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Velocity7
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Re: Virgin Australia to enter voluntary administration

Wed Apr 22, 2020 7:50 am

Gangurru wrote:
JCK98 wrote:
I feel Velocity Airlines could work, might keep some links to the old Virgin and the Frequent Flyer program without paying SRB and the need for a complete rebrand. Also don't need to change the callsign.


I agree. Velocity has enough connection to Virgin whilst signalling change.

There is an inherent sexual connotation in the name Virgin. In a post #metoo era, the name and painting women on the nose seems old fashioned and tone deaf. Having a name that suggests movement and speed seems more fitting for an airline.


Whilst I guess the name of the (hopefully) new airline is likely to be the least of the priorities at the moment and it may be expensive to rebrand, I agree, the brand is well passed its expiry date. It's a little bit tawdry and means almost nothing to anyone anymore in Australia - and absolutely zero to anyone born after about 1995!

Thoughts are with all the VA staff and I hope the outcome is good for them
 
Flyingsottsman
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Re: Virgin Australia to enter voluntary administration

Wed Apr 22, 2020 10:11 am

openskies88 wrote:
Ryanair01 wrote:
I just wanted to pass my best wishes to any VA staffers who might be reading this. Best of luck and lets hope for a positive outcome.


Thank you.

After yesterday's employee webinar with Paul Scurrah and Vaughan Strawbridge (from Deloitte), I think I can speak on behalf of most staff and say that we are far more optimistic than we were a few days ago.



I will look forward to asking you for a coke or a beer from you on my way to Fiji :) when I fly with you guys again.
 
Morrofinch
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Re: Virgin Australia to enter voluntary administration

Wed Apr 22, 2020 10:45 am

John Thomas is considered a likely option to be the new CEO of VA on the other side according to AFR.

https://www.afr.com/companies/transport ... 422-p54m1d
 
NiuginiF28
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Re: Virgin Australia to enter voluntary administration

Wed Apr 22, 2020 11:28 am

Morrofinch wrote:
John Thomas is considered a likely option to be the new CEO of VA on the other side according to AFR.

https://www.afr.com/companies/transport ... 422-p54m1d


No doubt John Thomas is their source.... -_-
 
SimProgrammer
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Re: Virgin Australia to enter voluntary administration

Wed Apr 22, 2020 11:37 am

VA is recoverable, the first job any CEO worth their salt is ditch the Virgin branding.

Its credibility has been punctured, and with a fresh new image, VA has every prospect of flourishing.
Drive a bus, an Airbus, easier than a London bus!
 
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eta unknown
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Re: Virgin Australia to enter voluntary administration

Wed Apr 22, 2020 11:52 am

John Thomas wont be going anywhere if Elizabeth Bryan remains on the board- she's the one rumoured to have ejected him.
 
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RyanairGuru
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Re: Virgin Australia to enter voluntary administration

Wed Apr 22, 2020 11:56 am

Morrofinch wrote:
John Thomas is considered a likely option to be the new CEO of VA on the other side according to AFR.

https://www.afr.com/companies/transport ... 422-p54m1d


I initially read that as Geoff Thomas, and had to check the date! Not it's not April 1st.
Worked Hard, Flew Right
 
Morrofinch
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Re: Virgin Australia to enter voluntary administration

Wed Apr 22, 2020 12:12 pm

eta unknown wrote:
John Thomas wont be going anywhere if Elizabeth Bryan remains on the board- she's the one rumoured to have ejected him.


If I was a gambling man, I would bet that the board will either get a complete makeover or cease to exist.
 
a320fan
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Re: Virgin Australia to enter voluntary administration

Wed Apr 22, 2020 12:13 pm

Wasn’t John Thomas Borghettis ‘protégé’ would not fresh management be preferable, especially management not from the Borghetti era.
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hohd
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Re: Virgin Australia to enter voluntary administration

Wed Apr 22, 2020 3:11 pm

Virgin Australia is 90% foreign owned and they can always ask Branson (who gets paid a royalty for naming rights) for some assistance. It will be tough for Australia to provide any significant amount, but why doesn't VA take the funding from regional governments (and some of them are willing to give) and then request a smaller grant or loan from Australian Federal government. Once it goes to administration, the regional governments will be hesitant to give any money.
 
xwb777
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Re: Virgin Australia to enter voluntary administration

Wed Apr 22, 2020 6:09 pm

Etihad is in discussions to relaunch Virgin Australia

https://www.arabianbusiness.com/transpo ... -australia
 
Exeiowa
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Re: Virgin Australia to enter voluntary administration

Wed Apr 22, 2020 6:15 pm

xwb777 wrote:
Etihad is in discussions to relaunch Virgin Australia

https://www.arabianbusiness.com/transpo ... -australia


Etihad has a stellar record with working with other airlines can't see that going wrong.....
 
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VirginFlyer
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Re: Virgin Australia to enter voluntary administration

Wed Apr 22, 2020 6:27 pm

xwb777 wrote:
Etihad is in discussions to relaunch Virgin Australia

https://www.arabianbusiness.com/transpo ... -australia

:redflag: The article does not say that Etihad is in discussions to relaunch Virgin Australia. It says:

“Over recent weeks we have worked closely with the company and all key stakeholders to try and find a solution that would have avoided administration for Virgin Australia, but unfortunately did not succeed,” the spokesperson said. “Having to deal with the impact of the Covid-19 crisis on our own business, we were unable to provide additional financial support in the current circumstances.”

Etihad is Virgin Australia’s largest shareholder.

“Australia is an important market for Etihad and our partnership with Virgin Australia has provided significant commercial benefits for both carriers,” the spokesperson added. “We hope that the administration will allow for some form of resumption of service and remain open for construction discussions on a potential re-launch of the company.”


V/F
It is not for him to pride himself who loveth his own country, but rather for him who loveth the whole world. The earth is but one country, and mankind its citizens. —Bahá'u'lláh
 
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eta unknown
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Re: Virgin Australia to enter voluntary administration

Wed Apr 22, 2020 6:32 pm

xwb777 wrote:
Etihad is in discussions to relaunch Virgin Australia

https://www.arabianbusiness.com/transpo ... -australia

LOL not really. Re-read the article- EY has practically written off their investment. They are open to discussions means they will listen, but they aren't contributing any more- that was confirmed by the VA CEO.
 
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qf2220
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Re: Virgin Australia to enter voluntary administration

Wed Apr 22, 2020 10:42 pm

I think that the above misinterpretation of an article is a caution to us all to ensure that we READ the article we are commenting on and UNDERSTAND it before we launch our own spin on it.
 
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qf2220
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Re: Virgin Australia to enter voluntary administration

Wed Apr 22, 2020 11:18 pm

I can't see why Scurrah wouldn't stay on (unless he doesnt want to). He hasn't been there that long and as so far made positive moves to rightsizing the airline. Why go to the effort of finding a new CEO? I dont think there are many optics to be changed/improved by making a change. The only thing i would see as a firm reason is if the new shareholders have someone they'd ike instead.
 
tullamarine
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Re: Virgin Australia to enter voluntary administration

Wed Apr 22, 2020 11:26 pm

qf2220 wrote:
I can't see why Scurrah wouldn't stay on (unless he doesnt want to). He hasn't been there that long and as so far made positive moves to rightsizing the airline. Why go to the effort of finding a new CEO? I dont think there are many optics to be changed/improved by making a change. The only thing i would see as a firm reason is if the new shareholders have someone they'd ike instead.

I think you're right. Bringing in a new CEO is very unsettling and nothing happens for the first few months whilst they get an understanding of the business and their team. Scurrah seemed to have a plan underway before CV blew it up; if that plan still makes sense you'd think a new owner may go forward with it even though the administration will have altered significantly some of the timelines.
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qf2220
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Re: Virgin Australia to enter voluntary administration

Wed Apr 22, 2020 11:40 pm

tullamarine wrote:
qf2220 wrote:
I can't see why Scurrah wouldn't stay on (unless he doesnt want to). He hasn't been there that long and as so far made positive moves to rightsizing the airline. Why go to the effort of finding a new CEO? I dont think there are many optics to be changed/improved by making a change. The only thing i would see as a firm reason is if the new shareholders have someone they'd ike instead.

I think you're right. Bringing in a new CEO is very unsettling and nothing happens for the first few months whilst they get an understanding of the business and their team. Scurrah seemed to have a plan underway before CV blew it up; if that plan still makes sense you'd think a new owner may go forward with it even though the administration will have altered significantly some of the timelines.


If us armchair CEOs can see solutions then im sure Scurrah can, and probably did, and in some cases was probably limited by legality that may not be such a constraint now.
 
anstar
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Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 12:42 am

https://australianaviation.com.au/2020/ ... rgin-move/

TWU are calling on the govt to take a stake in Virgin to get a return in the future. Maybe TWU could put their money where their mouth is and get TWU Super to support their members and take a stake in the airlines so they too can receive a return in the future and keep jobs.
 
BNEFlyer
Posts: 255
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Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 12:46 am

Paul Scurrah will stay on, new owners or investors would be foolish to push him out. Prior to the Covid crisis his plan to strengthen VA was underway, approved by the Board.

And regarding the Virgin Australia name, really the only reason to not use the name is if Virgin Group wasn't an investor or the new owners/Administrators thought that the funds for the licencing fee could be better used.
 
Sydscott
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Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 1:31 am

anstar wrote:
https://australianaviation.com.au/2020/04/twu-urges-government-to-make-bold-virgin-move/

TWU are calling on the govt to take a stake in Virgin to get a return in the future. Maybe TWU could put their money where their mouth is and get TWU Super to support their members and take a stake in the airlines so they too can receive a return in the future and keep jobs.


The key problem with Virgin is that there has been zero return for so long because their shareholders invested for strategic reasons. Government has quite rightly decided not to pick up the pieces and given the alleged level of interest from various different places I don't think it's going to be a tall order to find buyers even in the current environment for a duopoly airline that if run properly would be highly profitable.

If the TWU wants a piece of it they're sitting on a nice pile of cash so rather than spend it propping up the Labor Party they should invest for their members.

Other than that all of the news media today are puff pieces and posturing. I'm starting to immensely dislike Geoffrey Thomas though. His bailout barracking and one sided commentary pre-Administration was grating but his "expert commentary" now about how people should go about saving it and what parts are valuable vs others seems disingenuous.
 
Sydscott
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Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 1:33 am

BNEFlyer wrote:
Paul Scurrah will stay on, new owners or investors would be foolish to push him out. Prior to the Covid crisis his plan to strengthen VA was underway, approved by the Board.

And regarding the Virgin Australia name, really the only reason to not use the name is if Virgin Group wasn't an investor or the new owners/Administrators thought that the funds for the licencing fee could be better used.


It's $10 million a year. Not much in the scheme of things but if you're an Administrator looking for long term savings that seems an easy cut to make especially if Virgin Groups stake in the airline is significantly reduced / wiped out as part of this.
 
Morrofinch
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Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 1:48 am

Two updates I have come across today:

Fox Sports News Channel has reported that Scurrah is "keen" to keep AFL sponsorship going despite the AFL CEO actively seeking other sponsors.

Sky News in AM Agenda reported that the Govt is actively pushing against a full service foreign airline as they believe they have other interests at heart. According to Sky, this puts the Indigo group as the leader aviation player to strike a deal.
 
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qf2220
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Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 1:56 am

anstar wrote:
https://australianaviation.com.au/2020/04/twu-urges-government-to-make-bold-virgin-move/

TWU are calling on the govt to take a stake in Virgin to get a return in the future. Maybe TWU could put their money where their mouth is and get TWU Super to support their members and take a stake in the airlines so they too can receive a return in the future and keep jobs.


I don't know the TWU balance sheet but is it realistic to expect an investment by TWU Super is going to make a difference? I feel it is going to need bigger things than that.
 
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qf2220
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Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 1:58 am

Sydscott wrote:
I'm starting to immensely dislike Geoffrey Thomas though..


His biography that appears toward the top of google searches is so over the top and self promoting. Once you take a critical look at it you start seeing a veneer...
 
Pcoder
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Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 2:00 am

Sydscott wrote:
BNEFlyer wrote:
Paul Scurrah will stay on, new owners or investors would be foolish to push him out. Prior to the Covid crisis his plan to strengthen VA was underway, approved by the Board.

And regarding the Virgin Australia name, really the only reason to not use the name is if Virgin Group wasn't an investor or the new owners/Administrators thought that the funds for the licencing fee could be better used.


It's $10 million a year. Not much in the scheme of things but if you're an Administrator looking for long term savings that seems an easy cut to make especially if Virgin Groups stake in the airline is significantly reduced / wiped out as part of this.


They could possibly try to buy the Ansett name from their administrators if need be (as long as the price was right). They could even possibly use the old Australian National Airways name, as a quick search of IP australia reveals no one holds the trademark. Even TAA or Trans-Australian Airlines appears not to be trademarked anymore (Qantas must have let it lapse, although they still have Australian Airlines).
 
xiaotung
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Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 2:52 am

Morrofinch wrote:
Two updates I have come across today:

Fox Sports News Channel has reported that Scurrah is "keen" to keep AFL sponsorship going despite the AFL CEO actively seeking other sponsors.

Sky News in AM Agenda reported that the Govt is actively pushing against a full service foreign airline as they believe they have other interests at heart. According to Sky, this puts the Indigo group as the leader aviation player to strike a deal.


Is VA really in a position to sponsor someone else? That's just crazy!

Is the government going give incentives to push their agenda? If not, why would the administrator and their creditors listen to the government as to who the new owner should be?
 
eamondzhang
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Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 3:22 am

Arniepie wrote:
The aviation market worldwide shrunk so much the past couple of months that supporting companies with government money
won't make any kind of sense.
If they are afraid of a monopolized market there are other things they can do.
For instance, pull Jetstar out of the QF group and make it an independent company and let it compete with QF.
They have a sizeable modern narrowbody fleet and a limited but modern widebody fleet that might be economical enough to run profitably.
That way you keep competition alive in Australia, you don't have to spend billions to keep a private company alive and you trim total
capacity on the market enough to keep 2 viable companies.
Maybe Tigerair might make it too restarting with a 20-30 narrowbody fleet pulling the best 737's out of virgin.

Stop the daydream as no government agencies have the power to force split a company. Not even ACCC.

Michael
 
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VirginFlyer
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Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 3:55 am

eamondzhang wrote:
Arniepie wrote:
The aviation market worldwide shrunk so much the past couple of months that supporting companies with government money
won't make any kind of sense.
If they are afraid of a monopolized market there are other things they can do.
For instance, pull Jetstar out of the QF group and make it an independent company and let it compete with QF.
They have a sizeable modern narrowbody fleet and a limited but modern widebody fleet that might be economical enough to run profitably.
That way you keep competition alive in Australia, you don't have to spend billions to keep a private company alive and you trim total
capacity on the market enough to keep 2 viable companies.
Maybe Tigerair might make it too restarting with a 20-30 narrowbody fleet pulling the best 737's out of virgin.

Stop the daydream as no government agencies have the power to force split a company. Not even ACCC.

Michael

I don’t for one minute believe it would happen, but I believe the government could conceivably legislate it through amending the Qantas Sale Act, or the Civil Aviation Act, or another act which affects the operation of Qantas, if they so wanted. Not going to happen, but not impossible.

V/F
It is not for him to pride himself who loveth his own country, but rather for him who loveth the whole world. The earth is but one country, and mankind its citizens. —Bahá'u'lláh
 
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SCFlyer
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Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 4:05 am

Former Labor senator Stephen Conroy via Sky News (another News Corp channel) is 'flabbergasted' that SIA ain't pulling the chequebook.

May be surprising to some politicians, but there are good reasons why SIA aren't keen to be involved again from a equity perspective after being bitten twice with the Air New Zealand (Ansett) and Virgin investments by previous SIA management teams.
 
81819
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Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 4:16 am

tullamarine wrote:
qf2220 wrote:
I can't see why Scurrah wouldn't stay on (unless he doesnt want to). He hasn't been there that long and as so far made positive moves to rightsizing the airline. Why go to the effort of finding a new CEO? I dont think there are many optics to be changed/improved by making a change. The only thing i would see as a firm reason is if the new shareholders have someone they'd ike instead.

I think you're right. Bringing in a new CEO is very unsettling and nothing happens for the first few months whilst they get an understanding of the business and their team. Scurrah seemed to have a plan underway before CV blew it up; if that plan still makes sense you'd think a new owner may go forward with it even though the administration will have altered significantly some of the timelines.


Politics!

I'd suggest John Thomas was originally appointed to the position he was because of his political association with some of the VA power brokers that sit behind the airline. As such, you often find appointments like this do not come with unanimous support.

When he resigned from his position, he probably did so because the power base moved to the extent where he politically did have the support for his position.

With the administration of Virgin Australia, we will probably find the power base that sits behind the airline will change. As such, the next CEO of Virgin Australia will probably come down to who ultimately has the controlling interest in the airline and who they are politically attached to. As such, John Thomas could find himself in a position where he is again the preferred CEO for the company.
 
81819
Posts: 2008
Joined: Fri May 23, 2008 9:13 pm

Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 4:17 am

SCFlyer wrote:
Former Labor senator Stephen Conroy via Sky News (another News Corp channel) is 'flabbergasted' that SIA ain't pulling the chequebook.

May be surprising to some politicians, but there are good reasons why SIA aren't keen to be involved again from a equity perspective after being bitten twice with the Air New Zealand (Ansett) and Virgin investments by previous SIA management teams.


Might be easier for SIA to simply align themselves with QANTAS.
 
81819
Posts: 2008
Joined: Fri May 23, 2008 9:13 pm

Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 4:51 am

Sydscott wrote:
anstar wrote:
https://australianaviation.com.au/2020/04/twu-urges-government-to-make-bold-virgin-move/

TWU are calling on the govt to take a stake in Virgin to get a return in the future. Maybe TWU could put their money where their mouth is and get TWU Super to support their members and take a stake in the airlines so they too can receive a return in the future and keep jobs.


The key problem with Virgin is that there has been zero return for so long because their shareholders invested for strategic reasons. Government has quite rightly decided not to pick up the pieces and given the alleged level of interest from various different places I don't think it's going to be a tall order to find buyers even in the current environment for a duopoly airline that if run properly would be highly profitable.

If the TWU wants a piece of it they're sitting on a nice pile of cash so rather than spend it propping up the Labor Party they should invest for their members.

Other than that all of the news media today are puff pieces and posturing. I'm starting to immensely dislike Geoffrey Thomas though. His bailout barracking and one sided commentary pre-Administration was grating but his "expert commentary" now about how people should go about saving it and what parts are valuable vs others seems disingenuous.


In realising this, I think we need to acknowledge the core Virgin Australia business is fundamentally sound and that its financial problems revolve around poor strategic decisions (VARA - started and closed an entire airline, International - Loss making for years, Tiger - Political buy to entice SIA into the fold, New Zealand - Loss making market, Unprofitable routes - Right sizing the airline), rather than poor operational management. These poor strategic decisions alone probably cost Virgin Australia in the region of $1.5-2.5 billion.

In the end, it was the crippling debt that finished the airline off. My numbers suggest Virgin had debt commitments in the region of $500-800 million per year over the next five years. If we look at Virgins books, at best it has been free cash flow neutral. As such, there was always (prior to coronavirus) going to be a question mark on how VA would retire debt maturing over the next two years.

This is where I think JB is being unfairly blamed for the airlines woes. All of the decisions that lead VA down the financial disaster path were ones that would have ultimately been approved by the VA board. If we go back to 2010-12 time period when many of these strategic decisions were made, there was a fair amount of provado, chest beating, we're going to give it to QANTAS, etc. Ultimately, the hype was never going to be a match for the ensuring realities of poor decision making.

I'd suggest Geoffrey Thomas is simply aligning himself with certain power brokers that sit behind the airline. Ultimately, his rhetoric could simply be a representation of the behaviours and attitudes that got VA into the position it is in today.

Hopefully the reemergence of VA comes with some significant changes to the power brokers that have previously sat behind the airline. For me, I will be looking at the extent of changes to the ownership structure as a measure for determining the success of the administration process.

I think we have to make this very clear. VA's woes are a direct consequence of its dysfunctional shareholder base. The owners can't blame the government, QANTAS, Air New Zealand or the markets for its woes. the buck stops with them.
 
cpd
Posts: 6415
Joined: Sat Jun 28, 2008 4:46 am

Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 5:10 am

eamondzhang wrote:
Arniepie wrote:
The aviation market worldwide shrunk so much the past couple of months that supporting companies with government money
won't make any kind of sense.
If they are afraid of a monopolized market there are other things they can do.
For instance, pull Jetstar out of the QF group and make it an independent company and let it compete with QF.
They have a sizeable modern narrowbody fleet and a limited but modern widebody fleet that might be economical enough to run profitably.
That way you keep competition alive in Australia, you don't have to spend billions to keep a private company alive and you trim total
capacity on the market enough to keep 2 viable companies.
Maybe Tigerair might make it too restarting with a 20-30 narrowbody fleet pulling the best 737's out of virgin.

Stop the daydream as no government agencies have the power to force split a company. Not even ACCC.

Michael



If that was the case, why wouldn’t you just close the airline down totally, sell everything and get out of the airline business.

No point in trying to be successful if the result is being split up.

It would be extremely disappointing if such a move was to happen. Virgin got itself into trouble through various misadventures.
 
tullamarine
Posts: 2538
Joined: Thu Aug 05, 1999 1:14 pm

Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 5:31 am

travelhound wrote:
SCFlyer wrote:
Former Labor senator Stephen Conroy via Sky News (another News Corp channel) is 'flabbergasted' that SIA ain't pulling the chequebook.

May be surprising to some politicians, but there are good reasons why SIA aren't keen to be involved again from a equity perspective after being bitten twice with the Air New Zealand (Ansett) and Virgin investments by previous SIA management teams.


Might be easier for SIA to simply align themselves with QANTAS.

Except competition authorities would demand QF and SQ were unable to cooperate at all between Australia and Singapore so it would be a completely pointless alliance.

Even if SQ wants to continue an equity position with VA, it will be cheaper for it to go through an administration process and buy the company with a much reduced debt burden rather than buy-out the existing shareholders and still being shouldered with the entire $5B debt.

By the way, I'm always amused by your capitalised writing of Qantas. Even the airline itself doesn't capitalise its name on its own website. The name originally was an acronym but now it is just a name.
Last edited by tullamarine on Thu Apr 23, 2020 5:37 am, edited 1 time in total.
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Lufthansa
Posts: 2638
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Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 5:35 am

travelhound wrote:
Sydscott wrote:

I'd suggest Geoffrey Thomas is simply aligning himself with certain power brokers that sit behind the airline. Ultimately, his rhetoric could simply be a representation of the behaviours and attitudes that got VA into the position it is in today.

.


I happen to be good friends with someone who was previously his son's partner.
I can assure you first hand that was exactly what was going on. VA even paid them to make
transcon trip reports.
 
tullamarine
Posts: 2538
Joined: Thu Aug 05, 1999 1:14 pm

Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 5:42 am

Lufthansa wrote:
travelhound wrote:
Sydscott wrote:

I'd suggest Geoffrey Thomas is simply aligning himself with certain power brokers that sit behind the airline. Ultimately, his rhetoric could simply be a representation of the behaviours and attitudes that got VA into the position it is in today.

.


I happen to be good friends with someone who was previously his son's partner.
I can assure you first hand that was exactly what was going on. VA even paid them to make
transcon trip reports.

That is hardly unusual. Very few travel writers pay for the trips they write reviews about. Remember all the travel writers on the Sunrise "scientific" flight; no one paid Qantas for the return trip in Business Class.

What is more an issue if the lack of disclosure not just for free trips but things like paid consultancies and Chairman's Lounge memberships. There is nothing wrong with accepting these thing but journalists and "industry experts" should disclose any potential conflicts of interest.
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EBT
Posts: 76
Joined: Tue Mar 27, 2018 1:04 am

Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 7:40 am

travelhound wrote:
In realising this, I think we need to acknowledge the core Virgin Australia business is fundamentally sound and that its financial problems revolve around poor strategic decisions (VARA - started and closed an entire airline, International - Loss making for years, Tiger - Political buy to entice SIA into the fold, New Zealand - Loss making market, Unprofitable routes - Right sizing the airline), rather than poor operational management. These poor strategic decisions alone probably cost Virgin Australia in the region of $1.5-2.5 billion.

In the end, it was the crippling debt that finished the airline off. My numbers suggest Virgin had debt commitments in the region of $500-800 million per year over the next five years. If we look at Virgins books, at best it has been free cash flow neutral. As such, there was always (prior to coronavirus) going to be a question mark on how VA would retire debt maturing over the next two years.

This is where I think JB is being unfairly blamed for the airlines woes. All of the decisions that lead VA down the financial disaster path were ones that would have ultimately been approved by the VA board. If we go back to 2010-12 time period when many of these strategic decisions were made, there was a fair amount of provado, chest beating, we're going to give it to QANTAS, etc. Ultimately, the hype was never going to be a match for the ensuring realities of poor decision making.


VARA is still operating - it is the former Skywest that is flying charter and regional ops in WA - think the Fokker 100 and A320s. Sure, they overpaid when they bought out Skywest, and shortly after they were basically forced to move the ATR operation onto mainline after CASA started to put a bit of scrutiny on that part of the company. Sure, they got dudded when they signed a 10 year deal to lease the ATRs from the guy who sold them Skywest at an inflated value, and continue to pay out on aircraft that are now stored in Nelson.

The debt is ultimately what killed them, and you can sheet that directly back to Borghetti. Yes there is a board that provides oversight, but the CEO is the one who sets strategy, works with the CFO on the financials and makes a lot of day-to-day decisions about the business. The strategy of taking Virgin upmarket was fine in theory, and while JB had wealthy shareholders willing to tip in bucketloads of equity or offer backstop financing facilities, it managed to keep going. But we're not in Kansas anymore, Toto.

The seeds of Virgin's demise were sown years ago, but there is one recent misstep, in my opinion, that Scurrah made in buying back the 35% stake in the Velocity Frequent Flyer, which saddled them with more debt. Just before they made that call, the hot tip was that it would list, which it should have done and Virgin could have used the opportunity to raise some quick cash by reducing its stake to 51%, and avoided taking on additional debt. Would it have stopped them falling into administration, amid the biggest ever challenge for the global aviation industry? Probably not, but it may have bought them some more time.
 
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Chipmunk1973
Posts: 270
Joined: Tue Jun 28, 2016 10:23 am

Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 8:11 am

EBT wrote:
VARA is still operating - it is the former Skywest that is flying charter and regional ops in WA - think the Fokker 100 and A320s. Sure, they overpaid when they bought out Skywest, and shortly after they were basically forced to move the ATR operation onto mainline after CASA started to put a bit of scrutiny on that part of the company. Sure, they got dudded when they signed a 10 year deal to lease the ATRs from the guy who sold them Skywest at an inflated value, and continue to pay out on aircraft that are now stored in Nelson.

The debt is ultimately what killed them, and you can sheet that directly back to Borghetti. Yes there is a board that provides oversight, but the CEO is the one who sets strategy, works with the CFO on the financials and makes a lot of day-to-day decisions about the business. The strategy of taking Virgin upmarket was fine in theory, and while JB had wealthy shareholders willing to tip in bucketloads of equity or offer backstop financing facilities, it managed to keep going. But we're not in Kansas anymore, Toto.

The seeds of Virgin's demise were sown years ago, but there is one recent misstep, in my opinion, that Scurrah made in buying back the 35% stake in the Velocity Frequent Flyer, which saddled them with more debt. Just before they made that call, the hot tip was that it would list, which it should have done and Virgin could have used the opportunity to raise some quick cash by reducing its stake to 51%, and avoided taking on additional debt. Would it have stopped them falling into administration, amid the biggest ever challenge for the global aviation industry? Probably not, but it may have bought them some more time.


Hindsight is always a brilliant thing. If there had been no COVID19 then perhaps Scurrah’s move may be seen as a measure of pulling VA out of its debt issue.

Whilst I’m not calling Velocity as the “Goose that laid the golden eggs”, it’s value in itself was probably as good as owned aircraft, if not maybe better, to use as collateral in raising new debt to replace older debt at higher rates of interest.

Also, after reaquiring their 100% in Velocity, I don’t personally believe it would have sold well with investors to see a “fire sale” of such a good asset and could have had more negative effects on their publicly listed shares.

But again, that’s hindsight.
Cheers,
C1973


B707, B717, B727, B734, B737, B738, B743, B77W, A300, A320, A332, A333, A339, A388, BAe146, Cessna 206.
 
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vhtje
Posts: 1199
Joined: Sat Jan 10, 2009 12:40 pm

Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 10:49 am

anstar wrote:
https://australianaviation.com.au/2020/04/twu-urges-government-to-make-bold-virgin-move/

TWU are calling on the govt to take a stake in Virgin to get a return in the future. Maybe TWU could put their money where their mouth is and get TWU Super to support their members and take a stake in the airlines so they too can receive a return in the future and keep jobs.


Oh, a union-bashing post on airliners.net? How very unusual! The union is doing, in this case, EXACTLY what it exists to do: stand up for, and protect, the workers' rights and interests. It is obviously in the workers' interests to save the company; the union's voice for Government assistance can only help. Why criticise them for doing their job? You don't personally like unions; fine, that's your right. But don't criticise them for doing exactly what they exist to do.

In regards to your send point (which I assume is sarcastic) - why should TWU Super sink money in a loss-making venture? I am sure TWU Super employs extremely clever investment managers, who would look at VA as an investment, and quickly decide to pass. As should any other superannuation fund if it is seeking to look after its members' interests and maximise return to them.

That does not make the union hypocritical (which I think is the implied point you were making). The VA business may indeed be a very poor business to invest in, but that doesn't mean the union should stop campaigning for the rights and interests of VA staff.
I only turn left when boarding aircraft. Well, mostly. All right, sometimes. OH OKAY - rarely.
 
Pentaprism
Posts: 53
Joined: Mon Mar 11, 2019 1:12 pm

Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 12:55 pm

travelhound wrote:
Sydscott wrote:
anstar wrote:
https://australianaviation.com.au/2020/04/twu-urges-government-to-make-bold-virgin-move/

TWU are calling on the govt to take a stake in Virgin to get a return in the future. Maybe TWU could put their money where their mouth is and get TWU Super to support their members and take a stake in the airlines so they too can receive a return in the future and keep jobs.


The key problem with Virgin is that there has been zero return for so long because their shareholders invested for strategic reasons. Government has quite rightly decided not to pick up the pieces and given the alleged level of interest from various different places I don't think it's going to be a tall order to find buyers even in the current environment for a duopoly airline that if run properly would be highly profitable.

If the TWU wants a piece of it they're sitting on a nice pile of cash so rather than spend it propping up the Labor Party they should invest for their members.

Other than that all of the news media today are puff pieces and posturing. I'm starting to immensely dislike Geoffrey Thomas though. His bailout barracking and one sided commentary pre-Administration was grating but his "expert commentary" now about how people should go about saving it and what parts are valuable vs others seems disingenuous.


In realising this, I think we need to acknowledge the core Virgin Australia business is fundamentally sound


I don't think we need to acknowledge this at all.

To the contrary Virgin's Core Business is fundamentally flimsy. Qantas has always enjoyed the Lion's share of the Premium Customers and will continue to do for the forseeable future. Little Brother Jetstar has the lowest cost base so will continue to make the best profits from VFR/Holiday traffic.

Virgin has employed and has access to some of the best brains in Australian and International Aviation. None of them has made the slightest dent in resolving this dilemma. To believe that some Knight in Shining Armour is going to ride in and suddenly make a success of Virgin's "fundamentally sound" Business Model would require an extreme leap of faith, or more likely, for the Believer to have a Kangaroo or two loose in the back Paddock. Especially in the post COVID environment when the Aviation World will be far harder to thrive in than it was.

The Australian market has only ever been big enough for 2 successful Airlines and Qantas happens to own them both. They would have to make an incredible blunder to cede this advantage.
 
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PapaWhiskey
Posts: 3
Joined: Fri Feb 02, 2018 10:21 pm

Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 9:45 pm

I've seen it mentioned here about VA returning to the "New World Carrier" concept. Personally I love the idea of an airline (or any business really) that thinks outside the box and doesn't just copy the competition. Don't try and be everything to everybody as everyone has different expectations and preferences with any type of business that they deal with. For a short domestic sector (BNE-SYD, BNE-MEL type length) I don't care about getting food on the plane, it can be nice but I'd rather grab something more substantial at the airport. For longer flights (4+ hours) then yes I want to be able to get food and drink onboard, I like the concept of a standard airline meal included on these flights but I'd also love to see the option of being able to preorder a "premium" meal where you pay a bit extra and can order a specific option, like SQ Book the Cook option.

I think Starlux (from Taiwan) is an interesting example of a more interesting airline, there timing for start up was bad luck but from what I've seen they look amazing. Just watching their promo videos makes me want to try them out in the future.
 
Sydscott
Posts: 3513
Joined: Thu Oct 30, 2003 11:50 am

Re: Virgin Australia to enter voluntary administration

Thu Apr 23, 2020 10:24 pm

Pentaprism wrote:
travelhound wrote:
Sydscott wrote:

The key problem with Virgin is that there has been zero return for so long because their shareholders invested for strategic reasons. Government has quite rightly decided not to pick up the pieces and given the alleged level of interest from various different places I don't think it's going to be a tall order to find buyers even in the current environment for a duopoly airline that if run properly would be highly profitable.

If the TWU wants a piece of it they're sitting on a nice pile of cash so rather than spend it propping up the Labor Party they should invest for their members.

Other than that all of the news media today are puff pieces and posturing. I'm starting to immensely dislike Geoffrey Thomas though. His bailout barracking and one sided commentary pre-Administration was grating but his "expert commentary" now about how people should go about saving it and what parts are valuable vs others seems disingenuous.


In realising this, I think we need to acknowledge the core Virgin Australia business is fundamentally sound


I don't think we need to acknowledge this at all.

To the contrary Virgin's Core Business is fundamentally flimsy. Qantas has always enjoyed the Lion's share of the Premium Customers and will continue to do for the forseeable future. Little Brother Jetstar has the lowest cost base so will continue to make the best profits from VFR/Holiday traffic.

Virgin has employed and has access to some of the best brains in Australian and International Aviation. None of them has made the slightest dent in resolving this dilemma. To believe that some Knight in Shining Armour is going to ride in and suddenly make a success of Virgin's "fundamentally sound" Business Model would require an extreme leap of faith, or more likely, for the Believer to have a Kangaroo or two loose in the back Paddock. Especially in the post COVID environment when the Aviation World will be far harder to thrive in than it was.

The Australian market has only ever been big enough for 2 successful Airlines and Qantas happens to own them both. They would have to make an incredible blunder to cede this advantage.


I disagree. Virgins core Domestic business can be highly profitable and Brett Godfrey, when he ran Virgin Blue, proved that by generating over a $1 billion in profits over his tenure. But under Godfreys Management Virgin was focused on profits and on having a profitable business. That changes when John Borghetti took over as CEO so I think a Virgin that is focused on shareholder return and profitability can actually be a very good business and carve out a profitable niche as it did before.

This article summarises that idea far more eloquently that I have above - https://www.smh.com.au/business/compani ... 54mi7.html

The key point to take from the article is that re-vamped Virgin should, and can, enjoy a major cost advantage over Qantas by simplifying the fleet and the way they do business. The good thing for them is that by doing that you don't then need to have the same level of fares or reliance on the large Corporate Market to fill your premium cabins like Qantas does. So you can differentiate yourself from Qantas and effectively compete against JetStar.
 
Morrofinch
Posts: 71
Joined: Mon Feb 11, 2019 5:15 am

Re: Virgin Australia to enter voluntary administration

Fri Apr 24, 2020 4:30 am

Virgin Australia's administrators find that on an early preliminary examination $6.84 billion is owed to 10,247 known creditors - banks & secured lenders top the scoreboard owed $2.28b. Says creditors could rise to 12,000

Image
 
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qf2220
Posts: 1972
Joined: Fri Aug 16, 2013 9:16 pm

Re: Virgin Australia to enter voluntary administration

Fri Apr 24, 2020 5:38 am

EBT wrote:
The seeds of Virgin's demise were sown years ago, but there is one recent misstep, in my opinion, that Scurrah made in buying back the 35% stake in the Velocity


Biggest seed was selling it in the first place...
 
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qf2220
Posts: 1972
Joined: Fri Aug 16, 2013 9:16 pm

Re: Virgin Australia to enter voluntary administration

Fri Apr 24, 2020 5:39 am

Morrofinch wrote:
Virgin Australia's administrators find that on an early preliminary examination $6.84 billion is owed to 10,247 known creditors - banks & secured lenders top the scoreboard owed $2.28b. Says creditors could rise to 12,000

Image


This is missing passengers who have prepaid fares and the ATO....
 
Morrofinch
Posts: 71
Joined: Mon Feb 11, 2019 5:15 am

Re: Virgin Australia to enter voluntary administration

Fri Apr 24, 2020 5:45 am

Nine, through its newspapers, is reporting that BGH is in discussion with AustralianSuper about its bid. They had led an aggressive campaign against US firms mainly arguing around the "Australian owned" argument. The link about this is below. It has been further revealed on the Nine TV channel that BGH has inquired to the ACC about the feasibility of a merger of VA and REX. It is understood this is the backbone of their investment plans.

https://www.afr.com/companies/transport ... 423-p54mk7
 
zkncj
Posts: 3874
Joined: Wed Nov 09, 2005 4:57 pm

Re: Virgin Australia to enter voluntary administration

Fri Apr 24, 2020 7:03 am

qf2220 wrote:
Morrofinch wrote:
Virgin Australia's administrators find that on an early preliminary examination $6.84 billion is owed to 10,247 known creditors - banks & secured lenders top the scoreboard owed $2.28b. Says creditors could rise to 12,000

Image


This is missing passengers who have prepaid fares and the ATO....


I would love to know the current value of the VA Travel Bank, one would hope they moved passengers revenue into that account for all the flights they didn't operate (while still taking peoples money).
 
Whatsaptudo
Posts: 110
Joined: Tue Jan 24, 2017 11:54 am

Re: Virgin Australia to enter voluntary administration

Fri Apr 24, 2020 7:06 am

Perth Airport are parking bulldozers behind VA aircraft that have been parked for some time, to protect their interests.
 
Pentaprism
Posts: 53
Joined: Mon Mar 11, 2019 1:12 pm

Re: Virgin Australia to enter voluntary administration

Fri Apr 24, 2020 9:32 am

Sydscott wrote:
Pentaprism wrote:
travelhound wrote:

In realising this, I think we need to acknowledge the core Virgin Australia business is fundamentally sound


I don't think we need to acknowledge this at all.

To the contrary Virgin's Core Business is fundamentally flimsy. Qantas has always enjoyed the Lion's share of the Premium Customers and will continue to do for the forseeable future. Little Brother Jetstar has the lowest cost base so will continue to make the best profits from VFR/Holiday traffic.

Virgin has employed and has access to some of the best brains in Australian and International Aviation. None of them has made the slightest dent in resolving this dilemma. To believe that some Knight in Shining Armour is going to ride in and suddenly make a success of Virgin's "fundamentally sound" Business Model would require an extreme leap of faith, or more likely, for the Believer to have a Kangaroo or two loose in the back Paddock. Especially in the post COVID environment when the Aviation World will be far harder to thrive in than it was.

The Australian market has only ever been big enough for 2 successful Airlines and Qantas happens to own them both. They would have to make an incredible blunder to cede this advantage.


I disagree. Virgins core Domestic business can be highly profitable and Brett Godfrey, when he ran Virgin Blue, proved that by generating over a $1 billion in profits over his tenure. But under Godfreys Management Virgin was focused on profits and on having a profitable business. That changes when John Borghetti took over as CEO so I think a Virgin that is focused on shareholder return and profitability can actually be a very good business and carve out a profitable niche as it did before.

This article summarises that idea far more eloquently that I have above - https://www.smh.com.au/business/compani ... 54mi7.html

The key point to take from the article is that re-vamped Virgin should, and can, enjoy a major cost advantage over Qantas by simplifying the fleet and the way they do business. The good thing for them is that by doing that you don't then need to have the same level of fares or reliance on the large Corporate Market to fill your premium cabins like Qantas does. So you can differentiate yourself from Qantas and effectively compete against JetStar.


Godfrey indeed did a very good job. But timing was on his side, Business Conditions were benign for the most part (other than 2008), Ansett disappeared just as Virgin was starting, gifting them a good share of a huge Customer Base and Jetstar didn't start until 2004 and was still a minor player for a few years after that. By contrast anyone starting or re-starting an Airline in Australia now are going to be firmly wedged between a firmly entrenched Qantas and Jetstar at at time when the Business Outlook is dismal.

I would also question if an average return of 100 Million per year and falling is a great investment given the high risk of the Industry and Considerable amount of Capital it ties up? I suspect there is a very good reason why John Borghetti changed Virgin's Strategy and targeted Qantas' Premium Customers. Their Investor's return on their Investment was poor and he was given the task of improving it. It didn't work but I don't blame him or the Owners for trying, if you're sitting on a crappy investment you need to try to turn it round or flog it off.

Some have commented the Virgin Brand is still valuable. I disagree. When Branson entered the scene he was fresh, brash & on a very successful role with a lot of Companies going somewhere. He appealed to a lot of people of that generation. Fast forward 20 years and most of his Companies have disappeared or are struggling & notably he refused to put any money in to save his Airlines and has had little to say except whinging about the Australian (and UK) Governments not bailing him out. Him and his famous brand are quickly fading into irrelevance and after the Administration period many former Virgin Customers are going to think and long and hard before spending their Money with Virgin Australia or Virgin anything/anywhere. In short the brand is probably already worthless and the new Buyer is likely to either choose to change the name or be forced to when it becomes apparent it is a liability.

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