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JibberJim
Posts: 144
Joined: Tue Nov 08, 2016 1:33 pm

Re: Virgin Australia to enter voluntary administration

Fri Apr 24, 2020 10:53 am

Are employees really bottom of the list in Australian administration?
 
Pcoder
Posts: 165
Joined: Mon Nov 23, 2015 10:44 am

Re: Virgin Australia to enter voluntary administration

Fri Apr 24, 2020 12:56 pm

No, It goes Administrator Fees > Secured Creditors > Employees > Unsecured Creditors. I'm not 100% sure but some Staff entitlements such as Superannuation (Pension), if they have not been properly administered, might get some priority.

It should already be noted, there are at least 10+ interested concerns looking at Virgin, much more than what was looking at Ansett, so I'm quite confident that there wont be liquidated.
 
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eta unknown
Posts: 2803
Joined: Wed Jun 13, 2001 5:03 am

Re: Virgin Australia to enter voluntary administration

Fri Apr 24, 2020 3:27 pm

Pcoder wrote:
It should already be noted, there are at least 10+ interested concerns looking at Virgin, much more than what was looking at Ansett, so I'm quite confident that there wont be liquidated.


It's just administrator semantics: yes there are 10+ interested parties- (waiting to chew at the carcass- this bit is not mentioned). It's like their previous comment about no redundancies being planned (at this moment, but tomorrow is another matter). Sorry to be so negative, but I've spent a good part of my career having to spin things (and in one position cover things up) so I tend to read between the lines.
 
peterinlisbon
Posts: 1773
Joined: Wed Feb 01, 2006 3:37 am

Re: Virgin Australia to enter voluntary administration

Fri Apr 24, 2020 4:21 pm

gdg9 wrote:
I don't see why the Australian government, or any government, would bail out an airline that was majority foreign owned?


Well, they allowed a foreign-owned airline to come and set up business in Australia in the first place because it benefitted their country. Does it make sense to let that airline go bankrupt and the Australian-owned one survive as if ownership was the only thing that matters? If the percentage ownership of Qantas happened to be more than 50% foreign, should they also let it go?
 
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eta unknown
Posts: 2803
Joined: Wed Jun 13, 2001 5:03 am

Re: Virgin Australia to enter voluntary administration

Fri Apr 24, 2020 4:45 pm

peterinlisbon wrote:
gdg9 wrote:
I don't see why the Australian government, or any government, would bail out an airline that was majority foreign owned?


Well, they allowed a foreign-owned airline to come and set up business in Australia in the first place because it benefitted their country. Does it make sense to let that airline go bankrupt and the Australian-owned one survive as if ownership was the only thing that matters? If the percentage ownership of Qantas happened to be more than 50% foreign, should they also let it go?


I note what you're saying, but the Australian Govt. specifically did say foreign ownership was an optics problem for a bailout: "“The government was not going to bail out five large foreign shareholders with deep pockets”, said the Treasurer.
The Govt. also made it perfectly clear that financial assistance would be on an industry basis, not a particular company (to many are hurting now).
Also note the Australian owned airline is comparatively healthy compared to VA.
 
NYCVIE
Topic Author
Posts: 248
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Re: Virgin Australia to enter voluntary administration

Fri Apr 24, 2020 8:04 pm

Pcoder wrote:
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).


What is with the obsession behind reviving names like Ansett? If they're trying to get away from the baggage of the Virgin brand why would they purchase the name of a carrier that has failed twice (in relatively recent memory)?

peterinlisbon wrote:
gdg9 wrote:
I don't see why the Australian government, or any government, would bail out an airline that was majority foreign owned?

Well, they allowed a foreign-owned airline to come and set up business in Australia in the first place because it benefitted their country. Does it make sense to let that airline go bankrupt and the Australian-owned one survive as if ownership was the only thing that matters? If the percentage ownership of Qantas happened to be more than 50% foreign, should they also let it go?


I think this is a good point. People are harping on the foreign ownership and I don't think that's really the primary issue. As you suggest, I would venture to guess that if Qantas was majority foreign owned many of the people calling for VA's death would be singing a different tune. I think it comes down to people either for some reason hate VA and want them to go away or people think VA isn't as important as QF is. Similar with VS and BA. I don't think there's anything wrong with that but we should call a spade a spade.

Why is the government comfortable with the idea of a majority foreign owned domestic carrier providing service and employment in Australia in good times, but cannot contemplate assistance for the same carrier during an unprecedented pandemic? It just seems strange. It's one thing if they don't want to provide a bailout because they don't see VA as a viable company but they shouldn't act like all of a sudden foreign ownership is an issue. Just my thoughts.
 
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eta unknown
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Re: Virgin Australia to enter voluntary administration

Fri Apr 24, 2020 8:25 pm

Re-read the above explanation- nobody is comfortable bailing out a foreign company because the foreigners get a free pass- they didn't do it so why should the govt.?
 
NYCVIE
Topic Author
Posts: 248
Joined: Mon Jul 04, 2016 11:01 pm

Re: Virgin Australia to enter voluntary administration

Fri Apr 24, 2020 9:11 pm

eta unknown wrote:
Re-read the above explanation- nobody is comfortable bailing out a foreign company because the foreigners get a free pass- they didn't do it so why should the govt.?


I'm not saying they should or should not bail them out. But in theory the government's motivation is saving jobs whereas a shareholder's is profit.
 
travelhound
Posts: 2008
Joined: Fri May 23, 2008 9:13 pm

Re: Virgin Australia to enter voluntary administration

Fri Apr 24, 2020 9:29 pm

eta unknown wrote:
Pcoder wrote:
It should already be noted, there are at least 10+ interested concerns looking at Virgin, much more than what was looking at Ansett, so I'm quite confident that there wont be liquidated.


It's just administrator semantics: yes there are 10+ interested parties- (waiting to chew at the carcass- this bit is not mentioned). It's like their previous comment about no redundancies being planned (at this moment, but tomorrow is another matter). Sorry to be so negative, but I've spent a good part of my career having to spin things (and in one position cover things up) so I tend to read between the lines.


That's the inflated number. We will probably find 70% of those "quality" interested parties will drop out of the race once they have completed their due diligence.
 
NTLDaz
Posts: 465
Joined: Sun Aug 21, 2011 7:56 am

Re: Virgin Australia to enter voluntary administration

Fri Apr 24, 2020 10:44 pm

NYCVIE wrote:
Pcoder wrote:
Sydscott wrote:

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).


What is with the obsession behind reviving names like Ansett? If they're trying to get away from the baggage of the Virgin brand why would they purchase the name of a carrier that has failed twice (in relatively recent memory.

I agree 100%..Not to mention the fact you'd battle to find anyone under 35 who would have heard of Ansett and unless you have an historic fondness for Ansett what exactly would that name mean to anyone ?

IMO if a reborn Virgin is to have a new name the obvious is Velocity. All regular Virgin fliers known the name and associate it with the airline.
 
travelhound
Posts: 2008
Joined: Fri May 23, 2008 9:13 pm

Re: Virgin Australia to enter voluntary administration

Fri Apr 24, 2020 10:56 pm

Just doing the numbers. Using 126 aircraft as the datum point (CASA web site), VA have lease / finance commitments of approximately $15 million per aircraft.

On review of the CASA aircraft register web site I noted VA currently have 13 owned aircraft. Between September 2019 and 24 March 2020, VA financed approximately 18 owned aircraft through some type of syndicated loan arrangement (VA Borrower 2019 No. 1). Eleven of these aircraft were financed in March 2020.

My numbers show VA's financed aircraft have a valuation close to $3 billion. A such, VA would have had equity in its aircraft (if we use $1.9m for the aircraft leasing creditors) close to 30% before the pandemic crisis hit.

The VA Borrower 2019 No.1 loan syndicate is quite intriguing. It could suggest, Virgin Australia were burning through cash in the last half of 2019 and the first quarter of 2020. As such, they could have already been in a spiral of doom prior to the Contra virus groundings.

Once the Administrator starts cancelling leases on aircraft, penalties will start to be incurred. Considering the state of the industry the financiers are probably willing to negotiate a settlement with the VA administrators so that as many aircraft as possible are retained.

I’d suggest the financing of owned aircraft in 2020, could result in these finance arrangements being legally challenged in the courts. It could be argued there was a material change in the business between September 2019 when the first transaction occurred and the 24 March 2020, when the last transaction occurred (three weeks prior to the company entering administration).

I can see why the administrators do not want to hand aircraft back to the lessors / financiers. With nearly $1 billion in assets tied up in these aircraft, any value Virgin Australia does have could quickly fly out of the country if the lessors start exercising their contractual rights.

Looking at the numbers, without the Contra virus VA would probably not have been able to survive. With a shortage of narrow bodies in the market prior to the pandemic a lot of VA's 737's would have simply flown out of the country.

As such, we can see why VA's cornerstone investors were not willing to prop up the company. Any value in the company would quickly disappear if finance commitments could not be met.

...and as for VA asking the government for $1.4 billion. Virgin Australia was already in a very difficult financial position prior to the pandemic. This was a last ditch attempt to save something that was probably already lost. In real terms SRB should have known better. Blaming the government for not giving VA a bail out was very poor form (but in true SRB style). I think the numbers speak for themselves.

I'd also suggest the aircraft lessors could enter into discussions with other third parties to take over VA's leased aircraft. This would ultimately result in the liquidaion of VA and a allowfor a new entity to enter the market. For the aircraft lessors this could be the best way of maintating value in their aircraft.

This may not be pretty.
 
Sydscott
Posts: 3513
Joined: Thu Oct 30, 2003 11:50 am

Re: Virgin Australia to enter voluntary administration

Sat Apr 25, 2020 12:27 am

JibberJim wrote:
Are employees really bottom of the list in Australian administration?


Yes and no is the answer to that question. Employee's are effectively unsecured creditors in an Administration but they do have a priority.

Employee's can also access the Fair Entitlement Guarantee from the Federal Government as a backstop in the event of liquidation or bankruptcy - https://www.ag.gov.au/industrial-relati ... fault.aspx .

So there are a couple of mechanisms to assist employee's in these circumstances but the BEST option is for a new buyer to simply takeover the entitlements for continuing staff as part of the Deed of Company Arrangement. It just depends on how the Administrators and new owners do the deal as to what goes where.
 
ltbewr
Posts: 15108
Joined: Thu Jan 29, 2004 1:24 pm

Re: Virgin Australia to enter voluntary administration

Sat Apr 25, 2020 2:18 am

The Perth Airport authority is blocking a few Virgin Australia aircraft with heavy equipment over liens for unpaid fees: https://www.yahoo.com/news/perth-airpor ... 00756.html
 
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SCFlyer
Posts: 577
Joined: Tue Oct 23, 2018 11:14 pm

Re: Virgin Australia to enter voluntary administration

Sun Apr 26, 2020 12:59 am

Mr Bartholomeusz suggests VA Mk II reverting back to a Domestic only LCC and concentrating on the trunk domestic capital city routes (with Cairns and Gold Coast thrown in) should be the go for whoever purchases VAH. This will mean closing lounges and selling off Velocity to concentrate on the basic LCC, BoB model.
Although he regards Tigerair as having 'potential as a ULCC' within a LCC.

Re-expanding back into NZ (aka the old 'Pacific Blue') in the future has been left open, but IMO would say AKL only with seasonal DUD.

https://www.smh.com.au/business/compani ... 54mi7.html
 
Pcoder
Posts: 165
Joined: Mon Nov 23, 2015 10:44 am

Re: Virgin Australia to enter voluntary administration

Sun Apr 26, 2020 1:09 am

SCFlyer wrote:
Mr Bartholomeusz suggests VA Mk II reverting back to a Domestic only LCC and concentrating on the trunk domestic capital city routes (with Cairns and Gold Coast thrown in) should be the go for whoever purchases VAH. This will mean closing lounges and selling off Velocity to concentrate on the basic LCC, BoB model.
Although he regards Tigerair as having 'potential as a ULCC' within a LCC.

Re-expanding back into NZ (aka the old 'Pacific Blue') in the future has been left open, but IMO would say AKL only with seasonal DUD.

https://www.smh.com.au/business/compani ... 54mi7.html


I think this is an issue with people not understanding Virgin's economic problems. The main issues it has relates to aircraft financing and leasing not operations. A move to an LCC model won't necessarily fix its problems.
 
moa999
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Joined: Tue Mar 13, 2018 6:37 am

Re: Virgin Australia to enter voluntary administration

Sun Apr 26, 2020 1:17 am

Can't see how you could feasibly have both an LCC and ULCC in the same family.
And an LCC doesn't necessarily make money - just have to look at Tiger in its SQ-owned and VA incarnations.

The back to the good old days also ignores the fact that JQ wasn't around or was much smaller for much of DJs better years and they were filling the vacuum left by Ansett.

By the late 2000s I think it was described that QF/JQ had DJ very much in a pincer movement.

Cutting costs is not easy and going full LCC arguably destroys much of the value within Velocity as well as substantially reducing yield. My personal view is that a VA2 should ditch Tiger and International, run a J/Y+/Y service on city routes, but only Y+/Y elsewhere, with a shrink in the lounge network
 
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SCFlyer
Posts: 577
Joined: Tue Oct 23, 2018 11:14 pm

Re: Virgin Australia to enter voluntary administration

Sun Apr 26, 2020 1:37 am

moa999 wrote:
Can't see how you could feasibly have both an LCC and ULCC in the same family.
And an LCC doesn't necessarily make money - just have to look at Tiger in its SQ-owned and VA incarnations.


WestJet (arguably) tried to operate a ULCC through their current subsidiary "SWOOP", but to little to very minimal success as it also cannabilised WestJet's own similar 'New World' LCC/Hybrid model as they (like VA) also tried to move upmarket by introducing W to their short haul aircraft and introducing J to their long-haul (leased) 787s.
 
zkncj
Posts: 3805
Joined: Wed Nov 09, 2005 4:57 pm

Re: Virgin Australia to enter voluntary administration

Sun Apr 26, 2020 1:57 am

SCFlyer wrote:
Mr Bartholomeusz suggests VA Mk II reverting back to a Domestic only LCC and concentrating on the trunk domestic capital city routes (with Cairns and Gold Coast thrown in) should be the go for whoever purchases VAH. This will mean closing lounges and selling off Velocity to concentrate on the basic LCC, BoB model.
Although he regards Tigerair as having 'potential as a ULCC' within a LCC.

Re-expanding back into NZ (aka the old 'Pacific Blue') in the future has been left open, but IMO would say AKL only with seasonal DUD.

https://www.smh.com.au/business/compani ... 54mi7.html


One way this could work, would be spiriting off VA back into two companies like the Virgin Australia / Pacific Blue was back in the early days.

Both companies would share an main common share holder, but the remainder of the company would be made up of local specific.

Virgin Australia would be come an domestic only airline, but would then be partnered with say Virgin New Zealand (or what ever it’s would called).

Back to the Pacific Blue days, with an CHC based airline that would provide limited Tasman/Pacific services.
 
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qf2220
Posts: 1946
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Re: Virgin Australia to enter voluntary administration

Sun Apr 26, 2020 11:33 pm

Pcoder wrote:
No, It goes Administrator Fees > Secured Creditors > Employees > Unsecured Creditors. I'm not 100% sure but some Staff entitlements such as Superannuation (Pension), if they have not been properly administered, might get some priority..


ATO is I think before Secured Creditors too.
 
Sydscott
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Re: Virgin Australia to enter voluntary administration

Mon Apr 27, 2020 4:05 am

qf2220 wrote:
Pcoder wrote:
No, It goes Administrator Fees > Secured Creditors > Employees > Unsecured Creditors. I'm not 100% sure but some Staff entitlements such as Superannuation (Pension), if they have not been properly administered, might get some priority..


ATO is I think before Secured Creditors too.


The ATO goes in with unsecured Creditors but the power the ATO does have is to make Directors personally liable in certain circumstances for any unpaid tax / shortfall. So they don't get priority but there are other mechanisms they potentially have access to, and more easily, than other Creditors do in order to recover money.

Pcoder wrote:
SCFlyer wrote:Mr Bartholomeusz suggests VA Mk II reverting back to a Domestic only LCC and concentrating on the trunk domestic capital city routes (with Cairns and Gold Coast thrown in) should be the go for whoever purchases VAH. This will mean closing lounges and selling off Velocity to concentrate on the basic LCC, BoB model. Although he regards Tigerair as having 'potential as a ULCC' within a LCC.Re-expanding back into NZ (aka the old 'Pacific Blue') in the future has been left open, but IMO would say AKL only with seasonal DUD.https://www.smh.com.au/business/compani ... 54mi7.htmlI think this is an issue with people not understanding Virgin's economic problems. The main issues it has relates to aircraft financing and leasing not operations. A move to an LCC model won't necessarily fix its problems.


I beg to differ. The main problem is that Virgins operation is not generating enough profitable revenue to pay its bills. If the operation was more profitable and generated better cashflow Virgin wouldn't be in the position that it's in. So while the financial part needs to be dealt with the Operation very much needs to be one which focuses on profits and cash generation which it simply hasn't in the past.
 
Deano969
Posts: 18
Joined: Mon Apr 27, 2020 6:12 am

Re: Virgin Australia to enter voluntary administration

Mon Apr 27, 2020 8:49 am

Read a lot of comments relating to how VA was not a LC or LCC and really couldn't take it up to QF
If or when VA re-launch after administration why not try something unique
3 class configuration
38" Premium up front
33" Full service economy in the middle
30" Ultra low cost up the back
Sell off upgrades at the check in....
That would open up their seats to one and all while generating extra revenue
 
Pcoder
Posts: 165
Joined: Mon Nov 23, 2015 10:44 am

Re: Virgin Australia to enter voluntary administration

Mon Apr 27, 2020 9:28 am

Some simple things that need to looked before any fundamental business changes would be, its sport sponsorships and the name licencing for Virgin and Tigerair. I think the $10 million for Virgin needs to be trimmed to something more like $2 million plus cut in profits. I'm also not seeing the value in retaining the Tiger name. Measure like these are some very simple changes that can be made with impacting the customers.

They could also look to introduce Basic Economy, which although i don't think going back to a LCC is viable, this might be a good option to compete with Jetstar. They could also provide a better drinks service (with soft drinks), similar to what the Japanese/American airlines do, using large bottles and pouring into cups rather than individual juice and water containers.
Last edited by Pcoder on Mon Apr 27, 2020 9:41 am, edited 1 time in total.
 
Flying-Tiger
Posts: 4040
Joined: Mon Aug 23, 1999 5:35 am

Re: Virgin Australia to enter voluntary administration

Mon Apr 27, 2020 9:36 am

Without pouring too much cold water into this dicussion: where is actually the business case to continue Virgin Australia? Anyone who would be interested to buy into the carrier has a requirement to see the money being recouped with interest = the carrier being profitable. Is there actually a realistic likelyhood to be able to turn profits in any realistic time frame? Or is it time to admit that the current market is only big enough for one large carrier (Qantas) and some regional ones (REX etc)?

FiFo charters are certainly something to be separated, however where´s the demand (and where will be the demand) in the near to mid-future to allow two larger airlines to compete and still earn profits?
Flown: A319/320/321,A332/3,A343/346, A359, A380,AT4,AT7,B712, B732/3/4/5/7/8/9,B742/4,B752/3, B762/763,B772/77W,CR2/7/9/K,ER3/4,E70/75/90/95, F50/70/100,M11,L15,SF3,S20, AR8/1, 142/143,... 330.860 miles and counting.
 
zkncj
Posts: 3805
Joined: Wed Nov 09, 2005 4:57 pm

Re: Virgin Australia to enter voluntary administration

Mon Apr 27, 2020 9:40 am

Deano969 wrote:
Read a lot of comments relating to how VA was not a LC or LCC and really couldn't take it up to QF
If or when VA re-launch after administration why not try something unique
3 class configuration
38" Premium up front
33" Full service economy in the middle
30" Ultra low cost up the back
Sell off upgrades at the check in....
That would open up their seats to one and all while generating extra revenue


Isn't that path that NZ wanted VA to take years ago when they we're one of the main three shareholders, but could never get the other shareholders across the line.

It sounds allot like NZ's seat to suit product, which sells for different product classes with all using the same physical seat (and sometimes if cheaper to fly VA/QF on the Tasman, than an Seat fare on NZ).
 
cx777fan
Posts: 295
Joined: Sat Feb 26, 2005 5:22 pm

Re: Virgin Australia to enter voluntary administration

Mon Apr 27, 2020 10:03 am

Deano969 wrote:
Read a lot of comments relating to how VA was not a LC or LCC and really couldn't take it up to QF
If or when VA re-launch after administration why not try something unique
3 class configuration
38" Premium up front
33" Full service economy in the middle
30" Ultra low cost up the back
Sell off upgrades at the check in....
That would open up their seats to one and all while generating extra revenue


This is ok in theory, but I think one of the main achilles heals of VA operations to date has been the confused and confusing hybrid product offering. For several years you basically needed a degree in marketing and economics to understand if your fare included food but not checked bags. Or coffee and orange juice but not a fizzy drink. Still water but not sparkling. Or three pretzels on a dinner time flight. Or more recently having to pay for extra food and beverage items in full fare J. On plenty of VA flights I overheard FAs (not always graciously) explaining the 'rules' to pax who invariably muttered "that's why I prefer to fly QF". Whatever Virgin MkII looks like (hopefully having ditched the dated and irrelevant Virgin branding) they would do well to simplify the product offering and maintain consistency and get service delivery right.
 
Pcoder
Posts: 165
Joined: Mon Nov 23, 2015 10:44 am

Re: Virgin Australia to enter voluntary administration

Mon Apr 27, 2020 10:09 am

cx777fan wrote:
Deano969 wrote:
Read a lot of comments relating to how VA was not a LC or LCC and really couldn't take it up to QF
If or when VA re-launch after administration why not try something unique
3 class configuration
38" Premium up front
33" Full service economy in the middle
30" Ultra low cost up the back
Sell off upgrades at the check in....
That would open up their seats to one and all while generating extra revenue


This is ok in theory, but I think one of the main achilles heals of VA operations to date has been the confused and confusing hybrid product offering. For several years you basically needed a degree in marketing and economics to understand if your fare included food but not checked bags. Or coffee and orange juice but not a fizzy drink. Still water but not sparkling. Or three pretzels on a dinner time flight. Or more recently having to pay for extra food and beverage items in full fare J. On plenty of VA flights I overheard FAs (not always graciously) explaining the 'rules' to pax who invariably muttered "that's why I prefer to fly QF". Whatever Virgin MkII looks like (hopefully having ditched the dated and irrelevant Virgin branding) they would do well to simplify the product offering and maintain consistency and get service delivery right.


+100

I've been on Virgin sometimes during the happy hour flights and only got offered the water, juice or coffee, whereas Qantas is for more consistent in its product.
 
Westerwaelder
Posts: 220
Joined: Fri Apr 03, 2020 12:27 pm

Re: Virgin Australia to enter voluntary administration

Mon Apr 27, 2020 10:24 am

Pcoder wrote:
cx777fan wrote:
Deano969 wrote:
Read a lot of comments relating to how VA was not a LC or LCC and really couldn't take it up to QF
If or when VA re-launch after administration why not try something unique
3 class configuration
38" Premium up front
33" Full service economy in the middle
30" Ultra low cost up the back
Sell off upgrades at the check in....
That would open up their seats to one and all while generating extra revenue


This is ok in theory, but I think one of the main achilles heals of VA operations to date has been the confused and confusing hybrid product offering. For several years you basically needed a degree in marketing and economics to understand if your fare included food but not checked bags. Or coffee and orange juice but not a fizzy drink. Still water but not sparkling. Or three pretzels on a dinner time flight. Or more recently having to pay for extra food and beverage items in full fare J. On plenty of VA flights I overheard FAs (not always graciously) explaining the 'rules' to pax who invariably muttered "that's why I prefer to fly QF". Whatever Virgin MkII looks like (hopefully having ditched the dated and irrelevant Virgin branding) they would do well to simplify the product offering and maintain consistency and get service delivery right.


+100

I've been on Virgin sometimes during the happy hour flights and only got offered the water, juice or coffee, whereas Qantas is for more consistent in its product.


I fully agree. Customers want clarity on what they are buying into. BMI used to confuse the heck out of customers with their version of a hybrid model. Those you are looking for the best price prefer the LCC/ULCC model, the others gravitate towards full (or a version thereof) service airlines. A hybrid trying to be everything to everyone often ends up not meeting anyones expectations
 
anstar
Posts: 3262
Joined: Sun Nov 23, 2003 3:49 am

Re: Virgin Australia to enter voluntary administration

Mon Apr 27, 2020 10:51 am

Deano969 wrote:
Read a lot of comments relating to how VA was not a LC or LCC and really couldn't take it up to QF
If or when VA re-launch after administration why not try something unique
3 class configuration
38" Premium up front
33" Full service economy in the middle
30" Ultra low cost up the back
Sell off upgrades at the check in....
That would open up their seats to one and all while generating extra revenue


Sounds a bit like Jack of all trades master of none.

Would also be a marketing nightmare from a brand image...

There is a market for 2 major airlines in Australia. Just not a market for them to have 2 low cost and 2 full service carriers. Virgin need to decide what part of the market they want to focus on. They had a good, profitable operation as Virgin Blue but then deviated from their DNA of being a value based carrier to a full service on some routes carrier. A confused business model. You dont have to be all things to all people to be successful. Under JB they got into a pissing competition with Qantas as JB had to prove AJ was the wrong choice for QF etc etc
 
VHOGU
Posts: 57
Joined: Tue Sep 16, 2014 9:50 am

Re: Virgin Australia to enter voluntary administration

Mon Apr 27, 2020 11:09 am

Pcoder wrote:
cx777fan wrote:
Deano969 wrote:
Read a lot of comments relating to how VA was not a LC or LCC and really couldn't take it up to QF
If or when VA re-launch after administration why not try something unique
3 class configuration
38" Premium up front
33" Full service economy in the middle
30" Ultra low cost up the back
Sell off upgrades at the check in....
That would open up their seats to one and all while generating extra revenue


This is ok in theory, but I think one of the main achilles heals of VA operations to date has been the confused and confusing hybrid product offering. For several years you basically needed a degree in marketing and economics to understand if your fare included food but not checked bags. Or coffee and orange juice but not a fizzy drink. Still water but not sparkling. Or three pretzels on a dinner time flight. Or more recently having to pay for extra food and beverage items in full fare J. On plenty of VA flights I overheard FAs (not always graciously) explaining the 'rules' to pax who invariably muttered "that's why I prefer to fly QF". Whatever Virgin MkII looks like (hopefully having ditched the dated and irrelevant Virgin branding) they would do well to simplify the product offering and maintain consistency and get service delivery right.


+100

I've been on Virgin sometimes during the happy hour flights and only got offered the water, juice or coffee, whereas Qantas is for more consistent in its product.

Their happy hour flights are flights that are scheduled to take off between 5- 7pm Monday to Friday, and excluding public holidays. I also believe the PER-HBA flights aren’t included in happy hour due to limited space on the aircraft because it’s return catered. If your 4.45pm flight takes off at 5.15pm due to delay, they won’t re-cater and delay the aircraft.

The snack offering depends on the length of flight. Sorry to say but serving a full aircraft a hot meal for a 1 hour or 1 hour 30 flight is pretty unrealistic both financially and time wise with 4 cabin crew. Most of the flights now have a 2 snack option if it’s over an hour, with gluten free snack options available.

As for J class, you get provided a complimentary pantry which has an abundance snack options include olives, chips, cheese and crackers, chocolate, granola, popcorn, nuts, herbal teas, hot chocolate etc.. I’d be surprised if anyone in J class wanted or needed to purchase from the retail menu on offer in economy, but they offer it anyway.

Mind you, this was the case pre covid. I doubt they do anything further than water, and retail menu now.
 
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SCFlyer
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Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 1:51 am

Indigo Partners, owners of the LCC Frontier in the USA and co-owner of European LCC Wizz Air throws their hat in the ring for VAH.

They initially plan to make VA 2.0 as a domestic-only LCC, and slowly expand from there.

This is not the first time Indigo had bid for VAH, they had a failed attempt to buy one of the stakes (HNA?) in 2018.

https://www.executivetraveller.com/news ... its-sights
 
superjeff
Posts: 1357
Joined: Fri Feb 05, 2010 2:14 am

Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 2:43 am

I'd like to hear from somebody who has some knowledge about Australian Bankruptcy/Administration processes: In the US Chapter 11 scenario, the debtor can abrogate leases or "executory contracts" (those are contracts performable over an extended time period) and use that threat as a way to renegotiate their terms. Right now, the last thing the creditors probably want is their airplanes back (who'll they place them with in the relatively near future, anywhere in the world). What part of Virgin Australia is salvageable? Does the royalty required by Branson make it possible (they could possibly abrogate that and, as discussed above, rebrand)? I have a feeling that the ULLC model (i.e., Indigo Partners) isn't the way to go when the reason for the problem is an external situation, like Corona.
 
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lightsaber
Moderator
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Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 2:51 am

I second SuperJeffs question, could Virgin Australia just returned leased aircraft as a negotiating tactic?

SCFlyer wrote:
Indigo Partners, owners of the LCC Frontier in the USA and co-owner of European LCC Wizz Air throws their hat in the ring for VAH.

They initially plan to make VA 2.0 as a domestic-only LCC, and slowly expand from there.

This is not the first time Indigo had bid for VAH, they had a failed attempt to buy one of the stakes (HNA?) in 2018.

https://www.executivetraveller.com/news ... its-sights

One clear strategy is the only way to come out of this. An ULCC is the least occupied niche. This is viable. Australia doesn't need two Qantas.

But would Indigo bother with the Virgin name?

Lightsaber
IM messages to mods on warnings and bans will be ignored and nasty ones will result in a ban.
 
Sydscott
Posts: 3513
Joined: Thu Oct 30, 2003 11:50 am

Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 4:27 am

superjeff wrote:
I'd like to hear from somebody who has some knowledge about Australian Bankruptcy/Administration processes: In the US Chapter 11 scenario, the debtor can abrogate leases or "executory contracts" (those are contracts performable over an extended time period) and use that threat as a way to renegotiate their terms. Right now, the last thing the creditors probably want is their airplanes back (who'll they place them with in the relatively near future, anywhere in the world). What part of Virgin Australia is salvageable? Does the royalty required by Branson make it possible (they could possibly abrogate that and, as discussed above, rebrand)? I have a feeling that the ULLC model (i.e., Indigo Partners) isn't the way to go when the reason for the problem is an external situation, like Corona.


First off lets be clear that the Australia does not have a Chapter 11 process in the way the US does. Virgin has opted for a "Voluntary Administration".

Under a Voluntary Administration scenario, the Company is protected from Creditors being able to take any action against the Company to recover debts. So a Lessor of an aircraft can't take the Company to Court, for example, unless the Administrator consents. Lets also be clear that under an Administration Scenario, the Administrator effectively becomes responsible for the payment of rent and other outgoings on the Company. So an Administrator would not keep on paying the aircraft leases unless they had to.

This is separate to a "Liquidation" process if the businesses is unrecoverable. If Virgin falls into Liquidation, a Liquidate has the power to disclaim agreements and obligations. So in that case the Liquidator of Virgin could get rid of the leases but we aren't in a Liquidation so that doesn't apply.

The key power that the Aircraft Lessors have is twofold:

1) They are secured Creditors of the Company so they are further ahead in the line for payment of their debt;
2) As a voting bloc in the Administration process. Any resolutions or Deeds of Company Arrangement negotiated by the Administrator with external parties requires approval by Creditors who will all look out for their own interests. So Administrators will need to keep the Aircraft Lessors on side.

Hope that helps.
 
ArtV
Posts: 144
Joined: Sun Jul 03, 2016 2:29 pm

Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 4:48 am

The appointment of a Voluntary Administrator removes the ability for a Lessor to take possession of their property (without the Administrators consent) during their appointment. Therefore, the aircraft are fundamentally controlled by the Administrator, not the lessors.

But, an Administrator does have the right, within the first 5 days of their appointment, to "disclaim any onerous property". Although not technically a termination, it is as close as you get....it terminates the lease. (Compared to the power of a Liquidator, who can terminate leases at will).

Further to the 5 day period, previous Administrators in complex appointments have applied to the courts and received extensions of the time period to disclaim. This allows them to hold the first meeting of creditors (which is to be done within 20 days of appointment), allowing them to keep the infrastructure of the business together so that creditors can make a better decision. Despite suggestions that Virgin's Administrator was planning on filing the extension request, I don't think there has been any information released either way.

On the other side, if the Administrator drags things along too long without agreement, there are precedents for leasors applying to the court and seeking their assets back.

Basically....it is a mess, and will remain a mess for some time!!
 
tullamarine
Posts: 2475
Joined: Thu Aug 05, 1999 1:14 pm

Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 5:00 am

Sydscott wrote:
superjeff wrote:
I'd like to hear from somebody who has some knowledge about Australian Bankruptcy/Administration processes: In the US Chapter 11 scenario, the debtor can abrogate leases or "executory contracts" (those are contracts performable over an extended time period) and use that threat as a way to renegotiate their terms. Right now, the last thing the creditors probably want is their airplanes back (who'll they place them with in the relatively near future, anywhere in the world). What part of Virgin Australia is salvageable? Does the royalty required by Branson make it possible (they could possibly abrogate that and, as discussed above, rebrand)? I have a feeling that the ULLC model (i.e., Indigo Partners) isn't the way to go when the reason for the problem is an external situation, like Corona.


First off lets be clear that the Australia does not have a Chapter 11 process in the way the US does. Virgin has opted for a "Voluntary Administration".

Under a Voluntary Administration scenario, the Company is protected from Creditors being able to take any action against the Company to recover debts. So a Lessor of an aircraft can't take the Company to Court, for example, unless the Administrator consents. Lets also be clear that under an Administration Scenario, the Administrator effectively becomes responsible for the payment of rent and other outgoings on the Company. So an Administrator would not keep on paying the aircraft leases unless they had to.

This is separate to a "Liquidation" process if the businesses is unrecoverable. If Virgin falls into Liquidation, a Liquidate has the power to disclaim agreements and obligations. So in that case the Liquidator of Virgin could get rid of the leases but we aren't in a Liquidation so that doesn't apply.

The key power that the Aircraft Lessors have is twofold:

1) They are secured Creditors of the Company so they are further ahead in the line for payment of their debt;
2) As a voting bloc in the Administration process. Any resolutions or Deeds of Company Arrangement negotiated by the Administrator with external parties requires approval by Creditors who will all look out for their own interests. So Administrators will need to keep the Aircraft Lessors on side.

Hope that helps.

Administration is well explained by ASIC on their website here https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors/

The complication at the creditors meeting is that there is a vote by sheer numbers which will typically favour whoever holds the employee proxies which, in this case, will probably be a series of union reps and a vote balanced on the value of debt which will be controlled by the bondholders who have appointed their own insolvency advisors to represent them. In the situation that there is a deadlock in votes, the chairman (administrator), typically has the casting vote.

Whilst Scott is correct that typically the administrator would be keen to keep lessors onside as much as possible the situation here may be different given the lessors are in a much weakened position with the global market meaning they are unlikely to be able to quickly place repossessed aircraft with other airlines, most of whom are also trying to rapidly shrink their fleets. Some lessors will be keen to ally with potential acquirers so their planes find a place in the new airline's fleet even though the new lease will probably be a much reduced amount; the alternative for the lessor may be a plane stuck in the desert doing nothing for 4 or 5 years.
717, 721/2, 732/3/4/5/7/8/9, 742/3/4, 752/3, 762/3, 772/E/W, 788/9, 300,310, 319,320/1, 332/3, 359, 388, DC9, DC10, F28, F100, 142,143, E75/90, CR2, D82/3/4, SF3, ATR
 
BNEFlyer
Posts: 245
Joined: Fri Oct 27, 2006 6:41 am

Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 5:08 am

lightsaber wrote:
I second SuperJeffs question, could Virgin Australia just returned leased aircraft as a negotiating tactic?

SCFlyer wrote:
Indigo Partners, owners of the LCC Frontier in the USA and co-owner of European LCC Wizz Air throws their hat in the ring for VAH.

They initially plan to make VA 2.0 as a domestic-only LCC, and slowly expand from there.

This is not the first time Indigo had bid for VAH, they had a failed attempt to buy one of the stakes (HNA?) in 2018.

https://www.executivetraveller.com/news ... its-sights

One clear strategy is the only way to come out of this. An ULCC is the least occupied niche. This is viable. Australia doesn't need two Qantas.

But would Indigo bother with the Virgin name?

Lightsaber

It's unlikely we'd have an ULCC flying to LAX and HND though, as VA will. LAX their most profitable route and HND which was ready to go including partnership with NH. And with Jetstar as an option we don't need another ULCC. We do need another competitor to QF though.
 
Pcoder
Posts: 165
Joined: Mon Nov 23, 2015 10:44 am

Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 5:15 am

lightsaber wrote:
I second SuperJeffs question, could Virgin Australia just returned leased aircraft as a negotiating tactic?

SCFlyer wrote:
Indigo Partners, owners of the LCC Frontier in the USA and co-owner of European LCC Wizz Air throws their hat in the ring for VAH.

They initially plan to make VA 2.0 as a domestic-only LCC, and slowly expand from there.

This is not the first time Indigo had bid for VAH, they had a failed attempt to buy one of the stakes (HNA?) in 2018.

https://www.executivetraveller.com/news ... its-sights

One clear strategy is the only way to come out of this. An ULCC is the least occupied niche. This is viable. Australia doesn't need two Qantas.

But would Indigo bother with the Virgin name?

Lightsaber


I'm not sure an ULCC would work here as there a number of impediments that would inhibit it. Firstly the tactic of drip pricing is mostly prohibited in Australia, so it would be harder to grab more ancillary revenue then the existing LCCs already get. Australia also has high airport charges and virtually no secondary airports.

Looking at flights from Syd to Mel in September (No school holidays), JQ is $90, VA is $116 and QF is $135. As you can see from what I've highlighted there is not a huge price difference between the LCCs and the Full Service. We already have two LCCs and they haven't been expanding greatly in the past couple of years, so I'm not sure why Indigo would suddenly do much better.

It's very likely that Indigo will get out bid by the likes of Wesfarmers, who have plenty of cash thanks to the Coles spin off.
 
travelhound
Posts: 2008
Joined: Fri May 23, 2008 9:13 pm

Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 5:34 am

Pcoder wrote:
lightsaber wrote:
I second SuperJeffs question, could Virgin Australia just returned leased aircraft as a negotiating tactic?

SCFlyer wrote:
Indigo Partners, owners of the LCC Frontier in the USA and co-owner of European LCC Wizz Air throws their hat in the ring for VAH.

They initially plan to make VA 2.0 as a domestic-only LCC, and slowly expand from there.

This is not the first time Indigo had bid for VAH, they had a failed attempt to buy one of the stakes (HNA?) in 2018.

https://www.executivetraveller.com/news ... its-sights

One clear strategy is the only way to come out of this. An ULCC is the least occupied niche. This is viable. Australia doesn't need two Qantas.

But would Indigo bother with the Virgin name?

Lightsaber


I'm not sure an ULCC would work here as there a number of impediments that would inhibit it. Firstly the tactic of drip pricing is mostly prohibited in Australia, so it would be harder to grab more ancillary revenue then the existing LCCs already get. Australia also has high airport charges and virtually no secondary airports.

Looking at flights from Syd to Mel in September (No school holidays), JQ is $90, VA is $116 and QF is $135. As you can see from what I've highlighted there is not a huge price difference between the LCCs and the Full Service. We already have two LCCs and they haven't been expanding greatly in the past couple of years, so I'm not sure why Indigo would suddenly do much better.

It's very likely that Indigo will get out bid by the likes of Wesfarmers, who have plenty of cash thanks to the Coles spin off.


I think the market is too small for an ULCC to work.

If we go back to the original Tiger Airways in Singapore, many commentators believed the airline failed because the ULCC model (adopted from Ryan Air) was not suitable for the Asian market.

As for TigerAir in Australia, it is probably the most unloved domestic carrier in the market. Australians have relatively high expectations for minimum standards. Jetstar (a relatively well run airline) had to quickly change because there were aspects of the LCC model the Australian consumer just didn’t like.
 
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eta unknown
Posts: 2803
Joined: Wed Jun 13, 2001 5:03 am

Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 6:10 am

travelhound wrote:
As for TigerAir in Australia, it is probably the most unloved domestic carrier in the market. Australians have relatively high expectations for minimum standards. Jetstar (a relatively well run airline) had to quickly change because there were aspects of the LCC model the Australian consumer just didn’t like.


I'd put it another way- there were JQ specific policies (not necessarily LCC) the Australian consumer just didn't like, but then JQ cleaned up their act.
 
tullamarine
Posts: 2475
Joined: Thu Aug 05, 1999 1:14 pm

Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 6:15 am

travelhound wrote:
Pcoder wrote:
lightsaber wrote:
I second SuperJeffs question, could Virgin Australia just returned leased aircraft as a negotiating tactic?


One clear strategy is the only way to come out of this. An ULCC is the least occupied niche. This is viable. Australia doesn't need two Qantas.

But would Indigo bother with the Virgin name?

Lightsaber


I'm not sure an ULCC would work here as there a number of impediments that would inhibit it. Firstly the tactic of drip pricing is mostly prohibited in Australia, so it would be harder to grab more ancillary revenue then the existing LCCs already get. Australia also has high airport charges and virtually no secondary airports.

Looking at flights from Syd to Mel in September (No school holidays), JQ is $90, VA is $116 and QF is $135. As you can see from what I've highlighted there is not a huge price difference between the LCCs and the Full Service. We already have two LCCs and they haven't been expanding greatly in the past couple of years, so I'm not sure why Indigo would suddenly do much better.

It's very likely that Indigo will get out bid by the likes of Wesfarmers, who have plenty of cash thanks to the Coles spin off.


I think the market is too small for an ULCC to work.

If we go back to the original Tiger Airways in Singapore, many commentators believed the airline failed because the ULCC model (adopted from Ryan Air) was not suitable for the Asian market.

As for TigerAir in Australia, it is probably the most unloved domestic carrier in the market. Australians have relatively high expectations for minimum standards. Jetstar (a relatively well run airline) had to quickly change because there were aspects of the LCC model the Australian consumer just didn’t like.


ULCCs rely on low airport charges. Lack of competition for airports in major cities mean airlines are stuck with high charges. Currently only Melbourne has any sort of competition with Avalon though Brisbane sort of does with Coolangatta but Coolangatta isn't particularly low cost either.
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Sydscott
Posts: 3513
Joined: Thu Oct 30, 2003 11:50 am

Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 7:30 am

tullamarine wrote:
Sydscott wrote:
superjeff wrote:
I'd like to hear from somebody who has some knowledge about Australian Bankruptcy/Administration processes: In the US Chapter 11 scenario, the debtor can abrogate leases or "executory contracts" (those are contracts performable over an extended time period) and use that threat as a way to renegotiate their terms. Right now, the last thing the creditors probably want is their airplanes back (who'll they place them with in the relatively near future, anywhere in the world). What part of Virgin Australia is salvageable? Does the royalty required by Branson make it possible (they could possibly abrogate that and, as discussed above, rebrand)? I have a feeling that the ULLC model (i.e., Indigo Partners) isn't the way to go when the reason for the problem is an external situation, like Corona.


First off lets be clear that the Australia does not have a Chapter 11 process in the way the US does. Virgin has opted for a "Voluntary Administration".

Under a Voluntary Administration scenario, the Company is protected from Creditors being able to take any action against the Company to recover debts. So a Lessor of an aircraft can't take the Company to Court, for example, unless the Administrator consents. Lets also be clear that under an Administration Scenario, the Administrator effectively becomes responsible for the payment of rent and other outgoings on the Company. So an Administrator would not keep on paying the aircraft leases unless they had to.

This is separate to a "Liquidation" process if the businesses is unrecoverable. If Virgin falls into Liquidation, a Liquidate has the power to disclaim agreements and obligations. So in that case the Liquidator of Virgin could get rid of the leases but we aren't in a Liquidation so that doesn't apply.

The key power that the Aircraft Lessors have is twofold:

1) They are secured Creditors of the Company so they are further ahead in the line for payment of their debt;
2) As a voting bloc in the Administration process. Any resolutions or Deeds of Company Arrangement negotiated by the Administrator with external parties requires approval by Creditors who will all look out for their own interests. So Administrators will need to keep the Aircraft Lessors on side.

Hope that helps.

Administration is well explained by ASIC on their website here https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors/

The complication at the creditors meeting is that there is a vote by sheer numbers which will typically favour whoever holds the employee proxies which, in this case, will probably be a series of union reps and a vote balanced on the value of debt which will be controlled by the bondholders who have appointed their own insolvency advisors to represent them. In the situation that there is a deadlock in votes, the chairman (administrator), typically has the casting vote.

Whilst Scott is correct that typically the administrator would be keen to keep lessors onside as much as possible the situation here may be different given the lessors are in a much weakened position with the global market meaning they are unlikely to be able to quickly place repossessed aircraft with other airlines, most of whom are also trying to rapidly shrink their fleets. Some lessors will be keen to ally with potential acquirers so their planes find a place in the new airline's fleet even though the new lease will probably be a much reduced amount; the alternative for the lessor may be a plane stuck in the desert doing nothing for 4 or 5 years.


The difficulty for the Administrators and the Aircraft Lessors is a bit more than that because in the situation where a re-vamped Virgin would emerge the Aircraft Lessors and "New Virgin" would need to do new deals for their aircraft. So there is a natural tension there between the Parties as well.

Also, in relation to voting, the votes case are in 2 categories:

1) By value;
2) As individual Creditors.

This is where the Union reps and the "organised" Creditors can take control of an Administration process to achieve deals or change Administrators. So it is a complicated dance that they will all be doing. The Administrators will need them to vote yes on any deal to get the Value part across the line so in order to do that it's in the Administrators interest to be fair to the Lessors etc.
 
ArtV
Posts: 144
Joined: Sun Jul 03, 2016 2:29 pm

Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 8:06 am

The first meeting is fairly procedural though - the only contention is ratifying the appointment of the Administrator (the Administrator will be doing deals with major voting blocks to ensure their role continues).. The second meeting, where deals/"schemes of arrangements" are presented and voted on can be more controversial.
 
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Chipmunk1973
Posts: 256
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Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 8:15 am

I have a question regarding VA’s leased aircraft. Off the top of my head, it was mentioned further back in the thread or perhaps in a news article that I read around the same time, that VA have leases with 3 or maybe 4 lessors. Perhaps it could be even more.

But what is the benefit of dealing with so many lessors? I get the scenario of too many eggs in the one basket. If a lessor were to have difficulty then you’d have issues with your fleet, potentially. But by the same token, would there not be advantages with “economies of scale”, whereby the more aircraft you lease through one lessor, the better the lease rate you’ll get?

If anyone has any insight of this and can share it would be much appreciated.

Thanks.
Cheers,
C1973
 
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qf2220
Posts: 1946
Joined: Fri Aug 16, 2013 9:16 pm

Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 8:33 am

eta unknown wrote:
travelhound wrote:
As for TigerAir in Australia, it is probably the most unloved domestic carrier in the market. Australians have relatively high expectations for minimum standards. Jetstar (a relatively well run airline) had to quickly change because there were aspects of the LCC model the Australian consumer just didn’t like.


I'd put it another way- there were JQ specific policies (not necessarily LCC) the Australian consumer just didn't like, but then JQ cleaned up their act.


I think this leads us to an important point. Australian air travel consumers want to feel special when flying.

And on the other side of this, the cost structure is such that it is too high to allow true ULCC fares that would convince Aust air travel consumers to give up on all the little things that make them feel special and go for the absolute base of fares. We have done a bit of it with JQ where we dont need some of them but as you note JQ had to step back away from their first hard line as it was a line too far.
 
JibberJim
Posts: 144
Joined: Tue Nov 08, 2016 1:33 pm

Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 9:30 am

Chipmunk1973 wrote:
I have a question regarding VA’s leased aircraft. Off the top of my head, it was mentioned further back in the thread or perhaps in a news article that I read around the same time, that VA have leases with 3 or maybe 4 lessors. Perhaps it could be even more.

But what is the benefit of dealing with so many lessors? I get the scenario of too many eggs in the one basket. If a lessor were to have difficulty then you’d have issues with your fleet, potentially. But by the same token, would there not be advantages with “economies of scale”, whereby the more aircraft you lease through one lessor, the better the lease rate you’ll get?


Surely the risk to the lessor is such that they would have to demand a higher rate, not a discount when placing a large number of aircraft?

As a lessor, if Airline goes bankrupt, you then lose your income, and have to find new places for your aircraft, that is much easier to do if you still have cash coming in from other aircraft, and only have to place a few.

I'm not sure I see where the economies of scale of placing more are, compared to the risk.
 
airhansa
Posts: 380
Joined: Wed Jan 08, 2020 3:18 pm

Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 9:48 am

Air New Zealand might be the best second airline for the country.
 
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SCFlyer
Posts: 577
Joined: Tue Oct 23, 2018 11:14 pm

Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 9:54 am

airhansa wrote:
Air New Zealand might be the best second airline for the country.


NZ tried the Australian market twice.

1st time was through the Ansett purchase. NZ had their own 'Borghetti' moment through the guise of Selwyn 'Borghetti' Cushing, who used his pre-emptive (veto) rights to purchase the remainder of AN (blocking SQ's bid) despite Cushing fully knowing NZ didn't have the balance sheet to fix an ailing AN, largely due to ego.

2nd time was through Virgin Australia. They didn't get along in the boardroom and Luxon couldn't break the holy trinity of EY (Hogan), SQ and Borghetti. After not having the numbers to oust JB, Luxon sold up shop to Nanshan and ended the relationship with VA not long after.

Considering NZ got a bailout after the AN fiasco and just got a loan to ride through COVID-19 (on the proviso the bailout money doesn't go overseas), NZ is not likely to enter the Australian domestic market for the forseeable future.
 
jeffrey0032j
Posts: 783
Joined: Wed Jun 15, 2016 3:11 pm

Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 10:21 am

SCFlyer wrote:
Indigo Partners, owners of the LCC Frontier in the USA and co-owner of European LCC Wizz Air throws their hat in the ring for VAH.

They initially plan to make VA 2.0 as a domestic-only LCC, and slowly expand from there.

This is not the first time Indigo had bid for VAH, they had a failed attempt to buy one of the stakes (HNA?) in 2018.

https://www.executivetraveller.com/news ... its-sights

Indigo Partners will be in for a rude shock if it tries to use its Frontier/Wizzair style ULCC model on the whole acquisition, and it doesn't have much experience outside of the ULCC space.
 
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VirginFlyer
Posts: 5574
Joined: Sun Sep 10, 2000 12:27 pm

Re: Virgin Australia to enter voluntary administration

Tue Apr 28, 2020 7:49 pm

SCFlyer wrote:
Selwyn 'Borghetti' Cushing

Is anyone else beginning to find this a bit tedious? I mean, if anything given Cushing was the original and Borghetti the latter-day one, should it not be John ‘Cushing’ Borghetti?

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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zkojq
Posts: 4283
Joined: Fri Sep 02, 2011 12:42 am

Re: Virgin Australia to enter voluntary administration

Wed Apr 29, 2020 12:17 am

VirginFlyer wrote:
Is anyone else beginning to find this a bit tedious? I mean, if anything given Cushing was the original and Borghetti the latter-day one, should it not be John ‘Cushing’ Borghetti?

V/F


Yes and I agree that it should be the other way around. I don't really see value in trying to brand someone this way.
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