QF742 wrote:

- scrap tiger and VARA (but possibly keep some sort of separate AOC to run mining charters, if profitable)

VARA is actually one of the most profitable parts of the business. Fly in Fly out mining charter is the only thing left in Australian jet aviation, and the only revenue VA has coming in. And it's a lucrative business. Some estimates up to 50-65% of profitable routes in Australian domestic aviation are mining FIFO (mainly WA) charter.
Most VARA staff would probably prefer to be separated from Virgin mainline and go back to their own Skywest operation.

sierrakilo44 wrote:

Morrofinch wrote:

I have a question for everyone. If you were in Scurrah/Deloitte shoes, which direction would you take?

Refocus on the core aspects of the business. Go back to a hybrid carrier that it was as Virgin Blue not Qantas lite which John Borghetti tried to turn it into when he got passed over for the top job at QF in favour of Alan Joyce. Two full sized premium airline groups will never work in a country as small as Australia.
They've already done something right by winding up Tigerair.
30-40 737's running core capital city routes. Australian domestic market is the profitable one. It's boring flying only Syd-Mel-Bne-Per but that's where the money is made.
Get rid of the ATRs. Regional routes aren't as profitable
Get rid of the 777s
Get rid of the 330s
Cancel (or at least defer) the MAX orders until the core operation is profitable again.
Get rid of premium classes for the time being.
Stop International flying with the exception of trans tasman flying if it's profitable.

Once the core business is profitable again for several years then consider branching out into some more short haul regional flying or consider replacing or supplementing the 738s with 737 MAX but again ONLY after the core business is profitable.

And of course rebrand to stop having to pay the bearded one $100m per year in licencing fees. Something uniquely Australian again. Suggestions?:
Ansett
Compass Mk 3
ANA (Australian National Airways)?
Australian Airlines?
V Australia?
Ozjet?
Air Australia?

I'm not too creative so maybe others can come up with better names.

I think you need to retain business class on the 'golden triangle' BNE/SYD/MEL and to PER. A lot of corporate contracts stipulate J for senior staff; therefore you need a J offering to attract those contracts.

Ref the name, I agree 'Virgin' should go. When SRB started expanding Virgin in the 1980s and into the 1990s, 'Virgin' was cool and alternative; what we would call these days a 'disruptor'. But those days are long gone. Millennials don't see Virgin as anything except completely mainstream. Why waste $10 million when you don't need to?

I'd steer away from resurrecting dead airlines; why bother? It's not like there would be any connection between VS MkII to the 'real' Ansett, and if it wasn't like the 'real' Ansett, you'd just be setting the new airline up for criticism. The chance to reinvent DJ as AN was there in 2002 when DJ took over some of AN's former staff and assets, and there was still sentiment and goodwill towards AN, but DJ's then management chose not to take that path. Also: look at the poor experiences at trying resurrecting names in the US: Braniff, Eastern and Pan Am. The other names you suggest are probably still owned (Australian is definitely owned by QF, so not a chance there), and arguably do not have any remaining goodwill with the flying public.

They should resist a new name that is too twee ("Aussie", "True Blue Air", "Koala Airlines", etc) - I'd go for something like:

* Australis
* Australasian Airlines/Airways
* Marlu Airlines (Qantas may object! Ha ha!)
* Woomera Airlines (speed through the air)

etc etc

zkncj wrote:

Morrofinch wrote:

JUST IN: It has been reported that NH is the preferred choice by Scurrah and the board.

Finally VA to join *A......

Morrofinch wrote:

The size of the airline depends on the buyer. Scurrah and the board has been reported to favour a bigger airline owner as they are more likely to keep VA at a larger size than say Westfarmers.

Wesfarmers aren’t shy on big box retail, just trying to image what Coles Air, Bunnings Airways or Air Kmart would be like to fly with....

Wesfarmers also have form buying poorly run businesses and turning them around, you only need to see what they've done with Coles & Kmart, they're not shy to spend money where it matters to bring things up to scratch. Both chains suffered badly from a lack of investment & tired stores prior to being taken over by Wesfarmers.

And as the 77Ws are owned, they would be unlikely to send them to the desert, especially as the LA flights were doing OK. A pity that the HND flights never got a chance to prove themselves, wouldn't be suprised if HND & LAX flights stayed if WES is the successful buyer. Can see them sending back the leased 330's & maybe buying another couple of cheap used 77W's for HND runs, especially if oil remains cheap.

cam747 wrote:

RJMAZ wrote:

PANAMsterdam wrote:

I'm stunned by the unwillingness of the Australian government to help Virgin.

Ease up. The Virgin Australia board of directors have a net worth of $7 billion. They simply do not want to tap into their personal wealth.

Good riddance I say.

Australia has the biggest COVID19 assistance package per head of population on the planet and Virgin Australia was not willing to accept anything besides cold hard cash. They said no to loans and rejected our jobkeeper program where they would get paid $1500 per fortnight per employee. Virgin would then have to pay the difference between their normal wages while the business could operate.

With high freight prices they could simply do belly cargo their loss would be a fraction of leaving everything grounded.

Whilst I agree the Govt should not bail them out, my thoughts today are with the thousands of Virgin staff who are uncertain about their futures, and have likely lost a job they love and an employer who, by most accounts, was great to work for.

Some of them probably read these forums, and statements like 'good riddance' whilst I'm sure not meant personally, is incredibly insensitive.

As an Aussie tax payer I agree with you, no the Aussie government should not bail them out and I too lost my job and was out of one for 2 years in 2015, so I can sympathise with Virgin Australia’s employees. But in my case no ones’ taxes helped me put food on the table or pay the home loan!

Unfortunately Virgin Australia would have gone to administration COVID-19 or no COVID-19. COVID-19 accelerated the inevitable.

I have yet to see Virgin Australia’s employees and unions asking their foreign owners for help. Show me an open letter to Richard Branson, SQ, EY or the Chinese for help. Most likely they know that the Singapore government through SQ and Abu Dhabi government through EY will not come to their aid. The HNA group have massive issues of their own well before the Hong Kong democratic protests, so no point even putting the effort. And I have no idea about other Chinese company does. As for Sir Richard, they know he too won’t help because he is not willing to help his own “baby”.

As for the argument that prices are going to go up because of Qantas’s monopoly … welcome to the new world order, a lot of countries will be having a single airline or airline group.

And there is no need for Australia to have 2 (off) full service carrier.

Flyingsottsman wrote:

Morrofinch wrote:

JUST IN: It has been reported that NH is the preferred choice by Scurrah and the board.

Lets hope! ANA had their problems a few years back and got through it , they would have to be much better than the Etihad/Singapore/HNA partners.

Fun thought...NH gets control of VA and renames them Australian National Airways...ANA

vhtje wrote:

sierrakilo44 wrote:

Morrofinch wrote:

I have a question for everyone. If you were in Scurrah/Deloitte shoes, which direction would you take?

Refocus on the core aspects of the business. Go back to a hybrid carrier that it was as Virgin Blue not Qantas lite which John Borghetti tried to turn it into when he got passed over for the top job at QF in favour of Alan Joyce. Two full sized premium airline groups will never work in a country as small as Australia.
They've already done something right by winding up Tigerair.
30-40 737's running core capital city routes. Australian domestic market is the profitable one. It's boring flying only Syd-Mel-Bne-Per but that's where the money is made.
Get rid of the ATRs. Regional routes aren't as profitable
Get rid of the 777s
Get rid of the 330s
Cancel (or at least defer) the MAX orders until the core operation is profitable again.
Get rid of premium classes for the time being.
Stop International flying with the exception of trans tasman flying if it's profitable.

Once the core business is profitable again for several years then consider branching out into some more short haul regional flying or consider replacing or supplementing the 738s with 737 MAX but again ONLY after the core business is profitable.

And of course rebrand to stop having to pay the bearded one $100m per year in licencing fees. Something uniquely Australian again. Suggestions?:
Ansett
Compass Mk 3
ANA (Australian National Airways)?
Australian Airlines?
V Australia?
Ozjet?
Air Australia?

I'm not too creative so maybe others can come up with better names.

I think you need to retain business class on the 'golden triangle' BNE/SYD/MEL and to PER. A lot of corporate contracts stipulate J for senior staff; therefore you need a J offering to attract those contracts.

Ref the name, I agree 'Virgin' should go. When SRB started expanding Virgin in the 1980s and into the 1990s, 'Virgin' was cool and alternative; what we would call these days a 'disruptor'. But those days are long gone. Millennials don't see Virgin as anything except completely mainstream. Why waste $10 million when you don't need to?

I'd steer away from resurrecting dead airlines; why bother? It's not like there would be any connection between VS MkII to the 'real' Ansett, and if it wasn't like the 'real' Ansett, you'd just be setting the new airline up for criticism. The chance to reinvent DJ as AN was there in 2002 when DJ took over some of AN's former staff and assets, and there was still sentiment and goodwill towards AN, but DJ's then management chose not to take that path. Also: look at the poor experiences at trying resurrecting names in the US: Braniff, Eastern and Pan Am. The other names you suggest are probably still owned (Australian is definitely owned by QF, so not a chance there), and arguably do not have any remaining goodwill with the flying public.

They should resist a new name that is too twee ("Aussie", "True Blue Air", "Koala Airlines", etc) - I'd go for something like:

* Australis
* Australasian Airlines/Airways
* Marlu Airlines (Qantas may object! Ha ha!)
* Woomera Airlines (speed through the air)

etc etc

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.

747m8te wrote:

Flyingsottsman wrote:

Morrofinch wrote:

JUST IN: It has been reported that NH is the preferred choice by Scurrah and the board.

Lets hope! ANA had their problems a few years back and got through it , they would have to be much better than the Etihad/Singapore/HNA partners.

Fun thought...NH gets control of VA and renames them Australian National Airways...ANA

Why go through the hussle? it is cheaper to establish a clean airline with the abundant second hand aircrafts and former VA staff. Maybe NH can persuade SQ and NZ to form a new airline with the name of your choice?

chonetsao wrote:

747m8te wrote:

Flyingsottsman wrote:

Lets hope! ANA had their problems a few years back and got through it , they would have to be much better than the Etihad/Singapore/HNA partners.

Fun thought...NH gets control of VA and renames them Australian National Airways...ANA

Why go through the hussle? it is cheaper to establish a clean airline with the abundant second hand aircrafts and former VA staff. Maybe NH can persuade SQ and NZ to form a new airline with the name of your choice?

Don't think NZ nor SQ wants to get involved considering their own issues plus the varied government bailouts/loans.

chonetsao wrote:

747m8te wrote:

Flyingsottsman wrote:

Lets hope! ANA had their problems a few years back and got through it , they would have to be much better than the Etihad/Singapore/HNA partners.

Fun thought...NH gets control of VA and renames them Australian National Airways...ANA

Why go through the hussle? it is cheaper to establish a clean airline with the abundant second hand aircrafts and former VA staff. Maybe NH can persuade SQ and NZ to form a new airline with the name of your choice?

I think NZ is going to have Biblical size social distancing from the Australian domestic market since two of their attempts turned out to be a disaster. Ansett nearly bankrupted them and Virgin Australia lost them over $100million.

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.

oceanvikram wrote:

chonetsao wrote:

747m8te wrote:

Fun thought...NH gets control of VA and renames them Australian National Airways...ANA

Why go through the hussle? it is cheaper to establish a clean airline with the abundant second hand aircrafts and former VA staff. Maybe NH can persuade SQ and NZ to form a new airline with the name of your choice?

I think NZ is going to have Biblical size social distancing from the Australian domestic market since two of their attempts turned out to be a disaster. Ansett nearly bankrupted them and Virgin Australia lost them over $100million.

Also to add that NZ had their own 'Borghetti' during the ill fated Ansett attempt.

Selwyn 'Borghetti' Cushing, despite fully knowing his airline didn't have the balance sheet to fix an ailing AN, Cushing put the final nail in AN's coffin by using his veto rights to block the SIA purchase of the News Corp stake in AN. All largely due to his ego.
(Air NZ acquired the veto rights when he bought the TNT stake in AN in the mid 90s).

Further Read on the NZ fiasco in AN: http://www.sharechat.co.nz/article/8e22 ... crash.html

FSDan wrote:

BNEFlyer wrote:

VA have announced they've gone into Voluntary Administration. They're not in liquidation, they haven't collapsed, no one has lost their job today, planes are still flying, Velocity points and travel bank credits are still there to be used.

For those of us not familiar with the Australian system, is Voluntary Administration similar to U.S. Chapter 11? Have any airlines previously gone through this process and emerged successful on the other side?

\\


The answer is "Sort of". It is perhaps more similar to the Canadian system, because, unlike in the U.S., in Australia (and Canada as well), the Debtor is run/supervised by a professional administrator (in this case Deloitte) rather than by its current management, as in the U.S. Otherwise, the basic premise is the same, to attempt a reorganization of the company's affairs and to protect as much of the assets for the creditors as possible.

This process has worked before in Australia (and Canada), and actually came relatively close to saving/salvaging Ansett years ago. Hopefully they can have some success in Australia, and, frankly, perhaps they need to wipe out some of their non-Australian investors or at least force them to come to a common plan going forward.

melpax wrote:

Wesfarmers also have form buying poorly run businesses and turning them around, you only need to see what they've done with Coles & Kmart, they're not shy to spend money where it matters to bring things up to scratch. Both chains suffered badly from a lack of investment & tired stores prior to being taken over by Wesfarmers.

And as the 77Ws are owned, they would be unlikely to send them to the desert, especially as the LA flights were doing OK. A pity that the HND flights never got a chance to prove themselves, wouldn't be suprised if HND & LAX flights stayed if WES is the successful buyer. Can see them sending back the leased 330's & maybe buying another couple of cheap used 77W's for HND runs, especially if oil remains cheap.

Wesfarmers has absolutely no experience running airlines- I would hate to see how the situation would even play out.

What are the odds that the creditors do something similar to a Crossair or a Delta Air Transport? That is, they decide to form a new airline from the framework of the regional airline? (Today's Swiss International Air Lines uses the Crossair AOC and the current Brussels Airlines uses the Delta Air Transport AOC.) Shut down VA, and rebuild from the regional division. Some wide-bodies will be needed, especially for mid-haul, but no more long-haul outside the Pacific Rim.

As for the fleet---status (this includes Virgin Australia Regional and Tigerair Australia):
A320: 2 owned, 13 leased
A332: 1 owned, 5 leased
AT76: 0 owned 10 leased
B737: 2 owned, 0 leased
B738: 42 owned, 41 leased
B77W: 4 owned, 1 leased
F100: 12 owned, 2 leased

Overall, the total fleet is 61 owned, 72 leased, with the 737 fleet about a 50:50 split. There are assets with which to start a new airline with the XR air operator's certificate, primarily with the B738, AT76, and F100 fleet, although I see a need to replace the F100s very soon, as that fleet is aging.

aemoreira1981 wrote:

What are the odds that the creditors do something similar to a Crossair or a Delta Air Transport? That is, they decide to form a new airline from the framework of the regional airline? (Today's Swiss International Air Lines uses the Crossair AOC and the current Brussels Airlines uses the Delta Air Transport AOC.) Shut down VA, and rebuild from the regional division. Some wide-bodies will be needed, especially for mid-haul, but no more long-haul outside the Pacific Rim.

As for the fleet---status (this includes Virgin Australia Regional and Tigerair Australia):
A320: 2 owned, 13 leased
A332: 1 owned, 5 leased
AT76: 0 owned 10 leased
B737: 2 owned, 0 leased
B738: 42 owned, 41 leased
B77W: 4 owned, 1 leased
F100: 12 owned, 2 leased

Overall, the total fleet is 61 owned, 72 leased, with the 737 fleet about a 50:50 split. There are assets with which to start a new airline with the XR air operator's certificate, primarily with the B738, AT76, and F100 fleet, although I see a need to replace the F100s very soon, as that fleet is aging.

The Fokker fleet sees less utilisation than the other types, and are typically used for FIFOs, like it or not, Fokkers are here to stay in the 3 Australian airlines that have them, and for at least the next 10 years.

Which I don’t see how those $15MM are worth it. Every Virgin brand failed. It’s the British equivalent to the Trump brand. I don’t get why people thing calling something “Virgin” would sell...

SCFlyer wrote:

chonetsao wrote:

747m8te wrote:

Fun thought...NH gets control of VA and renames them Australian National Airways...ANA

Why go through the hussle? it is cheaper to establish a clean airline with the abundant second hand aircrafts and former VA staff. Maybe NH can persuade SQ and NZ to form a new airline with the name of your choice?

Don't think NZ nor SQ wants to get involved considering their own issues plus the varied government bailouts/loans.

They have been stupid engough to do it twice, why not got for an third round?

If Australia and New Zealand were to say move to an shared bubble for travel before the end of the year, I could see them making some sort of an move. Short-Haul is going to be where the money is for the next few years, and they will been keen todo any to bring extra revenue in.

What does need to happen is an Protection from Qantas ACT needs to be put in place, for new players. For example rules around what Qantas can or can’t do, it Australia wants to have two airlines.

chonetsao wrote:

What does need to happen is an Protection from Qantas ACT needs to be put in place, for new players. For example rules around what Qantas can or can’t do, it Australia wants to have two airlines.

What do you have in mind? I don't know what The Qantas Act entails, but from your statement it seems that it imposes some limits on this particular company?

zkncj wrote:

SCFlyer wrote:

chonetsao wrote:

Why go through the hussle? it is cheaper to establish a clean airline with the abundant second hand aircrafts and former VA staff. Maybe NH can persuade SQ and NZ to form a new airline with the name of your choice?

Don't think NZ nor SQ wants to get involved considering their own issues plus the varied government bailouts/loans.

They have been stupid engough to do it twice, why not got for an third round?

If Australia and New Zealand were to say move to an shared bubble for travel before the end of the year, I could see them making some sort of an move. Short-Haul is going to be where the money is for the next few years, and they will been keen todo any to bring extra revenue in.

What does need to happen is an Protection from Qantas ACT needs to be put in place, for new players. For example rules around what Qantas can or can’t do, it Australia wants to have two airlines.

Can we put to bed the idea of NZ? The first time was stupid in that they through the ego of the CEO brought an ailing AN which should have never happened.

Second time they couldn’t get on in the board room and rightfully got out of the situation which wasn’t at all helped by VA’s floundering financial position.

Why would they try a third time when they have a deal with QF?

aemoreira1981 wrote:

As for the fleet---status (this includes Virgin Australia Regional and Tigerair Australia):
A320: 2 owned, 13 leased
A332: 1 owned, 5 leased
AT76: 0 owned 10 leased
B737: 2 owned, 0 leased
B738: 42 owned, 41 leased
B77W: 4 owned, 1 leased
F100: 12 owned, 2 leased

Overall, the total fleet is 61 owned, 72 leased, with the 737 fleet about a 50:50 split. There are assets with which to start a new airline with the XR air operator's certificate, primarily with the B738, AT76, and F100 fleet, although I see a need to replace the F100s very soon, as that fleet is aging.

I think you will find the majority of the “owned” 737 fleet are still encumbered. As such, the administrator will need to negotiate a settlement with the financiers who have secured their loans against these aircraft.

Also be aware, Lessors still have the right to charge Virgin Australia penalties and repossess aircraft if lease conditions are broken. As such, decisions about the future fleet size will encompass the costs associated with retaining / surrendering aircraft.

Ultimately, it could be cheaper (probably more financially viable) to retain leased / encumbered aircraft and sell the owned assets.

Looking at their fleet, I do wonder about the Fokkers.

The type has been out of production since 1997, when Fokker left the airliner business.

Furthermore, the QF fleet has an average age of 27.6 years.

Wonder what will replace them, and how long this can be delayed.

travelhound wrote:

aemoreira1981 wrote:

As for the fleet---status (this includes Virgin Australia Regional and Tigerair Australia):
A320: 2 owned, 13 leased
A332: 1 owned, 5 leased
AT76: 0 owned 10 leased
B737: 2 owned, 0 leased
B738: 42 owned, 41 leased
B77W: 4 owned, 1 leased
F100: 12 owned, 2 leased

Overall, the total fleet is 61 owned, 72 leased, with the 737 fleet about a 50:50 split. There are assets with which to start a new airline with the XR air operator's certificate, primarily with the B738, AT76, and F100 fleet, although I see a need to replace the F100s very soon, as that fleet is aging.

I think you will find the majority of the “owned” 737 fleet are still encumbered. As such, the administrator will need to negotiate a settlement with the financiers who have secured their loans against these aircraft.

Also be aware, Lessors still have the right to charge Virgin Australia penalties and repossess aircraft if lease conditions are broken. As such, decisions about the future fleet size will encompass the costs associated with retaining / surrendering aircraft.

Ultimately, it could be cheaper (probably more financially viable) to retain leased / encumbered aircraft and sell the owned assets.

It's a tough situation either way -- selling aircraft, in the current environment, is not necessarily going to raise a good price. And it's making creditors whole (or as close as it gets) that's the priority of administrator.

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.

bennett123 wrote:

Looking at their fleet, I do wonder about the Fokkers.

The type has been out of production since 1997, when Fokker left the airliner business.

Furthermore, the QF fleet has an average age of 27.6 years.

Wonder what will replace them, and how long this can be delayed.

I have a feeling that the Fokker 70/100 will be to Australia (and Air Niugini) what the Boeing 737-200 is to Nolinor Aviation in Canada...fly them until complete timeout. (That said, outside of Australia and Papua New Guinea, the only major Fokker operators these days are in Iran.) If they're only used on FIFO missions, they likely only get 2 flights a day. QantasLink has the Boeing 717 and the Fokker 100 as similar-sized planes, although I suspect that the B712 is for quicker turn missions.

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.

sierrakilo44 wrote:

Morrofinch wrote:

I have a question for everyone. If you were in Scurrah/Deloitte shoes, which direction would you take?

Refocus on the core aspects of the business. Go back to a hybrid carrier that it was as Virgin Blue not Qantas lite which John Borghetti tried to turn it into when he got passed over for the top job at QF in favour of Alan Joyce. Two full sized premium airline groups will never work in a country as small as Australia.
They've already done something right by winding up Tigerair.
30-40 737's running core capital city routes. Australian domestic market is the profitable one. It's boring flying only Syd-Mel-Bne-Per but that's where the money is made.
Get rid of the ATRs. Regional routes aren't as profitable
Get rid of the 777s
Get rid of the 330s
Cancel (or at least defer) the MAX orders until the core operation is profitable again.
Get rid of premium classes for the time being.
Stop International flying with the exception of trans tasman flying if it's profitable.

Once the core business is profitable again for several years then consider branching out into some more short haul regional flying or consider replacing or supplementing the 738s with 737 MAX but again ONLY after the core business is profitable.

And of course rebrand to stop having to pay the bearded one $100m per year in licencing fees. Something uniquely Australian again. Suggestions?:
Ansett
Compass Mk 3
ANA (Australian National Airways)?
Australian Airlines?
V Australia?
Ozjet?
Air Australia?

I'm not too creative so maybe others can come up with better names.

Would it really be a good idea to adopt the name of previously failed airlines? The only one that makes sense is V Australia considering it was the previous name used to circumvent the "Virgin"name pending their international flight approval.

Breaking: The majority of bond holders are likely to block any bid which does not get them larger than a 60 cent return on their dollar investment. This makes it likely that many buyers will no longer interested and increases the chances of liquidation occurring.

Source: Nine Group

Morrofinch wrote:

Breaking: The majority of bond holders are likely to block any bid which does not get them larger than a 60 cent return on their dollar investment. This makes it likely that many buyers will no longer interested and increases the chances of liquidation occurring.

Source: Nine Group

I'm wondering what percentage do that actual bond holder have compared to the staff, banks and other creditors in deciding who to sell to? As with the Channel 10 administration, you might have a situation where only some of the banks and the employees have to be looked after to get enough votes to win.

Virgin Australia could have new owners in as little as eight weeks, with more than 10 potential suitors lining up for a closer look at the airline after it went into administration.

None of those 10 parties includes Chinese interests at this stage.

https://www.theaustralian.com.au/busine ... 3e282cc90d

myki wrote:

chonetsao wrote:

What does need to happen is an Protection from Qantas ACT needs to be put in place, for new players. For example rules around what Qantas can or can’t do, it Australia wants to have two airlines.

What do you have in mind? I don't know what The Qantas Act entails, but from your statement it seems that it imposes some limits on this particular company?

I'd be interested to know what that would entail as well. Not that the poster was saying so, but Qantas isn't the bad guy in all this. They are a business in business to employ people and make a profit, if they come across as defending their company/turf then so be it, that is what one would expect them to be doing. Taking the emotion out of Virgin falling over for a minute, it was the fault of the Virgin leadership over the past 10 years that did this to Virgin not Qantas.

There should be no rules set up to protect Virgin or new airlines from Qantas as long as Qantas are playing within the rules, which they do, if they play at the limits of the rules then again, so be it thats what one would expect them to do.

Virgin falling over, yes it tragic and unsettling for all involved, but Qantas is not to blame and should not be hampered by some "Protection from Qantas Act"! Let companies compete within set rules and the well managed ones survive.

This Bloomberg columnist's opinion on the "so-called saviour SQ" is very telling.

To add my opinion, SQ being bitten twice (three times if you count Tiger Airways) in the Australian market, with an "own goal"/SIA's own 'incompetence' through the "Tiger Airways" adventure, may likely have played a role in staying away from the Australian domestic market after VAH's administration.

Singapore’s $10.5 billion capital raising last month — backed by its largest shareholder, state-owned investment company Temasek Holdings Pte. — is the most striking instance of support offered to an airline in the current crisis. Less than a tenth of that sum would have been sufficient to provide the A$1.4 billion ($882 million) rescue loan that Virgin had sought from the Australian government. There’s no legal barrier to Singapore buying out the remaining 80% of the company. Consolidating control would have given it a stronger foothold in a domestic aviation market that it once coveted, at a time when only within-country flights are likely to be operating in significant numbers for some time. It’s telling, then, that the company turned down this option.

https://www.bloomberg.com/opinion/artic ... buccaneers

Gemuser wrote:

NTLDaz wrote:

Gemuser wrote:

You are probably right but for all its simple wording Sec 92 is the most ligatgated section of the constitution, there are some twists & turns in that story. thats why I said its "debatable"

gemuser

It is shockingly worded if one is after certainty that's for sure with all the talk of intercourse. In the unfortunate event of QF group having a monopoly it wouldn't shock me to see intra state fares regulated.

It is exactly and precisely worded for the intension of the time, ie there were to be NO barries between the states in any area! One meaning of intercourse refers to "conversation and social activity between people" although it has been drowned out in the last 50/60 years by the sexual meaning. Remember our constitution was written between 1890 & 1898, so over about 130 years ago when the social activity definision was the one in regular use. But even with that intension there has still been some twisting around over the words.

In this line: "event of QF group having a monopoly it wouldn't shock me to see intra state fares regulated" I assume you ment inter state airfares. Intra state airfares were regulated in many states well in to the 1990 and still are but by means of subsidy contracts.

Gemuser

Yes I do understand that intercourse doesn't just mean the sexual connotation lol. My point is that it can be interpreted differently - it's not explicitly worded. There was a time when it was fairly straight forward after earlier HC rulings. Subsequent, and more recent, rulings means section 92 interpretations are not as cut and dried as previoisly thought.

And I do mean intrastate fares. I may be wrong but there's hardly a regulated route left in NSW. The NSW government doesn't tell Qantas what to charge on a flight from Sydney to Port Macquarie, for example. If Qantas abuse a monopoly situation I wouldn't be surprised if the government intervenes.

Morrofinch wrote:

The size of the airline depends on the buyer. Scurrah and the board has been reported to favour a bigger airline owner as they are more likely to keep VA at a larger size than say Westfarmers.

Not so much Scurrah as he hasn't had time to warm his seat but id say board judgement is not relevant given the board judgement that got VA to where it is...

Also, does the administrator have the final say? Or does board have some input still?

From where I sit 60 cents in the dollar for unsecured creditors seems to be a fair number.

If we consider $5 billion in debt x 60% = $3 billion and the current owners will loose their equity of $760 million, a reorganisation of VA using 60 cents in the dollar could effectively wipe out more than 50% of debt. If we consider a new investor will bring equity and capital (could end up being a condition of a deed of company arrangement) to the business, a Virgin Australia emerging from administration could have debt in the region of $1.5-2.5 billion.

If I remember correctly, a large part of the unsecured debt relates to loans from the airline investors. Some of the airlines could end up deciding to swap their debt for equity.

We could actually see a very competitive Virgin Australia mark 2 biting on the heels of QF once all of the dust settles.

This situation also highlights why government money ($1.4b) was never the right option. All a government loan would have done is secure the shareholder airlines equity in the business, whilst at the same time guaranteeing their loans.

If we assume the major (dysfunctional) shareholders were a significant part of Virgin Australia’s problems, the administration process is a good opportunity to clean out the shareholders, as much as it is to clean out the books.

The administration process looks like it is going to be a win/win/win/win for the Australian people, Virgin Australia employees, the business community and tourism.

I don’t think we should be shedding too many tears for the institutional investors. They might be the losers this time, but ultimately that just comes with the territory.

a36001 wrote:

There should be no rules set up to protect Virgin or new airlines from Qantas as long as Qantas are playing within the rules, which they do, if they play at the limits of the rules then again, so be it thats what one would expect them to do.

There are already some competition rules, but anything extra could actually force Qantas to the administration point as well.

Quite possibly after this VA2 may arise with say 35-40 737s and maybe a few 330s.
Whereas QF will still have a much larger fleet with the associated lease and financing costs.

In what I expect will still be limited domestic and international demand for some time, the best course for Qantas may well be stimulate demand by low fares, so it can at least utilise most of its fleet.

If you restrict them from doing that, the leases may well be a noose around the Roos neck

moa999 wrote:

a36001 wrote:

There should be no rules set up to protect Virgin or new airlines from Qantas as long as Qantas are playing within the rules, which they do, if they play at the limits of the rules then again, so be it thats what one would expect them to do.

There are already some competition rules, but anything extra could actually force Qantas to the administration point as well.

Quite possibly after this VA2 may arise with say 35-40 737s and maybe a few 330s.
Whereas QF will still have a much larger fleet with the associated lease and financing costs.

In what I expect will still be limited domestic and international demand for some time, the best course for Qantas may well be stimulate demand by low fares, so it can at least utilise most of its fleet.

If you restrict them from doing that, the leases may well be a noose around the Roos neck

I'm pretty confident that there won't be a Restriction from Qantas Act. Qantas aren't just sailing through this- they'll be hurting right now. The deep pockets won't last forever. As you say they'll have big decisions to make.moving forward. Big chance they aren't going to need their full fleet for quite a while.

Morrofinch wrote:

Breaking: The majority of bond holders are likely to block any bid which does not get them larger than a 60 cent return on their dollar investment. This makes it likely that many buyers will no longer interested and increases the chances of liquidation occurring.

Source: Nine Group

I'm in the U.S. so don't have firsthand access to what's actually happening, but this seems like posturing. The Administrators have to maximise return to the creditors. If less than 60% is arguably better than a liquidation, then I'd argue the creditors would take some kind of equity. Yes, they probably have a voice and can attempt to reject a plan of reorganisation (or whatever the term in in Australia for that), but I would be surprised if the creditors would act based on what they want versus what would actually be the best possible result/minimal loss for them.

Having lived through Braniff and Eastern in the U.S., and being quite familiar with Ansett in Australia over the past 40 years, I feel for the Virgin staff and wish all of them well (and, hopefully, that VA can be successfully reorganised and profitably operated.

SCFlyer wrote:

Virgin Australia could have new owners in as little as eight weeks, with more than 10 potential suitors lining up for a closer look at the airline after it went into administration.

None of those 10 parties includes Chinese interests at this stage.

https://www.theaustralian.com.au/busine ... 3e282cc90d

Chinese airlines will gain absolutely nothing from acquiring VA and I never believed that any of them were serious contenders. They don't have the need nor the experience to operate a hub and spoke model hence nothing strategic to be gained. Obvious they also can't expect VA to make money so there is also not a financial aspect of it, not to mention the Chinese government has tightened restrictions for Chinese firms to invest overseas in recent years. The big 3 Chinese airlines have not made an overseas investment in an airline unlike NH. I would rather believe NH as they have a track record of investing in the likes of Vietnam and The Philippines.

https://www.theaustralian.com.au/inquir ... 20c60663d7

Quite an article. It is such a complex issue.

Did JB make mistakes? Absolutely

But did he do what he promised? Yes and he did it well.

Ultimately the Board accepted his vision when they appointed him. What would VA be like if it had gone down the original plan? I think much smaller and probably JQ would have smashed it out long ago.

Morrofinch wrote:

Breaking: The majority of bond holders are likely to block any bid which does not get them larger than a 60 cent return on their dollar investment. This makes it likely that many buyers will no longer interested and increases the chances of liquidation occurring.

Source: Nine Group

There is absolutely no guarantee that a liquidation would give the bondholders anything approaching 60% particularly as payment of redundancies and entitlements to all staff would rank higher than the debt holders and a liquidation will massively devalue the worth of the Velocity business.

zkncj wrote:

fkfnz wrote:

zkncj wrote:

Has anyone had any luck with credit card charge backs for canceled Virgin Australia flights? and now that Virgin Australia is voluntary administration, would they be an better chance of these getting credited by the credit card providers?

I've currently got a claim in with my CC provider, should hear something back in the next few days. It's only around $1600NZ but given there were previously only 3 VA flights a week to my nearest airport, and probably zero anytime soon, a travel credit isn't going to be useful to me.

Was this within 30days of the credit card statement?

No, ANZ Visa Platinum gives you 120 days (I think) to make a claim.

Speaking of Wesfarmer's interest in VAH, the 'BUNNINGS' joke (complete with Sausage Sizzles as the in-flight food) has now hit the media..

https://www.dailymail.co.uk/news/articl ... ralia.html

SCFlyer wrote:

Speaking of Wesfarmer's interest in VAH, the 'BUNNINGS' joke (complete with Sausage Sizzles as the in-flight food) has now hit the media..

https://www.dailymail.co.uk/news/articl ... ralia.html

A bit off-topic but the whole Daily Mail is a joke. Calling it a member of the media is flattering to say the least.

Just in: It is understood that NH has approached SQ to try and reach a deal for VA. It is understood NH was interested in a 50/50 arrangement which SQ knocked back. SQ has reportedly given assurances it will not stand in the way of NH however.

Source: Reuters

Morrofinch wrote:

SQ has reportedly given assurances it will not stand in the way of NH however.

SQ has no power now. administrator in control.

Morrofinch wrote:

Just in: It is understood that NH has approached SQ to try and reach a deal for VA. It is understood NH was interested in a 50/50 arrangement which SQ knocked back. SQ has reportedly given assurances it will not stand in the way of NH however.

Source: Reuters

You would think that SQ and NH are in a very good relationship at the moment having just signed a JV not long ago. I am hopeful that even SQ can't agreement on a 50/50 split, they will still be involved and have a say 20% share. Knowing how much Japan had paid for Toll, I can really see NH come on top. This is also perhaps for the best as the HND slots will not fall in the hands of QF.

moa999 wrote:

Morrofinch wrote:

SQ has reportedly given assurances it will not stand in the way of NH however.

SQ has no power now. administrator in control.

Probably more in terms of Star Alliance issues. Like dating your cousins ex in layman terms.

xiaotung wrote:

Morrofinch wrote:

Just in: It is understood that NH has approached SQ to try and reach a deal for VA. It is understood NH was interested in a 50/50 arrangement which SQ knocked back. SQ has reportedly given assurances it will not stand in the way of NH however.

Source: Reuters

You would think that SQ and NH are in a very good relationship at the moment having just signed a JV not long ago. I am hopeful that even SQ can't agreement on a 50/50 split, they will still be involved and have a say 20% share. Knowing how much Japan had paid for Toll, I can really see NH come on top. This is also perhaps for the best as the HND slots will not fall in the hands of QF.

Whether SQ will want to be involved from an equity perspective looks increasingly unlikely.
SIA tried 3 times at the Australian domestic market and failed all 3 attempts. SIA's 2nd attempt via Tiger Airways was a spectular "epic fail".

SIA has a mediocre, maybe arguably dismal record overall at overseas equity investments. Pushing it into mediocre (at best) is only to the Vistara JV investment.

I can see SQ partnering with the VAH successor carrier to main some presence in the Australian domestic market, on the assumption it remains as a 2-class Hybrid or goes to 1-class hybrid, regardless if it carries the Virgin name or it rebrands as something else under the new owner.

The Fokkers are very good at what they do, and they aren't a large strain on the VA balance sheet (they are the only type of aircraft still bringing in any kind of revenue atm). As such, its highly likely that the F100s will form a large part of any VA MkII.

Further, a large part of the debts that VA has are to aircraft leasing companies on leased 738s and A332s. Those debts haven't matured yet but they will soon enough and when that day comes, VA probably won't be able to pay. For the leasing companies that own the 738s and A332s, I;d expect their best bet to get a return out of VA is to get their planes back. VA can't afford them, but they probably can afford to keep running the owned 738s, 77Ws and F100s.

I don't fly with VA, as QF is usually the same price as them, flies more places more often and is overall more convenient to me. So many people and businesses I work with have contracts with or mostly fly QF because of their wider international network, and more consistent partner and lounge network. VA as Qantas Lite clearly hasn't worked. Whatever they do post administration, it shouldn't be staying the course.

SCFlyer wrote:

xiaotung wrote:

Morrofinch wrote:

Just in: It is understood that NH has approached SQ to try and reach a deal for VA. It is understood NH was interested in a 50/50 arrangement which SQ knocked back. SQ has reportedly given assurances it will not stand in the way of NH however.

Source: Reuters

You would think that SQ and NH are in a very good relationship at the moment having just signed a JV not long ago. I am hopeful that even SQ can't agreement on a 50/50 split, they will still be involved and have a say 20% share. Knowing how much Japan had paid for Toll, I can really see NH come on top. This is also perhaps for the best as the HND slots will not fall in the hands of QF.

Whether SQ will want to be involved from an equity perspective looks increasingly unlikely.
SIA tried 3 times at the Australian domestic market and failed all 3 attempts. SIA's 2nd attempt via Tiger Airways was a spectular "epic fail".

SIA has a mediocre, maybe arguably dismal record overall at overseas equity investments. Pushing it into mediocre (at best) is only to the Vistara JV investment.

I can see SQ partnering with the VAH successor carrier to main some presence in the Australian domestic market, on the assumption it remains as a 2-class Hybrid or goes to 1-class hybrid, regardless if it carries the Virgin name or it rebrands as something else under the new owner.

I agree from an equity perspective, SQ would have lost big but strategically the VA investment and JV and from Velocity member base, you could argue they would have gained a lot more business and their Aussie routes are highly profitable. So they would want to see that continue. The real losers are the 2 Chinese investors who would have gained absolutely nothing, not that they care anyway.