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FSDan
Posts: 3340
Joined: Mon Jan 03, 2011 5:27 pm

Re: Virgin Atlantic facing collapse

Thu Apr 02, 2020 10:34 pm

tphuang wrote:
FSDan wrote:
tphuang wrote:
Well, if VS still has all these LHR slots that are worth money, they can sell them to raise funds to keep themselves going. Even in this climate, they might be able to raise $500 million from those sales. There will be plenty of interested parties.


If they don't have the LHR slots, though, is there a point to keeping themselves going? They are already at a severe competitive disadvantage to BA, and would only make life harder for themselves in the long run by selling some of their most valuable assets.

Their LHR slots so far haven't allowed them to be profitable even during the good times. I'm not sure what the rationale is to keep something like that around other than to service DL. They can try a long haul strategy from LGW or MAN. Either way, it shouldn't be up to British people to prop them up when they still have assets they can sell.


The profitability of their MAN and LGW long haul ops might be better now post Thomas Cook, and also especially if Norwegian were to fail. But still, if they were to sell their LHR slots, in my opinion they might as well sell all their 789s and 35Ks while they are at it, and change their business model into being an entirely leisure-oriented airline. At that point they really wouldn't be of any use to DL either (unless they theoretically sold their LHR slots to DL well below market value).
This is my signature until I think of a better one.
 
NateGreat
Posts: 497
Joined: Thu Sep 28, 2017 6:02 pm

Re: Virgin Atlantic facing collapse

Thu Apr 02, 2020 11:09 pm

FSDan wrote:
tphuang wrote:
FSDan wrote:

If they don't have the LHR slots, though, is there a point to keeping themselves going? They are already at a severe competitive disadvantage to BA, and would only make life harder for themselves in the long run by selling some of their most valuable assets.

Their LHR slots so far haven't allowed them to be profitable even during the good times. I'm not sure what the rationale is to keep something like that around other than to service DL. They can try a long haul strategy from LGW or MAN. Either way, it shouldn't be up to British people to prop them up when they still have assets they can sell.


The profitability of their MAN and LGW long haul ops might be better now post Thomas Cook, and also especially if Norwegian were to fail. But still, if they were to sell their LHR slots, in my opinion they might as well sell all their 789s and 35Ks while they are at it, and change their business model into being an entirely leisure-oriented airline. At that point they really wouldn't be of any use to DL either (unless they theoretically sold their LHR slots to DL well below market value).

And where would those 789s and 35Ks go?
 
FSDan
Posts: 3340
Joined: Mon Jan 03, 2011 5:27 pm

Re: Virgin Atlantic facing collapse

Thu Apr 02, 2020 11:19 pm

NateGreat wrote:
FSDan wrote:
tphuang wrote:
Their LHR slots so far haven't allowed them to be profitable even during the good times. I'm not sure what the rationale is to keep something like that around other than to service DL. They can try a long haul strategy from LGW or MAN. Either way, it shouldn't be up to British people to prop them up when they still have assets they can sell.


The profitability of their MAN and LGW long haul ops might be better now post Thomas Cook, and also especially if Norwegian were to fail. But still, if they were to sell their LHR slots, in my opinion they might as well sell all their 789s and 35Ks while they are at it, and change their business model into being an entirely leisure-oriented airline. At that point they really wouldn't be of any use to DL either (unless they theoretically sold their LHR slots to DL well below market value).

And where would those 789s and 35Ks go?


No idea! We're well into strange territory here, talking about VS becoming an all-leisure airline and divesting all LHR assets. If they were to sell their LHR slots, what do you think they would do with their 789s and 35Ks? Fly LGW-MCO and MAN-MCO 10x daily each?
This is my signature until I think of a better one.
 
NateGreat
Posts: 497
Joined: Thu Sep 28, 2017 6:02 pm

Re: Virgin Atlantic facing collapse

Thu Apr 02, 2020 11:24 pm

FSDan wrote:
NateGreat wrote:
FSDan wrote:

The profitability of their MAN and LGW long haul ops might be better now post Thomas Cook, and also especially if Norwegian were to fail. But still, if they were to sell their LHR slots, in my opinion they might as well sell all their 789s and 35Ks while they are at it, and change their business model into being an entirely leisure-oriented airline. At that point they really wouldn't be of any use to DL either (unless they theoretically sold their LHR slots to DL well below market value).

And where would those 789s and 35Ks go?


No idea! We're well into strange territory here, talking about VS becoming an all-leisure airline and divesting all LHR assets. If they were to sell their LHR slots, what do you think they would do with their 789s and 35Ks? Fly LGW-MCO and MAN-MCO 10x daily each?

If their LHR ops failed, it would interesting to see them switch over to all LGW ops. Although, I’m praying they can keep their LHR ops and their 789 and 35K fleets. I’m trying to fly the 35K for the very first time to LHR from JFK in October. Maybe they could even consider splitting some of their LHR ops/slots with DL, especially for cities like ATL and maybe BOS.
 
tphuang
Posts: 5353
Joined: Tue Mar 14, 2017 2:04 pm

Re: Virgin Atlantic facing collapse

Thu Apr 02, 2020 11:47 pm

FSDan wrote:
tphuang wrote:
FSDan wrote:

If they don't have the LHR slots, though, is there a point to keeping themselves going? They are already at a severe competitive disadvantage to BA, and would only make life harder for themselves in the long run by selling some of their most valuable assets.

Their LHR slots so far haven't allowed them to be profitable even during the good times. I'm not sure what the rationale is to keep something like that around other than to service DL. They can try a long haul strategy from LGW or MAN. Either way, it shouldn't be up to British people to prop them up when they still have assets they can sell.


The profitability of their MAN and LGW long haul ops might be better now post Thomas Cook, and also especially if Norwegian were to fail. But still, if they were to sell their LHR slots, in my opinion they might as well sell all their 789s and 35Ks while they are at it, and change their business model into being an entirely leisure-oriented airline. At that point they really wouldn't be of any use to DL either (unless they theoretically sold their LHR slots to DL well below market value).


It might be better for them to do that. There is still plenty of demand to places like MCO, Caribbeans, southern Europe, South America from LGW. Not everyone needs to fly out of LHR. If they are holding onto the LHR slots, then they have clearly have not explored every avenue. I don't see how you make the case to British gov't you are doing this as a last resort when you still hold onto the slots.

And why would they need to be be of any use to DL? DL is not going to buy their slots at a time when TATL demand is at an all time low and they are having their own liquidity issues. The obvious buyer here of any slots is BA if they want money and I assume some other airlines looking for 1 or 2 daily flights here and there.
 
FSDan
Posts: 3340
Joined: Mon Jan 03, 2011 5:27 pm

Re: Virgin Atlantic facing collapse

Thu Apr 02, 2020 11:47 pm

NateGreat wrote:
If their LHR ops failed, it would interesting to see them switch over to all LGW ops.


In that scenario, I just can't picture them needing a fleet of more than the 4 332s (based at MAN) and the 10 333s (based at LGW). And a failure of Norwegian would need to be a precursor for increased LGW ops to have any hope of profitability. Also, trying to become a mostly leisure focused airline at a time when leisure traffic is likely to be the hardest hit for a while seems like a decidedly bad idea to me.

NateGreat wrote:
Maybe they could even consider splitting some of their LHR ops/slots with DL, especially for cities like ATL and maybe BOS.


They theoretically could do that (indeed, have been doing that with DL taking over some frequencies to cover for the 789 engine issues), but the problem would remain what to do with their surplus aircraft in that case. They could probably retire their 744s ASAP and backfill some with other fleets, although their LHR-based aircraft are not in a high-density leisure configuration and might not be great replacements.
This is my signature until I think of a better one.
 
FSDan
Posts: 3340
Joined: Mon Jan 03, 2011 5:27 pm

Re: Virgin Atlantic facing collapse

Thu Apr 02, 2020 11:53 pm

tphuang wrote:
There is still plenty of demand to places like MCO, Caribbeans, southern Europe, South America from LGW.


There is in the long term, but can VS make it long enough to get to the point where long haul leisure travel has rebounded? It seems that's likely to be the hardest hit of any market segment for most of the rest of this year at the very least.

tphuang wrote:
And why would they need to be be of any use to DL? DL is not going to buy their slots at a time when TATL demand is at an all time low and they are having their own liquidity issues. The obvious buyer here of any slots is BA if they want money and I assume some other airlines looking for 1 or 2 daily flights here and there.


Does BA have a better liquidity position than DL? Both were obviously healthy heading into this, but with U.S. domestic traffic likely to rebound before international traffic does I would have thought BA was in no better shape to be investing in assets like slots at the moment.
This is my signature until I think of a better one.
 
tphuang
Posts: 5353
Joined: Tue Mar 14, 2017 2:04 pm

Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 12:10 am

FSDan wrote:
tphuang wrote:
There is still plenty of demand to places like MCO, Caribbeans, southern Europe, South America from LGW.


There is in the long term, but can VS make it long enough to get to the point where long haul leisure travel has rebounded? It seems that's likely to be the hardest hit of any market segment for most of the rest of this year at the very least.

tphuang wrote:
And why would they need to be be of any use to DL? DL is not going to buy their slots at a time when TATL demand is at an all time low and they are having their own liquidity issues. The obvious buyer here of any slots is BA if they want money and I assume some other airlines looking for 1 or 2 daily flights here and there.


Does BA have a better liquidity position than DL? Both were obviously healthy heading into this, but with U.S. domestic traffic likely to rebound before international traffic does I would have thought BA was in no better shape to be investing in assets like slots at the moment.


not thinking of liquidity position, but of need. There are places that BA can park LHR slots that DL simply cannot right now with the decline in TATL travel. How is DL going to be able to operate 40 extra flight a day to LHR without a local partner? Even if it sends some of that to KL/AF, how many flights can you run between LHR-AMS in the current environment.

If we use China as a guideline from domestic traffic. US airlines might get to 70% of pre-virus domestic capacity with 60% LF by Q4 at really low yields. Hard for me to see that actually losing less money than just not flying anything at all for BA.
 
skipness1E
Posts: 4840
Joined: Sun Aug 19, 2007 9:18 am

Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 1:27 am

Some of the replies above are commercially insane, some of them are good. For me, the key is to what extent business travel rebounds, as BA are VERY heavyily focussed on the front cabin, whereas Virgin Atlantic are not quite so exposed. No 86J cabins at Virgin Towers. Timing is key here, forward bookings for the summer have flatlined and won't recover, and remember, one bad summer can kill many seasonally exposed carriers. Let's not pretend that LHR-US is not seasonlly sensitve, it massively is, frequency is held up to maintain the loyalty of frequent fliers, so they don't bleed away to the competition. So fundamentally, VS will bleed cash all summer, and even if winter bounces back to near normal levels, which it won't, they'll struggle with liquidity.

As for moving everything to Gatwick, well we know what happens once airlines move from LHR to LGW, they usually go bust or stagger on for some time before being bought out. Pan Am and TWA didn't bounce back after leaving LHR. Actually the opposite is more likely, close LGW and retrench to LHR. I mean people forget how small the LGW operation now is, it's only five aircraft, on a good day. That could be moved lock stock and barrel to LHR and slotted in where multiple frequencies have been cut on other routes. It's sub optimal but the costs of two bases in London, two sets of engineering cover, two (different) handling agents isn't ideal. But lets'e be clear, if you move focus out of LHR to LGW and MAN, you're done, game over, beause when the high yield frequent flyer market does recover, you won't have enough skin in the game for it to benefit you.

I don't expect the new LGW routes will operate this summer or next, nor will GRU go ahead. Everyone is in survival mode, and it's quite the journey from the public walking 2m away from everyone, giving you dirty looks if you so much as cough, to taking your kids on a long haul flight for seven hours with hundreds of other people. Cut it back to what might make money by next summer and close the rest. BAU is 18 months to 2 years away, if at all.
 
VS11
Posts: 1662
Joined: Mon Jul 02, 2001 6:34 am

Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 3:06 am

skipness1E wrote:
Some of the replies above are commercially insane, some of them are good. For me, the key is to what extent business travel rebounds, as BA are VERY heavyily focussed on the front cabin, whereas Virgin Atlantic are not quite so exposed. No 86J cabins at Virgin Towers. Timing is key here, forward bookings for the summer have flatlined and won't recover, and remember, one bad summer can kill many seasonally exposed carriers. Let's not pretend that LHR-US is not seasonlly sensitve, it massively is, frequency is held up to maintain the loyalty of frequent fliers, so they don't bleed away to the competition. So fundamentally, VS will bleed cash all summer, and even if winter bounces back to near normal levels, which it won't, they'll struggle with liquidity.

As for moving everything to Gatwick, well we know what happens once airlines move from LHR to LGW, they usually go bust or stagger on for some time before being bought out. Pan Am and TWA didn't bounce back after leaving LHR. Actually the opposite is more likely, close LGW and retrench to LHR. I mean people forget how small the LGW operation now is, it's only five aircraft, on a good day. That could be moved lock stock and barrel to LHR and slotted in where multiple frequencies have been cut on other routes. It's sub optimal but the costs of two bases in London, two sets of engineering cover, two (different) handling agents isn't ideal. But lets'e be clear, if you move focus out of LHR to LGW and MAN, you're done, game over, beause when the high yield frequent flyer market does recover, you won't have enough skin in the game for it to benefit you.

I don't expect the new LGW routes will operate this summer or next, nor will GRU go ahead. Everyone is in survival mode, and it's quite the journey from the public walking 2m away from everyone, giving you dirty looks if you so much as cough, to taking your kids on a long haul flight for seven hours with hundreds of other people. Cut it back to what might make money by next summer and close the rest. BAU is 18 months to 2 years away, if at all.


I agree mostly with your comments but there are other considerations. Everything you say is also true for BA but they have higher costs than Virgin. Virgin is much smaller and much more adaptable. Also, the current lockdown situation is not sustainable for more than 3 months, anywhere in the world. I do believe that by July people will be traveling again even if there are restrictions in place - wearing masks, more space between people on flights, mandatory quick result testing before entering airports. Massive amounts of money, effort and research are thrown currently at this thing and there will be results. It is easy to get caught in the doom and gloom of the news cycle but it is not the end of the world yet.
 
strfyr51
Posts: 5045
Joined: Tue Apr 10, 2012 5:04 pm

Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 3:28 am

jayunited wrote:
Armodeen wrote:
SimProgrammer wrote:
Persuading the UK to prop up a company owned by a tax-dodging expat sitting on a £4bn pile and a US major with shareholders hungry months to feed, will be difficult.


This opinion is popular but a little grating. While SRB had a before crash net worth of £4bn, it is certainly significantly less now. It’s also mostly tied up in assets, it’s not like he has a literal pile of money on which he sleeps on Necker island as you imply. SRB doesn’t have anything like the sort of money required to save VS, billionaire or not. DL will have enough problems preventing its own collapse and I’m sure cannot bail out other airlines. This is an unprecedented situation.

Also, VS employs 8500 people. Most of those will tell you what a great company they are to work for. How about showing a little empathy and thinking about them?


VS is in an interesting position and I personally don't want to see any airline go under but if SimProgrammer's entire comment is true it is going to be difficult to persuade the government to intervene. I would suggest all 8500 Vs employees bombard their local politicians with request to help save their airline and ultimately their jobs. But is will not be easy just look at the cruise industry here in the U.S. they thought they were going to be bailed out then a few people in Congress relented because they are are not U.S. companies and don't pay U.S. taxes and Trump backed down and changed his tune even though thousands of U.S. land based jobs are on the line in states like Florida.

Delta Airlines can't come to VS's rescue so now is the time for all VS employees to band together and make sure the UK government hears their voices so that they don't simply focus on SRB, or the fact that DL owns such a large portion of VS.

Jay is actually right. Virgin is primarily owned by 2 shareholders. If they were a diversified ownership group making money for a diverse group of shareholders? Or public stockholders? then by all means I would say support then. However? Just for Branson and Delta to not lose their shirts? I do not and Cannot see it. Maybe they should go public and see what the market will bring them. They really do nothing for the General market otherwise. They're private. so they should raise their money on the private market! They have No right to public Taxpayer financing.
 
skipness1E
Posts: 4840
Joined: Sun Aug 19, 2007 9:18 am

Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 4:31 am

VS11 wrote:
skipness1E wrote:
Some of the replies above are commercially insane, some of them are good. For me, the key is to what extent business travel rebounds, as BA are VERY heavyily focussed on the front cabin, whereas Virgin Atlantic are not quite so exposed. No 86J cabins at Virgin Towers. Timing is key here, forward bookings for the summer have flatlined and won't recover, and remember, one bad summer can kill many seasonally exposed carriers. Let's not pretend that LHR-US is not seasonlly sensitve, it massively is, frequency is held up to maintain the loyalty of frequent fliers, so they don't bleed away to the competition. So fundamentally, VS will bleed cash all summer, and even if winter bounces back to near normal levels, which it won't, they'll struggle with liquidity.

As for moving everything to Gatwick, well we know what happens once airlines move from LHR to LGW, they usually go bust or stagger on for some time before being bought out. Pan Am and TWA didn't bounce back after leaving LHR. Actually the opposite is more likely, close LGW and retrench to LHR. I mean people forget how small the LGW operation now is, it's only five aircraft, on a good day. That could be moved lock stock and barrel to LHR and slotted in where multiple frequencies have been cut on other routes. It's sub optimal but the costs of two bases in London, two sets of engineering cover, two (different) handling agents isn't ideal. But lets'e be clear, if you move focus out of LHR to LGW and MAN, you're done, game over, beause when the high yield frequent flyer market does recover, you won't have enough skin in the game for it to benefit you.

I don't expect the new LGW routes will operate this summer or next, nor will GRU go ahead. Everyone is in survival mode, and it's quite the journey from the public walking 2m away from everyone, giving you dirty looks if you so much as cough, to taking your kids on a long haul flight for seven hours with hundreds of other people. Cut it back to what might make money by next summer and close the rest. BAU is 18 months to 2 years away, if at all.


I agree mostly with your comments but there are other considerations. Everything you say is also true for BA but they have higher costs than Virgin. Virgin is much smaller and much more adaptable. Also, the current lockdown situation is not sustainable for more than 3 months, anywhere in the world. I do believe that by July people will be traveling again even if there are restrictions in place - wearing masks, more space between people on flights, mandatory quick result testing before entering airports. Massive amounts of money, effort and research are thrown currently at this thing and there will be results. It is easy to get caught in the doom and gloom of the news cycle but it is not the end of the world yet.

I’m a marketing analyst and from a market confidence standpoint, this is properly existential for many airlines. I could be wrong, but unless COVID19 is 100% cured and dealt with ASAP, too many people will NOT risk putting their selves and loved ones on a long haul flight as we used to. The sheer unconscious bias that will come into play will be huge. Only something like “The World’s Biggest Offer” a-la BA in 1991 will get people back in the air in the same way, a loss leader to breathe life into the industry.
 
Boeing74741R
Posts: 1418
Joined: Tue Apr 17, 2007 5:44 am

Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 8:19 am

KingB123 wrote:
i dont get why the government has to be responsible for the mess of private companies,


Because sometimes it's in the national interest to provide a support package if a private enterprise is considered strategic or too big to fail. Other times, such as if you have a left-leaning/socialist government, a takeover deal as part of a rescue package is ideological. I actually agree in principle that the government shouldn't be rescuing every single business that runs into distress, but if an organisation is well-run or strategic or in the interests of the wider public (i.e. competition) or simply fall in to the "too big to fail" category, it shouldn't be dismissed out of hand.

In the current climate of COVID-19 and the British government have wiped out the markets of all British airlines by telling said market to stay at home until further notice combined with other countries temporarily closing their borders for an indefinite period to selected origins, it is my view that the British government to consider supporting the industry that they are hitting hardest so they will be there when we come out on the other side of this pandemic. Even well-run companies are not immune to sudden economic shocks and despite their bluster, it wouldn't surprise me if BA eventually get the begging bowl out if this continues for a long time.

Let me ask you this. Back in 2007/2008, the (private) banks such as Northern Rock, RBS and Lloyds TSB were all on the verge of collapsing. The UK government took on majority stakes/fully nationalised them as part of a rescue package. I felt at the time at least one of them should have been allowed to fail to send a message that banks need to change the way they operate as the government wouldn't be there to bail them out, but in hindsight it was probably the best course of action as the economic impact of a failed bank would have been devastating. Other nations governments followed suit. Did you support that action or is your view that governments should leave private companies alone extend to the banks in 2007/2008?
 
Boeing74741R
Posts: 1418
Joined: Tue Apr 17, 2007 5:44 am

Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 8:29 am

FSDan wrote:
They could probably retire their 744s ASAP and backfill some with other fleets, although their LHR-based aircraft are not in a high-density leisure configuration and might not be great replacements.


The 747's are on the way out anyway, but many of the remaining ones are leased for at least another year or so, so the liabilities even parked up will remain unless the leaseco's are prepared to take them back early.

Other aircraft can easily be reconfigured, but clearly you wouldn't want to do this all the time as it becomes an expensive exercise doing that twice a year.

skipness1E wrote:
As for moving everything to Gatwick, well we know what happens once airlines move from LHR to LGW, they usually go bust or stagger on for some time before being bought out. Pan Am and TWA didn't bounce back after leaving LHR. Actually the opposite is more likely, close LGW and retrench to LHR. I mean people forget how small the LGW operation now is, it's only five aircraft, on a good day. That could be moved lock stock and barrel to LHR and slotted in where multiple frequencies have been cut on other routes. It's sub optimal but the costs of two bases in London, two sets of engineering cover, two (different) handling agents isn't ideal. But lets'e be clear, if you move focus out of LHR to LGW and MAN, you're done, game over, beause when the high yield frequent flyer market does recover, you won't have enough skin in the game for it to benefit you.


You know what, if frequencies/routes are cut at LHR to free up slots for whatever is left operating out of LGW I can see merit in consolidating all of their London ops to LHR. I've always argued that not all leisure travellers are prepared to go to LGW due to location (and conversely some people aren't prepared to go to LHR if LGW is better located) and, as you say, it reduces overheads.

Yes, some of the leisure destinations might not be as profitable as the places VS currently serve from LHR, but if some of these flights are no longer profitable anyway post-downturn it's a better use of slots than being forced to give them up.

In fact, this year is probably the first in several years where new routes have been added to LGW (the JFK flight and the DL BOS flight). All the new routes in recent years have been out of LHR and MAN.
 
Boeing74741R
Posts: 1418
Joined: Tue Apr 17, 2007 5:44 am

Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 8:31 am

FSDan wrote:
The profitability of their MAN and LGW long haul ops might be better now post Thomas Cook, and also especially if Norwegian were to fail.


Given the prices they were charging immediately after Thomas Cook collapsed for flights over last winter, you'd like to think they've been able to make more money than they normally would.
 
BrianDromey
Posts: 2750
Joined: Sun Dec 10, 2006 2:23 am

Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 10:09 am

skipness1E wrote:
As for moving everything to Gatwick, well we know what happens once airlines move from LHR to LGW, they usually go bust or stagger on for some time before being bought out. Pan Am and TWA didn't bounce back after leaving LHR. Actually the opposite is more likely, close LGW and retrench to LHR. I mean people forget how small the LGW operation now is, it's only five aircraft, on a good day. That could be moved lock stock and barrel to LHR and slotted in where multiple frequencies have been cut on other routes. It's sub optimal but the costs of two bases in London, two sets of engineering cover, two (different) handling agents isn't ideal. But lets'e be clear, if you move focus out of LHR to LGW and MAN, you're done, game over, beause when the high yield frequent flyer market does recover, you won't have enough skin in the game for it to benefit you.


I agree that if VS need to consolidate then LHR makes sense - the yields are higher. Up to now it was never worth 'wasting' an LHR slot to Orlando. Which they operated 2x Daily from LGW, which is quite some capacity with only 14 upper class seats. That might change in an environment where they have more slots than they know what to do with. I think the 747 and A346s are done for good. Going forward its going to be a 789, 330 and 350 operation. Which will likely be more than enough, LHR and MAN likely to come back online first with the connections to the DL hubs, probably at much reduced frequency.

The only thing going for the old 747 and A340 fleets would be cheap oil prices in the interim. But I just don't think the demand would be there unless VS can get out of expensive lease obligations for the A350 and 787 fleets.
 
Sokes
Posts: 1887
Joined: Sat Mar 09, 2019 4:48 pm

Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 12:37 pm

mattyfitzg wrote:
Well the U.K. government already said they’d look at each airline on a case by case basis with no guarantees


Arbitrary decisions are always a nice way to make money. I assume the ministers involved can look forward to nice advisory contracts next time they fail to get reelected.
Why not just tell the company to issue new shares?
Why can't the world be a little bit more autistic?
 
TUGMASTER
Posts: 1220
Joined: Wed Jul 07, 2004 8:56 pm

Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 1:05 pm

So... 5 pages in, and we’re all still debating this issue.
It’s been stated several times up thread why there is little support for a VS bail out.

I’m sure absolutely no one wants to see anyone out of work, But the problem is SRB .
He knows it , everyone on here knows it, and many of the general public know it too.
Good luck to VS I say, but the money has to come from the deep pockets is SRB , with DL also chipping in their fair share too.
 
KingB123
Posts: 191
Joined: Mon Feb 19, 2018 10:30 pm

Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 1:23 pm

Sokes wrote:
raylee67 wrote:
This should be compare to WWII, where life would resume after a huge one-off disruption.

I believe in WW2 around 50 million people died. I expect the virus may kill anywhere between 30 to 70 million. But then I prefer 100 million dead 80 year old over 20 million 20 year old.
The story of the chess board and the corn of rice which gets doubled every field: in two, three months everything may be over and we can go back to normal.


What an disgusting comment to make
King B
 
Sokes
Posts: 1887
Joined: Sat Mar 09, 2019 4:48 pm

Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 1:30 pm

KingB123 wrote:
What an disgusting comment to make

My apologies. Can you formulate it in such a way as not to be disgusting?
Why can't the world be a little bit more autistic?
 
KingB123
Posts: 191
Joined: Mon Feb 19, 2018 10:30 pm

Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 1:39 pm

Sokes wrote:
KingB123 wrote:
What an disgusting comment to make

My apologies. Can you formulate it in such a way as not to be disgusting?


By not having a preference on what age group you would like to die.
King B
 
DeltaPSCFlyer
Posts: 78
Joined: Fri Nov 22, 2019 4:39 pm

Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 1:48 pm

TUGMASTER wrote:
So... 5 pages in, and we’re all still debating this issue.
It’s been stated several times up thread why there is little support for a VS bail out.

I’m sure absolutely no one wants to see anyone out of work, But the problem is SRB .
He knows it , everyone on here knows it, and many of the general public know it too.
Good luck to VS I say, but the money has to come from the deep pockets is SRB , with DL also chipping in their fair share too.


Agree with your last sentence...BUT....how could DL do that at this point, especially if they accept the grant from the government? Imagine the (justified) outrage if they were to send $500 million or so to "rescue" VS? If VS does in fact collapse, then DL is out of luck. What may seemed like a strategy investment in the pre-virus world is gone now. And DL may lose a similar equity investment with KE, depending on what happens with KE. Ouch.
 
Ryanair01
Posts: 485
Joined: Fri Dec 27, 2013 9:27 pm

Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 2:00 pm

TUGMASTER wrote:
So... 5 pages in, and we’re all still debating this issue.
It’s been stated several times up thread why there is little support for a VS bail out.

I’m sure absolutely no one wants to see anyone out of work, But the problem is SRB .
He knows it , everyone on here knows it, and many of the general public know it too.
Good luck to VS I say, but the money has to come from the deep pockets is SRB , with DL also chipping in their fair share too.


I doubt SRB has enough cash sat just sat around to pump any significant sum into VS. DL won't be able to put cash in, they are surviving off US Federal Funds, which I'm sure DL can't spend on overseas investments.

So really it comes down to the UK Govt.

For the UK Govt VS staff (direct and supply chain) are net contributors to the economy via National Insurance and PAYE tax. If VS goes under then many thousands more people become net claimants from the economy, because they'll get unemployment benefits. So whatever happens there is going to be a major cost for the British Government.
 
TUGMASTER
Posts: 1220
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Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 2:12 pm

DeltaPSCFlyer wrote:
TUGMASTER wrote:
So... 5 pages in, and we’re all still debating this issue.
It’s been stated several times up thread why there is little support for a VS bail out.

I’m sure absolutely no one wants to see anyone out of work, But the problem is SRB .
He knows it , everyone on here knows it, and many of the general public know it too.
Good luck to VS I say, but the money has to come from the deep pockets is SRB , with DL also chipping in their fair share too.


Agree with your last sentence...BUT....how could DL do that at this point, especially if they accept the grant from the government? Imagine the (justified) outrage if they were to send $500 million or so to "rescue" VS? If VS does in fact collapse, then DL is out of luck. What may seemed like a strategy investment in the pre-virus world is gone now. And DL may lose a similar equity investment with KE, depending on what happens with KE. Ouch.


DL can inject cash..... because Half of VS is Deltas business.!!!
 
DeltaPSCFlyer
Posts: 78
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Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 2:17 pm

TUGMASTER wrote:
DeltaPSCFlyer wrote:
TUGMASTER wrote:
So... 5 pages in, and we’re all still debating this issue.
It’s been stated several times up thread why there is little support for a VS bail out.

I’m sure absolutely no one wants to see anyone out of work, But the problem is SRB .
He knows it , everyone on here knows it, and many of the general public know it too.
Good luck to VS I say, but the money has to come from the deep pockets is SRB , with DL also chipping in their fair share too.


Agree with your last sentence...BUT....how could DL do that at this point, especially if they accept the grant from the government? Imagine the (justified) outrage if they were to send $500 million or so to "rescue" VS? If VS does in fact collapse, then DL is out of luck. What may seemed like a strategy investment in the pre-virus world is gone now. And DL may lose a similar equity investment with KE, depending on what happens with KE. Ouch.


DL can inject cash..... because Half of VS is Deltas business.!!!


They can? Really? How much cash do you think they have lying around doing nothing?

Reality: DL is in cash conservation mode right now (along with every other airline) just to be able to survive. So what cash, and how much, do you think they can just send over to VS? Yeah, I get DL has a 49% stake in VS. Imagine being a laid off DL employee, and then seeing the company send millions to "save" a foreign partner?!
 
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aemoreira1981
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Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 3:00 pm

TUGMASTER wrote:
So... 5 pages in, and we’re all still debating this issue.
It’s been stated several times up thread why there is little support for a VS bail out.

I’m sure absolutely no one wants to see anyone out of work, But the problem is SRB .
He knows it , everyone on here knows it, and many of the general public know it too.
Good luck to VS I say, but the money has to come from the deep pockets is SRB , with DL also chipping in their fair share too.


DL will have its own restrictions on the USA precluding that from happening. As for IAG, aren't they incorporated or based (one or the other) outside the UK?
 
gunnerman
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Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 3:11 pm

FSDan wrote:
tphuang wrote:
There is still plenty of demand to places like MCO, Caribbeans, southern Europe, South America from LGW.


There is in the long term, but can VS make it long enough to get to the point where long haul leisure travel has rebounded? It seems that's likely to be the hardest hit of any market segment for most of the rest of this year at the very least.

tphuang wrote:
And why would they need to be be of any use to DL? DL is not going to buy their slots at a time when TATL demand is at an all time low and they are having their own liquidity issues. The obvious buyer here of any slots is BA if they want money and I assume some other airlines looking for 1 or 2 daily flights here and there.


Does BA have a better liquidity position than DL? Both were obviously healthy heading into this, but with U.S. domestic traffic likely to rebound before international traffic does I would have thought BA was in no better shape to be investing in assets like slots at the moment.


With the crisis set to continue no airline is safe. Regardless of how much cash it has just about every airline will go bankrupt by May unless it gets help, so everyone is in survival mode these days. BA is no different and it will get help by reclaiming from the UK government 80% of salaries, capped at £2,500pm, of the over 30,000 recently laid off employees.
Last edited by gunnerman on Fri Apr 03, 2020 3:14 pm, edited 1 time in total.
 
Clackers
Posts: 111
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Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 3:12 pm

Hopefully SRB will invest his own money and then buy out BA.
Last edited by Clackers on Fri Apr 03, 2020 3:14 pm, edited 1 time in total.
 
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aemoreira1981
Posts: 3615
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Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 3:13 pm

gunnerman wrote:
tphuang wrote:
And why would they need to be be of any use to DL? DL is not going to buy their slots at a time when TATL demand is at an all time low and they are having their own liquidity issues. The obvious buyer here of any slots is BA if they want money and I assume some other airlines looking for 1 or 2 daily flights here and there.


Does BA have a better liquidity position than DL? Both were obviously healthy heading into this, but with U.S. domestic traffic likely to rebound before international traffic does I would have thought BA was in no better shape to be investing in assets like slots at the moment.

With the crisis set to continue no airline is safe. Regardless of how much cash it has just about every airline will go bankrupt by May unless it gets help, so everyone is in survival mode these days. BA is no different and it will get help by reclaiming from the UK government 80% of salaries, capped at £2,500pm, of the over 30,000 recently laid off employees.[/quote]

Because of how large the USA domestic market is, the US3 + WN + B6 + AS + NK even are probably in the best position, although B6 is probably the most exposed right now since it's an East Coast regional. F9's fleet is completely leased and they could get upended.
 
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chepos
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Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 3:17 pm

Clackers wrote:
Hopefully SRB will invest his own money and then buy out BA.

Yep, that will surely happen in an alternate universe (the SRB buying BA part).


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BA744PHX
Posts: 384
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Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 3:21 pm

Clackers wrote:
Hopefully SRB will invest his own money and then buy out BA.


Now this is a perfect example of someone living in a fantasy world.... LOL
 
MIflyer12
Posts: 8310
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Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 3:33 pm

DeltaPSCFlyer wrote:
TUGMASTER wrote:
DeltaPSCFlyer wrote:

Agree with your last sentence...BUT....how could DL do that at this point, especially if they accept the grant from the government? Imagine the (justified) outrage if they were to send $500 million or so to "rescue" VS? If VS does in fact collapse, then DL is out of luck. What may seemed like a strategy investment in the pre-virus world is gone now. And DL may lose a similar equity investment with KE, depending on what happens with KE. Ouch.


DL can inject cash..... because Half of VS is Deltas business.!!!


They can? Really? How much cash do you think they have lying around doing nothing?

Reality: DL is in cash conservation mode right now (along with every other airline) just to be able to survive. So what cash, and how much, do you think they can just send over to VS? Yeah, I get DL has a 49% stake in VS. Imagine being a laid off DL employee, and then seeing the company send millions to "save" a foreign partner?!


I'm not aware of restrictions - but I haven't seen the legislation - on grant-receiving nor loan-receiving U.S. carriers may on foreign carrier investments, but the optics (to Congress, to taxpayers, to employees that are going to be furloughed after 30 Sept) would be awful.

IMHO, DL is more likely just to walk away from its 49% stake than stick another $360 million (or large fraction of that) in it. After fair-value assets buys they can see what their 49% share brings in liquidation.
 
AAMDanny
Posts: 326
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Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 3:56 pm

I think this thread is a little miss leading, as every British Airlines is currently facing the same set of circumstances, Virgin was just the first to approach the UK Gov to ask for help, others are following in their footsteps.
 
jomur
Posts: 361
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Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 4:30 pm

gunnerman wrote:
FSDan wrote:
tphuang wrote:
There is still plenty of demand to places like MCO, Caribbeans, southern Europe, South America from LGW.


There is in the long term, but can VS make it long enough to get to the point where long haul leisure travel has rebounded? It seems that's likely to be the hardest hit of any market segment for most of the rest of this year at the very least.

tphuang wrote:
And why would they need to be be of any use to DL? DL is not going to buy their slots at a time when TATL demand is at an all time low and they are having their own liquidity issues. The obvious buyer here of any slots is BA if they want money and I assume some other airlines looking for 1 or 2 daily flights here and there.


Does BA have a better liquidity position than DL? Both were obviously healthy heading into this, but with U.S. domestic traffic likely to rebound before international traffic does I would have thought BA was in no better shape to be investing in assets like slots at the moment.


With the crisis set to continue no airline is safe. Regardless of how much cash it has just about every airline will go bankrupt by May unless it gets help, so everyone is in survival mode these days. BA is no different and it will get help by reclaiming from the UK government 80% of salaries, capped at £2,500pm, of the over 30,000 recently laid off employees.


But BA's employees are going to get more than 80%. And why do do assume that even BA/IAG will go bust when they have categorically said they have enough cash and reserves to last a lot longer and don't need a government bail out. They don't have a massive bill for aircraft to pay as most are paid off.
 
Opus99
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Re: Virgin Atlantic facing collapse

Fri Apr 03, 2020 7:25 pm

AAMDanny wrote:
I think this thread is a little miss leading, as every British Airlines is currently facing the same set of circumstances, Virgin was just the first to approach the UK Gov to ask for help, others are following in their footsteps.

It’s not. They are facing collapse at this point in time. Other UK airlines like BA and easyJet are not currently stating administration in the face because they have large reserves at the moment. In a few months could they? Very possibly but BA will most likely be bailed out if it needs to be. Virgin the government isn’t too hot on bailing them out which is why they’ve gotten rolls Royce and Airbus to help beg the government. This is very serious
 
AAMDanny
Posts: 326
Joined: Wed Apr 30, 2008 4:06 pm

Re: Virgin Atlantic facing collapse

Sat Apr 04, 2020 12:06 pm

Opus99 wrote:
AAMDanny wrote:
I think this thread is a little miss leading, as every British Airlines is currently facing the same set of circumstances, Virgin was just the first to approach the UK Gov to ask for help, others are following in their footsteps.

It’s not. They are facing collapse at this point in time. Other UK airlines like BA and easyJet are not currently stating administration in the face because they have large reserves at the moment. In a few months could they? Very possibly but BA will most likely be bailed out if it needs to be. Virgin the government isn’t too hot on bailing them out which is why they’ve gotten rolls Royce and Airbus to help beg the government. This is very serious


I think the fact that the thread title was changed supports my suggestion. But of course it's serious, never said it wasn't. All airlines are in the same boat with large leased fleets that are not flying or generating any cash.
 
DobboDobbo
Posts: 1143
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Re: Virgin Atlantic needs government support?

Sat Apr 04, 2020 12:38 pm

Depending on how long the crisis continues for, every airline on the planet will require support of some form or another to survive because they cannot burn their cash indefinitely.

It’s a question of “when” not “if” that support is required to avert collapse on a case by case basis - in the UK, VS are likely the first domino to fall and they are not alone at this point as many other (In some cases far larger) airlines the world over are in the same position now.
 
tphuang
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Re: Virgin Atlantic facing collapse

Sat Apr 04, 2020 12:44 pm

AAMDanny wrote:
Opus99 wrote:
AAMDanny wrote:
I think this thread is a little miss leading, as every British Airlines is currently facing the same set of circumstances, Virgin was just the first to approach the UK Gov to ask for help, others are following in their footsteps.

It’s not. They are facing collapse at this point in time. Other UK airlines like BA and easyJet are not currently stating administration in the face because they have large reserves at the moment. In a few months could they? Very possibly but BA will most likely be bailed out if it needs to be. Virgin the government isn’t too hot on bailing them out which is why they’ve gotten rolls Royce and Airbus to help beg the government. This is very serious


I think the fact that the thread title was changed supports my suggestion. But of course it's serious, never said it wasn't. All airlines are in the same boat with large leased fleets that are not flying or generating any cash.


The fact is VS was not making money before this and the other major airlines were. British gov't is already providing support to all businesses that all airlines are using. The grant that US airlines are getting are basically the same idea. Now, VS is asking for something in addition when no other airlines are close to that point yet. Some airlines will be let to go under during this crisis. In 5 or 6 month, when BA/U2/FR run out of money, there is at least a good case to rescue these airlines since they are the most viable airlines left. Until then, VS can go sell its LHR slots first. It hasn't done all it can as long as it still holds to those slots.
 
Bhoy
Posts: 556
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Re: Virgin Atlantic facing collapse

Sat Apr 04, 2020 1:26 pm

tphuang wrote:
Until then, VS can go sell its LHR slots first. It hasn't done all it can as long as it still holds to those slots.

That’s all well and good, but in the current climate, who has spare cash lying around to buy slots they can’t realistically use until the borders are reopened (at which point, they’d be missing the spare frames/crew needed to use them)

Even these cash rich airlines cited above like BA, U2, FR won’t be able to, as if they used their spare cash to buy slots, how would they then pay their own staff wages in the meantime? By themselves asking for government bailouts?
 
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oxonrow
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Re: Virgin Atlantic needs government support?

Sat Apr 04, 2020 1:31 pm

Why are so few of you concerned about the effect VS collapse will have on the consumer in/out of LHR? BA is already leaving those of flying Y in the dark, even their premium cabins are... not quite in line what many would describe as a healthy price/quality relationship. BA and its JV partners expanded their share of LHR slots massively over the years. Bound to stay that way given the 3rd runway debacles. If VS were to go down, BA would be free to reign supreme(r than it already does). Not great for us consumers. Those of us for whom LHR is the closest airport anyways. Should we follow the German or French example, get rid of domestic competitors/consolidate to feed the national champion, to compete better internationally? Economic nationalism at its best, really. VS checks BA, that's good for us consumers, it's probably good for BA too. As this crisis again shows, focus on front cabins alone exposes it to too many risks. BA needs to change its game. VS should stick around. UK aviation sector is stronger for it too.
 
Kiwinlondon
Posts: 94
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Re: Virgin Atlantic needs government support?

Sat Apr 04, 2020 1:43 pm

Here are some options:

1) SRB and Delta can put some money in first.
2) Government can then put money in through buying slots from Virgin at LGW and LHR at 20% discount to the average price paid for slots at both airports during 2018/2019. The Government can then retain the slots and sell them on at a profit to compensate for lost interest when 'normality returns'.
3) Let them sink or swim.
4) Claw back some dividends paid over the last several years.
5) A loan on normal commercial terms with LHR and LGW slots held as collateral, with Directors offering personal guarantees and putting personal collateral up too.

Let's see how keen they are for a 'bail out' on reasonable commercial terms outlined in Option 2 or 5?

I say Option 2 or 5 with a take it or leave it ultimatum. If they don't agree, then the default position should be option 3.

If a company cannot survive short term (6 months) without needing a bail out, they should not be in business because they are clearly poorly run companies.

They moaned loudly when Flybe got assistance and they were right then when they said Flybe should not be helped and the right thing for them to do now would be to reject a Government bail out.

Kiwinlondon
 
Byrdluvs747
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Re: Virgin Atlantic needs government support?

Sat Apr 04, 2020 3:06 pm

Kiwinlondon wrote:
Here are some options:

2) Government can then put money in through buying slots from Virgin at LGW and LHR at 20% discount to the average price paid for slots at both airports during 2018/2019. The Government can then retain the slots and sell them on at a profit to compensate for lost interest when 'normality returns'.


Since VS isnt slot-rich like BA, this would effectively kill the airline. Since some slots are worth more than others, VS would have to sell more of its slot portfolio to make any significant amount of money, especially with a discounted price of 20%.
The 747: The hands who designed it were guided by god.
 
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SamYeager2016
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Re: Virgin Atlantic needs government support?

Sat Apr 04, 2020 3:45 pm

Byrdluvs747 wrote:
Kiwinlondon wrote:
Here are some options:

2) Government can then put money in through buying slots from Virgin at LGW and LHR at 20% discount to the average price paid for slots at both airports during 2018/2019. The Government can then retain the slots and sell them on at a profit to compensate for lost interest when 'normality returns'.


Since VS isnt slot-rich like BA, this would effectively kill the airline. Since some slots are worth more than others, VS would have to sell more of its slot portfolio to make any significant amount of money, especially with a discounted price of 20%.

No reason why Virgin couldn't lease them back for a time limited period, say a year or so, before being given first option on buying them back again.. After the exemption for slot use runs out the government would have to make use of them or lose them anyway and prices might not have recovered by then
 
chonetsao
Posts: 679
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Re: Virgin Atlantic needs government support?

Sat Apr 04, 2020 4:10 pm

Kiwinlondon wrote:
Here are some options:

1) SRB and Delta can put some money in first.
2) Government can then put money in through buying slots from Virgin at LGW and LHR at 20% discount to the average price paid for slots at both airports during 2018/2019. The Government can then retain the slots and sell them on at a profit to compensate for lost interest when 'normality returns'.
3) Let them sink or swim.
4) Claw back some dividends paid over the last several years.
5) A loan on normal commercial terms with LHR and LGW slots held as collateral, with Directors offering personal guarantees and putting personal collateral up too.

Let's see how keen they are for a 'bail out' on reasonable commercial terms outlined in Option 2 or 5?

I say Option 2 or 5 with a take it or leave it ultimatum. If they don't agree, then the default position should be option 3.

If a company cannot survive short term (6 months) without needing a bail out, they should not be in business because they are clearly poorly run companies.

They moaned loudly when Flybe got assistance and they were right then when they said Flybe should not be helped and the right thing for them to do now would be to reject a Government bail out.

Kiwinlondon


How about stop VS paying Richard Branson the royalty fees in millions of pounds per year for using the name of Virgin as the first step? And then stop VS paying the lobby fees that is in millions of pounds to try to influence key government figures as a second measure?
 
gunnerman
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Re: Virgin Atlantic facing collapse

Sat Apr 04, 2020 4:19 pm

jomur wrote:
gunnerman wrote:
FSDan wrote:

There is in the long term, but can VS make it long enough to get to the point where long haul leisure travel has rebounded? It seems that's likely to be the hardest hit of any market segment for most of the rest of this year at the very least.



Does BA have a better liquidity position than DL? Both were obviously healthy heading into this, but with U.S. domestic traffic likely to rebound before international traffic does I would have thought BA was in no better shape to be investing in assets like slots at the moment.


With the crisis set to continue no airline is safe. Regardless of how much cash it has just about every airline will go bankrupt by May unless it gets help, so everyone is in survival mode these days. BA is no different and it will get help by reclaiming from the UK government 80% of salaries, capped at £2,500pm, of the over 30,000 recently laid off employees.


But BA's employees are going to get more than 80%. And why do do assume that even BA/IAG will go bust when they have categorically said they have enough cash and reserves to last a lot longer and don't need a government bail out. They don't have a massive bill for aircraft to pay as most are paid off.

How come you think that BA being able to reclaim 80% of over 30,000 employees' salaries isn't a form of bailout? Furthermore any company whose business has fallen drastically is in trouble. As for aircraft: BA has 82 (about 29% of the fleet) on off balance sheet operating leases and finance leases of £4bn secured on aircraft and other assets, so that's not exactly "most are paid off".
Last edited by gunnerman on Sat Apr 04, 2020 4:30 pm, edited 1 time in total.
 
tphuang
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Re: Virgin Atlantic needs government support?

Sat Apr 04, 2020 4:24 pm

Byrdluvs747 wrote:
Kiwinlondon wrote:
Here are some options:

2) Government can then put money in through buying slots from Virgin at LGW and LHR at 20% discount to the average price paid for slots at both airports during 2018/2019. The Government can then retain the slots and sell them on at a profit to compensate for lost interest when 'normality returns'.


Since VS isnt slot-rich like BA, this would effectively kill the airline. Since some slots are worth more than others, VS would have to sell more of its slot portfolio to make any significant amount of money, especially with a discounted price of 20%.

It's not up to the tax payer to fund VS commercial strategy. If VS couldn't be profitable with its LHR slots back when times were good, it certainly will be losing money when times are bad. That's exactly the kind of airline the UK gov't should allow to fail.

VS has one asset that is still worth some money. That's its slots. Sell them to whoever is willing to buy, be it British gov't or BA or someone else. Find a different strategy to go after that.

Other than people here thinking that they won't do as well financially without those slots, there haven't been a single worthy argument so far on why it should not sell its slots to save itself.
 
Detroit313
Posts: 547
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Re: Virgin Atlantic needs government support?

Sat Apr 04, 2020 4:35 pm

Let Delta save it! Enough with begging the government!

BA controlling LHR is enough. Virgin doesn't contribute anything and is not needed. Totally obsolete.

Same way Air France controls Paris, KLM Amsterdam and Lufthansa Frankfurt and Munich.
 
BA777FO
Posts: 580
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Re: Virgin Atlantic needs government support?

Sat Apr 04, 2020 4:40 pm

oxonrow wrote:
Why are so few of you concerned about the effect VS collapse will have on the consumer in/out of LHR? BA is already leaving those of flying Y in the dark, even their premium cabins are... not quite in line what many would describe as a healthy price/quality relationship. BA and its JV partners expanded their share of LHR slots massively over the years. Bound to stay that way given the 3rd runway debacles. If VS were to go down, BA would be free to reign supreme(r than it already does). Not great for us consumers. Those of us for whom LHR is the closest airport anyways. Should we follow the German or French example, get rid of domestic competitors/consolidate to feed the national champion, to compete better internationally? Economic nationalism at its best, really. VS checks BA, that's good for us consumers, it's probably good for BA too. As this crisis again shows, focus on front cabins alone exposes it to too many risks. BA needs to change its game. VS should stick around. UK aviation sector is stronger for it too.


Really? BA has made a lot of enhancements in every cabin. New catering and soft product, wifi on 90% of its aircraft by the end of the year, a new business seat that competes with the best in the sky...what do you mean not a healthy price/quality relationship?

BA and its partners have fewer slots as a percentage of the total at LHR than KLM do at AMS, LH does at FRA or AF does at CDG. That's a poor argument, BA faces more competition across the majority of its network than any other out of its hub. There are only a dozen or so longhaul routes where BA has no non-stop competitor but there are aggressive one-stop competitors on those routes. There'll be no reigning supreme.

As for BA changing its game, it's out-competed Virgin at Gatwick, are you aware of the Gatwick changes? The BA cost base is incredibly competitive; it's getting new, modern aircraft, a new incredibly competitive J seat and still faces among the stiffest competition of any airline. Virgin liquidating would have no material impacg on UK aviation competitiveness. There is an argument to be had about the job losses and economic cost of those. European aviation still needs to undergo more consolidation like the US went through 10 years or so ago.
 
bennett123
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Re: Virgin Atlantic needs government support?

Sat Apr 04, 2020 4:42 pm

gunnerman

Presumably VS is also claiming 80% of staff salaries already.
 
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oxonrow
Posts: 62
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Re: Virgin Atlantic needs government support?

Sat Apr 04, 2020 5:03 pm

BA777FO wrote:
Really? BA has made a lot of enhancements in every cabin. New catering and soft product, wifi on 90% of its aircraft by the end of the year, a new business seat that competes with the best in the sky...what do you mean not a healthy price/quality relationship?

BA and its partners have fewer slots as a percentage of the total at LHR than KLM do at AMS, LH does at FRA or AF does at CDG. That's a poor argument, BA faces more competition across the majority of its network than any other out of its hub. There are only a dozen or so longhaul routes where BA has no non-stop competitor but there are aggressive one-stop competitors on those routes. There'll be no reigning supreme.

As for BA changing its game, it's out-competed Virgin at Gatwick, are you aware of the Gatwick changes? The BA cost base is incredibly competitive; it's getting new, modern aircraft, a new incredibly competitive J seat and still faces among the stiffest competition of any airline. Virgin liquidating would have no material impacg on UK aviation competitiveness. There is an argument to be had about the job losses and economic cost of those. European aviation still needs to undergo more consolidation like the US went through 10 years or so ago.


So-called enhancements, perhaps some more material in the future, but the J seat introduction will be slow. Y is dismal, on EU flights probably the worst in the industry now, long-haul no longer what it used to be. Maybe subjective, but working for an international organisation, I am envious of colleagues who get to fly out of other hubs on respectable carriers. Read the fora here to see what the world thinks of BA J class. And yes, the fares on LHR routes are incomparably higher than any other major hub in Europe and there are structural factors at play that no whitewashing (oh but demand!) can camouflage. And BA's expansion at LHR is part of that problem.

Your second para: yes, but that's not entirely objective in so far that the market sector that brings in bigger bucks favours BA for several reasons. There will never be equal level playing field of course, but BA has some rather distinct advantages, mostly related to the slot constraint at LHR, that allow it to drive a very different operation than its European and most of its long-haul competitors.

I beg to differ re the third para too. LGW routes and crews have been particularly unpleasant from customer point of view, but never mind that. Yes, VS going down will severally impact competitiveness on the NATL routes, particularly NY but others too, numbers tell that story very well. Consolidation is not working well for consumers, and luckily the low-cost model is different/stronger here than in the US and that is rooted in several structural factors as well, and will hopefully defend us against over-consolidation. I understand this the mantra and many drink the cool-aid, but there are strong political economy arguments against what has been happening. And for intellectual honesty's stake, it's hard to sustain an argument about competitiveness when you end on a consolidation note.

Agree to disagree -- your focus is on guarding the firm. Mine on the consumer.
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