers value (IIRC the only non-encumbered owned fleet) would be very close to zero, and I suspect the handful of non-encumbered 737s would be the oldest in the fleet.
I think of Bain's purchase of $3.5bn (including debt remember not only equity) was $2bn for VFF and $1.5bn for everything else. VFF was generating profits >$300m/year for a few years. The buyback by VA of the 1/3rd it had previously sold off set a $2bn valuation which at around just 6x earnings looked like a gift if you thought VA would continue in one form or another.

Of the $1.5bn - it covers the secured creditors & staff entitlements. So Bain has got the functional airline operation for free but with a negative cash flow of around $15m/week pre VFF net earnings of say $6m/week.

Against that breakdown you have Q getting increasingly desperate and resorting to very bad PR moves (but necessary when you may be trading insolvent) such as cancelling all sponsorships across the board.

One additional massive advantage VA now has is its lack of legacy floorspace (& the ongoing cashflow drain servicing it). Q on the other hand has nearly 2,000,000 sqm leased around the world & in Australia - the bulk of which approx 90% is on-airport & paying premium leasing rates thanks to AJ cashing in all his Australian airport leases to fund the share buybacks (both through raising cash & generating franking credits). As Q booked over $1bn in terminating those leases (between 18 months to 3 years early) - that provides a good guide on what their new leases will be costing. Nothing like locking in 10-30 year leases at the top of the market to create a major cashflow deficit when times are not so good.

Which is likely to be one of the major reasons, if not the main one, why Q has threatened to move their operations. Given their recent long term lease on their 7 tower HQ at Mascot for 12 years (which they're trying to sub-let around 20,000 sqm currently) - there is no way they could afford to break the lease. However never underestimate the stupidity of State Govts to give tax payers' money away.
 

HS-TQE

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If I recall QF's entire 787 fleet, plus a number from the other operational fleets were also recently encumbered (mortgaged/loaned) against the banks on top of leasing almost every building..

Also not surprising that both QF and VA are ending the sports sponsorships. Though If I recall, those sports are still keeping the carriers as the 'preferred carrier' minus the sponsorships.
 

jakeseven7

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Unions step up over loss of pay and conditions for Virgin workers under new owner Bain Capital


Pilots face pay cuts of up to 40 percent and flight attendants will be expected to work 15 hours straight under Virgin Australia's new owner Bain. The company under Bain Capital is shaping up to be a very different workplace for employees and they are not happy.

 

HappyFlyerFamily

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Unions step up over loss of pay and conditions for Virgin workers under new owner Bain Capital


Pilots face pay cuts of up to 40 percent and flight attendants will be expected to work 15 hours straight under Virgin Australia's new owner Bain. The company under Bain Capital is shaping up to be a very different workplace for employees and they are not happy.

Is it pay or pay rates?

If payrate, then not so good. But if pay that’s kind of expected.
 

RAM

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Things may be looking up on a relative basis for VA II given Q's court appearance where they argued that they were within 8 to 10 weeks of going broke if they hadn't grounded their planes.


I suspect Q are being conservative with that estimate. Given that their FY 2019/20 financial reports show that without the equity raising of $1.36bn from institutional investors on June 26th - they would have had negative net tangible assets (liabilities > tangible assets) of more than 70 cents per share, aka 'broke'.

Seems as if the 8-10 weeks quote may need to have been rephrased somewhat to reflect the reality shown with the Financial reports.
 

Melburnian1

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Unions step up over loss of pay and conditions for Virgin workers under new owner Bain Capital


Pilots face pay cuts of up to 40 percent and flight attendants will be expected to work 15 hours straight under Virgin Australia's new owner Bain. The company under Bain Capital is shaping up to be a very different workplace for employees and they are not happy....
A few days later (!), Elizabeth Knight in 'SMH'/'The Age' has a similar contention.

From having one of the strongest bargaining positions in Australia in say January this year - perhaps eclipsed only by the CFMMEU wharfies, as we're seeing at present in Sydney - airline pilots have emerged into an environment where they arguably have rather less such sway (although not 'nil', as robotics cannot replace this human capital).

Qantas will be keen upon EBAs expiring to reduce pilots' salaries plus allowances and other conditions to keep it competitive with VA 2.0.
 

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