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81819
Posts: 2008
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Re: Australian Aviation Thread - April 2020

Thu Apr 30, 2020 8:14 am

CraigAnderson wrote:
Chipmunk1973 wrote:
This is a guess on my part, but I’m of the opinion that there will be a reasonable amount of 737 leases retained to ensure enough aircraft to offer enough frequency as competition to QF especially on SYD-MEL. Whilst the A330s offered a very nice J service, I don’t see those leases remaining, particularly when it’s been reported many times that the rates are not favourable.
Given that the only decent service (money wise) internationally, I wouldn’t be surprised to see the owned 777s being retained for at least a SYD-LAX service within the next 6-12 months.


I agree, a very interesting analysis from travelhound!

The 'golden boomerang' of BNE-SYD-MEL will soak up a lot of B737s just to remain in the same ballpark as Qantas although I'd think Virgin could maybe run one every hour instead of how QF has every half hour a lot of the time, so yes, some B737s will also need to be leased. As sad as it would be to see the A330s vanish, I think they are as good as gone, unless Twiggy or Wesfarmers is a successful bidder, because unless Virgin Mk II brings back Borghetti's planned 'Perth Product' for lie-flat 737 business class beds, which I don't see happening, Qantas would easily trump Virgin for corporate and Government travellers by going all-put with its own A330s.

I think SYD-LAX and BNE-LAX would be strong contenders, the owned B777s won't fetch much on the second-hand marker these days and those two routes are fairly competitive, especially BNE-LAX which has only Qantas. Virgin Australia dropped MEl-LAX a few years ago, the market already has QF and UA, plus the cost for crew overnighting in MEL all added up.


I think the Corona virus will put an end to the A330's for domestic flying. I'd suggest once the airline has been stabilised VA would be better off purchasing 737-10's with a revised business class seat.
 
melpax
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Re: Australian Aviation Thread - April 2020

Thu Apr 30, 2020 8:38 am

QF742 wrote:
I can’t see VA moving HQ to Perth. It will be very costly to move HQ, even with government assistance.

In relation to this hypothetical Perth international expansion, even less likely. The new VA will need to actually make money in order to pay down what debt it is left with and have enough cash for ongoing business and capital expenditure. Operating a small sub fleet for international ops is simply not feasible. I hope the next VA executive team will be prudent and pragmatic and create success for VA.


If Wesfarmers do end up buying into VA, it would be unlikely that they would move the HQ to Perth. If you look at their retail businesses as an example, they are all largely run out of Melbourne, especially the former Coles businesses, so they can access a wider pool of talent than if the HQ was moved to Perth.
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tullamarine
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Re: Australian Aviation Thread - April 2020

Thu Apr 30, 2020 8:46 am

melpax wrote:
QF742 wrote:
I can’t see VA moving HQ to Perth. It will be very costly to move HQ, even with government assistance.

In relation to this hypothetical Perth international expansion, even less likely. The new VA will need to actually make money in order to pay down what debt it is left with and have enough cash for ongoing business and capital expenditure. Operating a small sub fleet for international ops is simply not feasible. I hope the next VA executive team will be prudent and pragmatic and create success for VA.


If Wesfarmers do end up buying into VA, it would be unlikely that they would move the HQ to Perth. If you look at their retail businesses as an example, they are all largely run out of Melbourne, especially the former Coles businesses, so they can access a wider pool of talent than if the HQ was moved to Perth.

You're probably right that it is unlikely VA would relocate its head office regardless of who buys it unless a state government is prepared to finance the move and add attractive long-term incentives but Coles isn't part of Wesfarmers any longer.

I think the Corona virus will put an end to the A330's for domestic flying. I'd suggest once the airline has been stabilised VA would be better off purchasing 737-10's with a revised business class seat.

If the market contracts as much as many expect it will, QF will also reduce the use of A330s on domestic services. The only thing that will save them is international, particularly Asia, will be even worse so they've got fly them somewhere.
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redroo
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Re: Australian Aviation Thread - April 2020

Thu Apr 30, 2020 9:28 am

tullamarine wrote:
melpax wrote:
QF742 wrote:
I can’t see VA moving HQ to Perth. It will be very costly to move HQ, even with government assistance.

In relation to this hypothetical Perth international expansion, even less likely. The new VA will need to actually make money in order to pay down what debt it is left with and have enough cash for ongoing business and capital expenditure. Operating a small sub fleet for international ops is simply not feasible. I hope the next VA executive team will be prudent and pragmatic and create success for VA.


If Wesfarmers do end up buying into VA, it would be unlikely that they would move the HQ to Perth. If you look at their retail businesses as an example, they are all largely run out of Melbourne, especially the former Coles businesses, so they can access a wider pool of talent than if the HQ was moved to Perth.

You're probably right that it is unlikely VA would relocate its head office regardless of who buys it unless a state government is prepared to finance the move and add attractive long-term incentives but Coles isn't part of Wesfarmers any longer.

I think the Corona virus will put an end to the A330's for domestic flying. I'd suggest once the airline has been stabilised VA would be better off purchasing 737-10's with a revised business class seat.

If the market contracts as much as many expect it will, QF will also reduce the use of A330s on domestic services. The only thing that will save them is international, particularly Asia, will be even worse so they've got fly them somewhere.


Definitely see VA 330 fleet going but not convinced on QF dropping the 330 from Perth. There is still a fair amount of cargo that is brought back and forth which the 330 is perfect for. Plenty of scope to consolidate the daily flights into fewer 330s. Can’t see them being used on the golden triangle for a while unless it’s a bit of clever scheduling.

But if you want to be really radical. QF could shrink to 787 and 737 and then grow from there.
 
346fetish
Posts: 54
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Re: Australian Aviation Thread - April 2020

Thu Apr 30, 2020 9:33 am

redroo wrote:
tullamarine wrote:
melpax wrote:

If Wesfarmers do end up buying into VA, it would be unlikely that they would move the HQ to Perth. If you look at their retail businesses as an example, they are all largely run out of Melbourne, especially the former Coles businesses, so they can access a wider pool of talent than if the HQ was moved to Perth.

You're probably right that it is unlikely VA would relocate its head office regardless of who buys it unless a state government is prepared to finance the move and add attractive long-term incentives but Coles isn't part of Wesfarmers any longer.

I think the Corona virus will put an end to the A330's for domestic flying. I'd suggest once the airline has been stabilised VA would be better off purchasing 737-10's with a revised business class seat.

If the market contracts as much as many expect it will, QF will also reduce the use of A330s on domestic services. The only thing that will save them is international, particularly Asia, will be even worse so they've got fly them somewhere.


Definitely see VA 330 fleet going but not convinced on QF dropping the 330 from Perth. There is still a fair amount of cargo that is brought back and forth which the 330 is perfect for. Plenty of scope to consolidate the daily flights into fewer 330s. Can’t see them being used on the golden triangle for a while unless it’s a bit of clever scheduling.

But if you want to be really radical. QF could shrink to 787 and 737 and then grow from there.


I see VA wides going as a whole. As for QF, I don't see the A330 going anytime soon. It's a strong, low CAPEX aircraft for the WA-BNE/MEL/SYD-AKL string and key asian routes.
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Flying-Tiger
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Re: Australian Aviation Thread - April 2020

Thu Apr 30, 2020 9:55 am

travelhound wrote:
With VA probably needing an extra $1.0 billion (new debt / equity by a super fund) to ensure its liquidity (or recapitalise the airline) a total bid could come in the region of $3.2-3.7 billion.

If we throw in a good will component, a bid could come in higher than $4.0 billion. If we do see a bid this high, it would suggest the bidder sees value in the business as a going concern.


Call me ignorant but:

- The 4.0 bn can only be a mix of assuming (heavily) hair-cut liabilities and a thick layer of fresh working capital. Who is having same these days?
- You need someone with deep pockets being willing to move into a high-risk and less-than-stellar-performing business with a more than dizzy [market] outlook, and the business still being fully loaded with debt.

One has to ask if it wouldn´t be more opportune for any investor - if there are really any - to start from scratch. Any business without such a debt load will be a far better performer that one highly-lverage. And in terms of brand acceptance: in this airline market price counts... There´s little to hinder an Indigo to move into the Australian market in say two years, setup an own airline and target QF and VA, still licking their [financial debt] wounds and undercut both on price. People won´t care about brand value if you´ve a lower priced competitor around.

In other words: I´m not sure if there´s really a way forward for VA except for bits and pieces (e.g. the FiFo market).
Flown: A319/320/321,A332/3,A343/346, A359, A380,AT4,AT7,B712, B732/3/4/5/7/8/9,B742/4,B752/3, B762/763,B772/77W,CR2/7/9/K,ER3/4,E70/75/90/95, F50/70/100,M11,L15,SF3,S20, AR8/1, 142/143,... 330.860 miles and counting.
 
JQ321
Posts: 153
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Re: Australian Aviation Thread - April 2020

Thu Apr 30, 2020 10:13 am

redroo wrote:
tullamarine wrote:
melpax wrote:

If Wesfarmers do end up buying into VA, it would be unlikely that they would move the HQ to Perth. If you look at their retail businesses as an example, they are all largely run out of Melbourne, especially the former Coles businesses, so they can access a wider pool of talent than if the HQ was moved to Perth.

You're probably right that it is unlikely VA would relocate its head office regardless of who buys it unless a state government is prepared to finance the move and add attractive long-term incentives but Coles isn't part of Wesfarmers any longer.

I think the Corona virus will put an end to the A330's for domestic flying. I'd suggest once the airline has been stabilised VA would be better off purchasing 737-10's with a revised business class seat.

If the market contracts as much as many expect it will, QF will also reduce the use of A330s on domestic services. The only thing that will save them is international, particularly Asia, will be even worse so they've got fly them somewhere.


Definitely see VA 330 fleet going but not convinced on QF dropping the 330 from Perth. There is still a fair amount of cargo that is brought back and forth which the 330 is perfect for. Plenty of scope to consolidate the daily flights into fewer 330s. Can’t see them being used on the golden triangle for a while unless it’s a bit of clever scheduling.

But if you want to be really radical. QF could shrink to 787 and 737 and then grow from there.


More realistic would be 747 and A380 gone with older A330's retired and as International recovers order some A350-1000ULRs for project sunrise/ expansion.
 
anstar
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Re: Australian Aviation Thread - April 2020

Thu Apr 30, 2020 11:25 am

redroo wrote:

But if you want to be really radical. QF could shrink to 787 and 737 and then grow from there.


Yep agreed. They could also repurpose the JQ787's for short haul domestic ie PER and Asian destinations. Allowing QF to be 737/787 and JQ to go back to being a LCC with a single fleet type of A320 family aircraft.
 
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Re: Australian Aviation Thread - April 2020

Thu Apr 30, 2020 11:57 am

Please continue discussion in Australian Aviation Thread - May 2020

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