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VHTAE
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Air NZ Selling Share In Virgin Australia?

Wed Mar 30, 2016 11:40 am

Seems another Virgin airline is in the news this week with the announcement that Air New Zealand is considering selling it's 25.89% share in Virgin Australia.

http://www.abc.net.au/news/2016-03-3...gin-australia-shareholding/7284400

[Edited 2016-03-30 04:51:04]
 
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aerorobnz
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RE: Air NZ Selling Share In Virgin Australia?

Wed Mar 30, 2016 1:01 pm

Good on them. VA is not making money in what should be an easy time to make money. The CEO has resigned from the board of directors and has been calling for Borghetti to go. I concur wholeheartedlly
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CXfirst
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RE: Air NZ Selling Share In Virgin Australia?

Wed Mar 30, 2016 1:39 pm

Quoting aerorobnz (Reply 1):
The CEO has resigned from the board of directors and has been calling for Borghetti to go.

Not publicly. Some have reported that internally he has stated he is not happy with Borghetti, but don't think you'll find anything official. In fact, it Borghetti's statement to staff, he said NZ and its CEO was happy with the direction VA was taking, and the de-investment was solely so NZ could focus on their own airline. However, as always, this needs to be taken with a grain of salt!

Quoting VHTAE (Thread starter):

Seems another Virgin airline is in the news this week with the announcement that Air New Zealand is considering selling it's 25.89% share in Virgin Australia.

Although, this might warrant its own thread. We do discuss this a bit in the Australian Aviation thread. So if you haven't seen this yet (or anyone else viewing this thread), have a read in there.

https://www.airliners.net/aviation-fo...eneral_aviation/read.main/6653315/

-CXfirst
 
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diverdave
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RE: Air NZ Selling Share In Virgin Australia?

Wed Mar 30, 2016 1:45 pm

Quoting VHTAE (Thread starter):
Seems another Virgin airline is in the news this week with the announcement that Air New Zealand is considering selling it's 25.89% share in Virgin Australia.

Perhaps DL would be interested in adding a stake in VA to its portfolio.  

David
 
anstar
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RE: Air NZ Selling Share In Virgin Australia?

Wed Mar 30, 2016 2:25 pm

I'd say its a clever move by Air NZ. They could do with the capital themselves. with AA/UA starting ops on what were previously monopoly routes and JQ moving onto more regional routes it perhaps wise to make sure they have a bit of a war chest to protect themselves.
 
zkncj
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RE: Air NZ Selling Share In Virgin Australia?

Wed Mar 30, 2016 6:44 pm

Quoting diverdave (Reply 3):
Perhaps DL would be interested in adding a stake in VA to its portfolio.  

Not sure how that would work ownership wise? If DL purchased NZs 26% that would make the airline around 80% foreign owned.

While the NZ shares are technically foreign ownership, at the same time is slightly different due to the close relationship between New Zealand and Australia.
 
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RE: Air NZ Selling Share In Virgin Australia?

Wed Mar 30, 2016 7:11 pm

Quoting zkncj (Reply 5):
Not sure how that would work ownership wise? If DL purchased NZs 26% that would make the airline around 80% foreign owned.

While the NZ shares are technically foreign ownership, at the same time is slightly different due to the close relationship between New Zealand and Australia.

I believe the way the VA has been set up would allow this. After all despite NZ having certain "benefits" with Australia... when it comes to ownership I believe it has no special benefits so would make no difference if DL bough NZ's share. In saying that I don't really see DL being interested. I'd guess EY would be more interested.
 
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RE: Air NZ Selling Share In Virgin Australia?

Wed Mar 30, 2016 7:12 pm

Quoting zkncj (Reply 5):

It won't cause any issues at all. VAH is more than 80% foreign owned right now. I'm really not sure what special provisions you refer to, but even if you ignore NZ for a moment the carrier is still more than 50% foreign owned (don't forget Virgin Group from the UK as the fourth largest investor). Australia permits 100% foreign ownership of domestic airlines. This is why there is the weird split between the domestic and international operations, allegedly this keeps them in compliance with the Australian ownership requirements for an international airline. Any body, anywhere in the world could buy NZs stake and it won't make any difference to their day to day operations from a regulatory standpoint. They have already satisfied their foreign ownership obligations.

Quoting diverdave (Reply 3):

It's not worth it. VA is a perennially under performing airline with inherent structural issues that is stuck mid-transition and doesn't know what it wants to be. They are doing much better than Air Berlin, but then again just about anyone is. They broke even in the first half and are on track for a small profit for the full year, but if it wasn't for fuel they wouldn't even manage that. More concerning, they are lagging Qantas in just about every financial metric you can name.

Delta may as well stay away. They have served Sydney long enough now to have no issues filling one flight per day. The VA feed and their TPAC routes are nice to have, but DL would barely miss a best if they lost them. It's not like they've done much with each other since entering their JBA, capacity is completely flat.
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Motorhussy
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RE: Air NZ Selling Share In Virgin Australia?

Wed Mar 30, 2016 9:09 pm

If DL wanted to grow their presence in Oz, say with new flights to BNE, a stake in VA would be advantageous. They could even take over VA's existing loss-making LAX-BNE service with feed at each end.

BTW, Australian Aviation reported the imminent sell-down yesterday…

http://australianaviation.com.au/201...ng-to-sell-virgin-australia-stake/
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RE: Air NZ Selling Share In Virgin Australia?

Wed Mar 30, 2016 9:32 pm

Quoting motorhussy (Reply 8):
If DL wanted to grow their presence in Oz, say with new flights to BNE, a stake in VA would be advantageous. They could even take over VA's existing loss-making LAX-BNE service with feed at each end.

Only one problem... DL does not care! VA needs DL more than DL needs VA. DL are content to fill one 772 from LAX to SYD. Even if they lose VA feed, the population bases of both cities (plus DL's enormous frequent flyer base) can eaily support the route. DL has also recently managed to win over some corporate accounts (mainly to MSP/SLC) from UA on the SYD route.
 
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RE: Air NZ Selling Share In Virgin Australia?

Wed Mar 30, 2016 9:35 pm

Quoting eta unknown (Reply 9):
DL has also recently managed to win over some corporate accounts (mainly to MSP/SLC) from UA on the SYD route.

That's largely expected. The better question was how much did UA have to bend over to get corporate accounts at DL fortresses, and at what price, factoring in the paper thin schedule that UA run routes like MSP-LAX.
 
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RE: Air NZ Selling Share In Virgin Australia?

Wed Mar 30, 2016 9:53 pm

Quoting a380787 (Reply 10):
The better question was how much did UA have to bend over to get corporate accounts at DL fortresses, and at what price, factoring in the paper thin schedule that UA run routes like MSP-LAX.

My understanding is these were long standing UA accounts before DL came onto the SYD scene. DL was initially preoccupied with the leisure sector (SYD is a GSA operation, not their own office) and eventually got round to seeing what corporate accounts they cold target.
 
aerokiwi
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RE: Air NZ Selling Share In Virgin Australia?

Thu Mar 31, 2016 3:42 am

I'm not sure this is the wisest time for NZ to bail, given the share price. Surely as part of the Board NZ would have foreseen the capital injection.

I defend VA a lot for domestic Australia flights but they certainly have some pretty glaring issues. Priorities as I see them:

1. Ditch the 77Ws and all long haul international
2. Focus regional international on Tiger - Fiji, Bali and Thailand routes
3. Get into gear on the freight front - they've been going on about this but their 330s are flying round near empty of freight
4. Smarten up their operations - get a move on for cabin service on domestic flights, ground ops in Sydney especially need to just do better
5. Domestic fleet really needs to be ATRs, 737s and 330s only - ditch the E190s and A320s. Are the F100s even needed for FIFO ops or could 737s do these?
6. More capacity on NZ-Pacific Island routes - these things can be real money spinners especially when flights can operate during otherwise quiet times of the day (e.g. redeyes)
7. Proper services for corporate travellers - for godsakes if you're going to have flexy tickets, actually make them flexible, not just another excuse for extra fees.

It doesn't seem like VA management is particularly on to it, though. Slow to react, no urgency in terms of back ops improvement. NZ could have really helped with that. Hopefully an airline swoops in and takes them fully private. As it stands now they are pretty listless.
 
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eta unknown
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RE: Air NZ Selling Share In Virgin Australia?

Thu Mar 31, 2016 4:11 am

Quoting aerokiwi (Reply 12):

HKT has been suspended for a while- the PER flights were operating with a payload restriction of about 40 seats.

Quoting aerokiwi (Reply 12):
Get into gear on the freight front - they've been going on about this but their 330s are flying round near empty of freight

Last year they lost their only cargo contract (Toll) to QF and were therefore forced to set up their own cargo division. Unfortunately for them, QF controls almost all domestic cargo now.

Quoting aerokiwi (Reply 12):
Domestic fleet really needs to be ATRs, 737s and 330s only - ditch the E190s and A320s. Are the F100s even needed for FIFO ops or could 737s do these?

737's no- too large or airports not equipped- the E190's perhaps (think 6 are being returned to lessors this year).
 
CXfirst
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RE: Air NZ Selling Share In Virgin Australia?

Thu Mar 31, 2016 6:15 am

Quoting eta unknown (Reply 13):
Last year they lost their only cargo contract (Toll) to QF and were therefore forced to set up their own cargo division. Unfortunately for them, QF controls almost all domestic cargo now.

Watch this space, there are some developments happening here. VA Cargo is also growing, with a lot of Toll customers coming direct to VA. However, there is still a lot of room for improvement.

-CXfirst
 
zkncj
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RE: Air NZ Selling Share In Virgin Australia?

Thu Mar 31, 2016 7:03 am

Quoting CXfirst (Reply 14):
VA Cargo is also growing, with a lot of Toll customers coming direct to VA. However, there is still a lot of room for improvement.

The fact that there backbone is 738s doesn't help, yet TT flies around in its 14x A320 with space for cans.
 
CXfirst
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RE: Air NZ Selling Share In Virgin Australia?

Thu Mar 31, 2016 7:34 am

Quoting zkncj (Reply 15):
The fact that there backbone is 738s doesn't help, yet TT flies around in its 14x A320 with space for cans.

???

You can load bulk cargo onto 737-800s, and TT A320's are bulk loaded, so they cannot take cans.

-CXfirst
 
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mariner
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RE: Air NZ Selling Share In Virgin Australia?

Thu Mar 31, 2016 8:17 am

Quoting aerokiwi (Reply 12):
I'm not sure this is the wisest time for NZ to bail, given the share price.

I doubt that the share price is going to get any better any time soon.

Quoting aerokiwi (Reply 12):
Surely as part of the Board NZ would have foreseen the capital injection.

The first one, sure, but not so much the second, this latest loan, because Virgin had already taken out another loan in the US. Or maybe they did foresee it and that's why Mr. Luxon has been "agitating" for the departure of Virgin CEO Borghetti for some time, according to the Australian Financial Review.

But this article has some interesting stuff:

http://www.stuff.co.nz/business/indu...loses-passion-for-virgin-australia

"Air NZ loses passion for Virgin Australia

The fact that Air New Zealand boss Christopher Luxon has been unhappy with the progress of Virgin's profit turnaround is a bit of an open secret.

The depth of his disquiet and his frustration with the progress made by Virgin Australia chief executive John Borghetti is said to the biggest factor in Air New Zealand's announcement on Wednesday.

It has been said that various Air New Zealand executives have been in Australia this week meeting with Virgin management – in what might have been a last ditch attempt to settle their differences.

A year ago Luxon is believed to have angered the Virgin hierarchy when he said publicly that it was "time for it to get profitable"."


I'd guess there have been some fireworks in the Virgin boardroom, and that may be why the new Virgin Board Chair, Elizabeth Bryan, gave a public rant about the foreign airline directors recently, singling out (none too subtly) Mr. Luxon.

From Crikey's Ben Sandilands:

http://blogs.crikey.com.au/planetalk...gin-australia-vah-in-trading-halt/

"In no particular order Virgin Australia was held to have botched some USD debt raisings, it has a fuel hedging policy that was manifestly inferior to that of Qantas and deprived it of some of the benefits of lower oil costs, and it had somehow managed to have a very poorly performing regional turboprop fleet, despite the fact that the ATRs involved make very good money for almost anyone who operates them."

I've never been a fan of Borghetti's move upmarket, and I'm even less of a fan now. It has yet to be shown that Australia can support two full service premium airlines (hello, Ansett) without government support, as with the Two Airline policy.

mariner
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RickNRoll
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RE: Air NZ Selling Share In Virgin Australia?

Thu Mar 31, 2016 8:32 am

Quoting anstar (Reply 4):
I'd say its a clever move by Air NZ. They could do with the capital themselves. with AA/UA starting ops on what were previously monopoly routes and JQ moving onto more regional routes it perhaps wise to make sure they have a bit of a war chest to protect themselves.

It's not very clever to lose over $100 million on the sale.
 
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mariner
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RE: Air NZ Selling Share In Virgin Australia?

Thu Mar 31, 2016 9:26 am

Quoting RickNRoll (Reply 18):
It's not very clever to lose over $100 million on the sale.

Not clever at all, but it's probably very sensible to take the haircut now, given the financial hole that Virgin has become.

mariner
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coolian2
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RE: Air NZ Selling Share In Virgin Australia?

Thu Mar 31, 2016 10:05 am

Quoting mariner (Reply 17):
I've never been a fan of Borghetti's move upmarket, and I'm even less of a fan now.

The big issue is that it's so half-hearted. They've got it in the branding. Seems to be in a decent amount of the product they have it too.

But behind the scenes, what makes everything actually work - it seems like they're still running themselves as a LCC.
Q300/ATR72-600/737-200/-300/-400/-700/-800/A320/767-200/-300/757-200/777-300ER/
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AirNiugini
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RE: Air NZ Selling Share In Virgin Australia?

Thu Mar 31, 2016 10:58 am

Quoting coolian2 (Reply 20):
But behind the scenes, what makes everything actually work - it seems like they're still running themselves as a LCC.

In what way?

Quoting aerokiwi (Reply 12):
7. Proper services for corporate travellers - for godsakes if you're going to have flexy tickets, actually make them flexible, not just another excuse for extra fees.
Quoting aerokiwi (Reply 12):
4. Smarten up their operations - get a move on for cabin service on domestic flights, ground ops in Sydney especially need to just do better

To be fair, VA Flexi fares have the same T&C's as the QF's on the domestic front. I fly with both QF and VA often for work and leisure, and they are both great airlines that offer an amazing level of service. I will agree with you that VA's SYD airport is a mess, but the cabin service/offerings are pretty good.
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coolian2
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RE: Air NZ Selling Share In Virgin Australia?

Thu Mar 31, 2016 11:13 am

Quoting AirNiugini (Reply 21):
In what way?

Well, as just one example:

Quoting AirNiugini (Reply 21):
I will agree with you that VA's SYD airport is a mess, but the cabin service/offerings are pretty good.
Q300/ATR72-600/737-200/-300/-400/-700/-800/A320/767-200/-300/757-200/777-300ER/
747-200/-300/-400/ER/A340-300/A380-800/MD-83/-88/CRJ-700/-900
 
AirNiugini
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RE: Air NZ Selling Share In Virgin Australia?

Thu Mar 31, 2016 11:36 am

Quoting coolian2 (Reply 22):

Yeah... maybe. That is more an infrastructure issue then an airline issue though. Expand if you disagree, but I would not say VA's airport operations are classed as 'LCC'.
Its time to fly!
 
zkncj
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RE: Air NZ Selling Share In Virgin Australia?

Thu Mar 31, 2016 5:44 pm

Quoting CXfirst (Reply 16):
You can load bulk cargo onto 737-800s, and TT A320's are bulk loaded, so they cannot take cans.

While an 738 can take bulk cargo, it limits the effective and items you can carry it can slow down turn times.

If the TT fleet was being used more effectively they would use can's rather than bulk loading, that would allow them to take cans of pre-packed freight.
 
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aerorobnz
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 12:50 am

Quoting zkncj (Reply 24):
If the TT fleet was being used more effectively they would use can's rather than bulk loading, that would allow them to take cans of pre-packed freight.

The fleet transtasman should really be the A320/A330 fleets and containerised.

Quoting coolian2 (Reply 20):
it seems like they're still running themselves as a LCC.


This is true in a number of ways. From a passenger perspective It has a very low cost carrier approach to to disruptions/Oversales and passenger compensation. Any of the other airlines except maybe JQ/D7 give double what VA does for food vouchers for say a 3h delay, You could barely buy a coffee with the value.
Flown to 147 Airports in 62 Countries on 83 Operators and counting. Wanderlust is like Syphilis, once you have the itch it's too late for treatment.
 
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sunrisevalley
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 1:06 am

Quoting mariner (Reply 19):
Not clever at all, but it's probably very sensible to take the haircut now, given the financial hole that Virgin has become

what is the chance of a rear exit of some sort?
 
deltal1011man
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 1:14 am

Quoting diverdave (Reply 3):

Perhaps DL would be interested in adding a stake in VA to its portfolio.  

I would expect DL will look at buying at least some of VA.

Quoting anstar (Reply 6):
In saying that I don't really see DL being interested.

Why? It basically locks Virgin into keep the JV/ATI with DL (not moving over to say UA).

Quoting eta unknown (Reply 9):
DL does not care! VA needs DL more than DL needs VA

Not true. Over the long term DL will need the VA relationship. At some point DL is going to expand in the area, like MEL and or AKL and VA will help with that.

Quoting motorhussy (Reply 8):

If DL wanted to grow their presence in Oz, say with new flights to BNE, a stake in VA would be advantageous. They could even take over VA's existing loss-making LAX-BNE service with feed at each end.

If and when DL adds another flight the Australia my money would be on MEL.
 
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eta unknown
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 2:35 am

Quoting Deltal1011man (Reply 27):
I would expect DL will look at buying at least some of VA.

Don't know if you've been following the parallel discussion in the Australian thread, but VA is a financial sink hole- WHY would DL invest money into a financially losing proposition. Secondly, VA is more valuable to SQ/EY and they would beat DL off. It's not like there are any valuable LHR slots in play...

Quoting Deltal1011man (Reply 27):
Why? It basically locks Virgin into keep the JV/ATI with DL (not moving over to say UA).

And what has the JV achieved for DL? DL has only one flight a day between 2 large population centers- if you need a JV to support that then you have a problem and shouldn't be playing in this market. Even if VA moves over to Star, the market is large enough to support a nonstop flight on a non-affiliated One world/Star carrier (Skyteam is pretty useless in Australia).

Quoting Deltal1011man (Reply 27):
Not true. Over the long term DL will need the VA relationship. At some point DL is going to expand in the area, like MEL and or AKL and VA will help with that.

VA will help with AKL... how? MEL... the same connections are available via SYD. The JV didn't help VA on their LAX-MEL flights and they abandoned the route when UA merely announced they would operate LAX-MEL nonstop.

Quoting Deltal1011man (Reply 27):
If and when DL adds another flight the Australia my money would be on MEL.

So now it's "IF"?!?
 
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mariner
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 2:39 am

Quoting sunrisevalley (Reply 26):
what is the chance of a rear exit of some sort?

Oh, mate, we're off on the wilder shores of deal-making.

As it stands at the moment - and assuming they sold all their shares on the open market at the current price of 36 cents per share - Air NZ would take a hit of more than $120 million.

That's the simple case.

However, they're not selling on the open market, at least not so far. They have employed two highly respectable finance houses to advise them - deal-makers extraordinaire - and I could only speculate as to what might happen, because there are too many unknowns.

For example, It's been reported today that a Chinese airline might want to acquire a stake in Virgin, and IF that is the case they would have to do a deal with Air NZ for their shares, because no one else - that we know of - is offering their shares for sale. This "Chinese airline" might well offer more than market price for the shares or Air NZ might demand more than market price.

Why wouldn't that same Chinese airline buy for less on the open market? Because there aren't that many shares (20%?) on the open market and the moment anyone starts buying up big time that market price will go up.

But IF there is another airline (Chinese or otherwise, or Delta as is suggested above) sniffing round, we have no idea - or I don't - where Etihad and Singapore stand with regards to their Virgin holdings.

Etihad has come out and said they're not interested either selling or buying the airline, they are "a partner not a predator" but I don't think the game is over yet and that could change if another airline threatens whatever they perceive their interests to be.

I think it's a fair guess that Singapore sided with the rest of the Virgin board against Luxon, but that doesn't mean that Singapore is happy with the paper haircut they're taking on their Virgin investment.

There's another complication. Air NZ has recently lent Virgin $131 million - a twelve month unsecured loan. It;s possible that Air NZ could sit on that loan until the end of the year, but, being unsecured, it's perhaps more possible that they would want the buying airline (Chinese or otherwise) to take over the loan, thus adding to the cost of buying in.

It's also not impossible to imagine that Air NZ retains a slab of their holding, perhaps in conjuntion with another airline - again, Chinese or otherwise.

http://www.heraldsun.com.au/business...y/6a6d369b9ed001862d54e7ba49fa6a0a

"Chinese airlines up for Virgin flights after Air New Zealand sale

CHINESE airlines are tipped to be the high-priced front runners to swoop on a stake in Virgin Australia, which would allow them direct entry for the first time to the Australian domestic travel market."


I have no clues and anyone's guess is as good as mine.

mariner

[Edited 2016-03-31 19:53:34]
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deltal1011man
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 2:53 am

Quoting eta unknown (Reply 28):

Don't know if you've been following the parallel discussion in the Australian thread, but VA is a financial sink hole- WHY would DL invest money into a financially losing proposition. Secondly, VA is more valuable to SQ/EY and they would beat DL off. It's not like there are any valuable LHR slots in play...

The same reason DL is putting money into AM, GOL(also a money pit at the moment) and MU.

Quoting eta unknown (Reply 28):

VA will help with AKL... how? MEL... the same connections are available via SYD. The JV didn't help VA on their LAX-MEL flights and they abandoned the route when UA merely announced they would operate LAX-MEL nonstop.

Any feed DL can get helps.
VA/DL left LAX-MEL because they couldn't compete with a 3x weekly flight up against a daily UA and two daily QF flights. Bringing LAX-BNE to daily was the smart choice.

Quoting eta unknown (Reply 28):

So now it's "IF"?!?

Do you not understand what the word and means?
 
zkncj
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 3:01 am

Quoting Deltal1011man (Reply 27):
Not true. Over the long term DL will need the VA relationship. At some point DL is going to expand in the area, like MEL and or AKL and VA will help with that.

AKL? VA dropped there New Zealand domestic services in 2010 which at the time we're pretty bad loss makers. Once they got into bed with NZ, there was no point with them serving New Zealand Domestic.
 
deltal1011man
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 3:09 am

Quoting zkncj (Reply 31):

AKL? VA dropped there New Zealand domestic services in 2010 which at the time we're pretty bad loss makers. Once they got into bed with NZ, there was no point with them serving New Zealand Domestic.

just having a name does help. Example, the JVs in Europe aren't just about CDG, AMS, FCO and LHR. They help all across Europe.
Same deal here, VA has FFs in AKL. Adding a non-stop from that market will give DL some feed, it might not be huge but its something.
 
zkncj
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 3:24 am

Quoting Deltal1011man (Reply 32):
Same deal here, VA has FFs in AKL. Adding a non-stop from that market will give DL some feed, it might not be huge but its something.

You'll find a large amount of the VA FF in Auckland, belong to NZ FF programme. Since NZ FF works on VA, it allows them to catch most of the market. NZ is currently the only frequent flyer programme in New Zealand linked to an credit card.

NZ probably gives VA the most business, if VA lost that relationship it will hurt them.
 
deltal1011man
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 3:59 am

Quoting zkncj (Reply 33):

You'll find a large amount of the VA FF in Auckland, belong to NZ FF programme. Since NZ FF works on VA, it allows them to catch most of the market. NZ is currently the only frequent flyer programme in New Zealand linked to an credit card.

I'm not going to disagree with that, but I bet VA has some fliers that would take a DL flight too.


no question its a hub(LAX) to spoke(AKL) route for DL. (va a hub to hub for AA)
but the VA relationship will help DL, if only a little bit.

More importantly I do expect DL/VA to grow to Oceania/Australia. I don't expect them to sit back and watch AA/QF and UA/NZ keep growing the marketplace. Right now DL doesn't have the aircraft to really grow the market, they will soon(ish)
 
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RyanairGuru
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 4:46 am

Quoting Deltal1011man (Reply 30):

Unlike VS, AM, Gol, and MU, DL will be the awkward third wheeler in VA.

While it might secure the JBA, I don't see enough value in that relationship for DL to invest in VA. Look at VA's capital raising over the past few years, basically their expectation of their cornerstone investors is that they put their credit card on the line and keep bailing them out. DL won't be interested in playing that game. Unlike Etihad's "equity alliance" of the poor and destitute, Delta would only invest if there was a tangible benefit, be it financial or strategic. VA ticks neither box.

Look at the JBA in broader terms: the two carriers have done absolutely nothing to develop the market since joining forces. In that time capacity has been flat, while United with zero feed on one end has grown in Australia (and let's ignore New Zealand for a moment as the difference is even more stark if you include AKL) and now United has almost as many daily seats between the two countries as DL/VA combined. Qantas also has more capacity in the Australia-US market *on their own metal* compared to when DL/VA got together, before you even consider AA.

Delta has shown very little interest in this market, and they have kept capacity steady while all of their competitors have grown. That tells me that this is not an essential part of their business, and while SYD is going absolutely nowhere I doubt they would want to invest hundreds of millions of dollars in such a peripheral part of their network.

Australia is not China, Mexico, or Brazil, and there are no LHR slots at stake. Why should they care?
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 4:52 am

Quoting mariner (Reply 29):
CHINESE airlines are tipped to be the high-priced front runners to swoop on a stake in Virgin Australia, which would allow them direct entry for the first time to the Australian domestic travel market."

I have no clues and anyone's guess is as good as mine.

Maybe Cathay as a two finger salute to both Qantas and Singapore
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aryonoco
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 4:55 am

Americans in this forum are obsessed with what DL will or won't do with VA, but you guys are missing the bigger picture.

At the end of the day, US operations are such a tiny part of VA that it doesn't really matter what happens to it. The only thing VA has achieved out of its US ventures has been making loss. If I was John Borghetti, I'd completely withdraw from the market, sell the 77Ws and leave the market to NZ and UA, putting codeshares on their flights.

DL should be able to make their one single daily flight to SYD work by themselves. If they can't, they should leave the market.

VA international should have focused on Trans Tasman in partnership with NZ and Asia in partnership with SQ. AUH and LAX have been very costly distractions.
 
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 4:59 am

If you want more of a clue, have a look at QF's traffic data for February.

QANTAS domestic +6.2%
Jetstar Domestic +7.5%

If this ends up being representative of traffic data for the rest of the year, VA are going to have a very hard time.

If these passengers have come from VA instead of growth in market VA's passenger will be down a whopping 10%.
 
CXfirst
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 6:02 am

Quoting zkncj (Reply 24):
If the TT fleet was being used more effectively they would use can's rather than bulk loading, that would allow them to take cans of pre-packed freight.

But that neccesitates more ground support equipment at regional airports, making start ups take longer. Not a determining factor, as JQ gets around using containerized holds.

However, having personally worked with the VA A330 fleet from a ramp perspective. Most of that freight could be bulk loaded, and often enough we had downgrades, and still we loaded all the freight that was meant to go on the A330 into the bulk hold of a 737. The only major freight we didn't load on the 737 was EK, QR and EY freight that was positioned from SYD or MEL to PER, due to their aircraft not being able to take all their freight (weight), and the PER service would uplift the remainder.

So, all in all, the containerized A320 hold isn't that advantageous.

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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 7:04 am

Quoting Deltal1011man (Reply 30):
Do you not understand what the word and means?

I clearly do, but it's obvious from your own viewpoints that you, perhaps, do not. One moment you say DL WILL expand into Australia, then you change your mind and say IF they do.

Also, you appear not to understand the VA scenario is entirely different to AM (DL's own backyard) and VS (LHR slots). Those are examples of benefits that can generate good revenue outcomes. However, we are talking about one flight a day between 2 large cities with a combined population of about 15 million people and a huge DL FF base in the USA. As many have said above, if you can't fill one 772 on SYD-LAX, you best get out of the kitchen. You keep saying VA will provide all this wonderful feed and even AKL pax will backtrack to SYD as this helps fill the flight... tell me, do you know something about DL's SYD flight that you aren't sharing? The BITRE stats show DL's SLF is pretty good.

[Edited 2016-04-01 00:06:41]
 
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 7:43 am

Quoting CXfirst (Reply 39):
But that neccesitates more ground support equipment at regional airports, making start ups take longer. Not a determining factor, as JQ gets around using containerized holds.

If NZ can have A320 can equipment in most of the Pacific Islands, its surely not hard for TT to have access to it Australian Airports? Most of there routes are into to main airports.
 
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 10:12 am

Quoting mariner (Reply 29):
I have no clues and anyone's guess is as good as mine.

I am convinced that given NZ's history with Ansett and Luxon's penchant for execution of strategy , NZ is not going to come up short on this one.
 
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RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 11:09 am

Quoting zkncj (Reply 41):
If NZ can have A320 can equipment in most of the Pacific Islands, its surely not hard for TT to have access to it Australian Airports? Most of there routes are into to main airports.

While many operators have chosen the A320 for its can carrying abillity, there is a surprising number of carriers who are simply not interested in the containers and loose load the baby buses- they do not want to buy or lease them or maintain them, especially if cargo yields are low and it's not a major factor in their revenue strategy.
 
kiwiandrew

RE: Air NZ Selling Share In Virgin Australia?

Fri Apr 01, 2016 10:56 pm

A dark horse which no one has mentioned so far....might UA consider buying out NZ's stake? While they would be unlikely to get approval for a JV with VA it would give them feed in Australia and maybe cause the VA/DL JV to collapse. UA recently bought a stake in Azul, so they are prepared to look outside the US. I don't think this is a likely outcome, but I guess it's possible . Thoughts ?
 
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sunrisevalley
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RE: Air NZ Selling Share In Virgin Australia?

Sat Apr 02, 2016 12:16 am

Quoting kiwiandrew (Reply 44):
A dark horse which no one has mentioned so far....might UA consider buying out NZ's stake? While they would be unlikely to get approval for a JV with VA it would give them feed in Australia and maybe cause the VA/DL JV to collapse. UA recently bought a stake in Azul, so they are prepared to look outside the US. I don't think this is a likely outcome, but I guess it's possible . Thoughts ?

Can you think of any reason why they would? They are busy trying to make a silk purse out of a sows ear at home. VA is another sows ear . I think the likely potential future players for the NZ stake have been identified.
 
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RE: Air NZ Selling Share In Virgin Australia?

Sat Apr 02, 2016 12:43 am

Quoting sunrisevalley (Reply 45):
I think the likely potential future players for the NZ stake have been identified.

I do, too, barring some dark horse - a Chinese airline?

But it raises a number of questions. Any buyer, say Singapore, of the whole Air NZ holding would have to launch a full merger/takeover. None of the big three can go beyond their present holding (except in approved increments of 3%) without making a play for the whole enchilada.

An article in the Financial Review today (posted in the Australian thread) says that John Borghetti was persuaded to stay by the new Chair of the Board, Elizabeth Bryan. I raised several eyebrows when I saw that. If it is true - if - why did she do it? Perhaps she wanted to show that he wasn't leaving because of her appointment, that she isn't divisive? Or perhaps she had swallowed the Borghetti approach?

"Borghetti must be wondering why he let Bryan convince him to stay longer – he could've walked last year (before Alan Joyce's fortunes turned so dramatically) as a visionary monopoly smasher. "

The same article claims that Luxon challenged Bryan and the BOD at the last meeting, wanting Borghetti's departure, but that she stood firm and he lost.

"While independent chairman Elizabeth Bryan has other majors, not to mention independent shareholders, to look out for, she's clearly stared the Kiwis down, despite Luxon and his board demanding a brake on Virgin's capex-intensive strategy to stem red ink, and with it the scalp of the CEO. Thus the walkout."

If - if - any of this is true, it now suggests she is now playing tough cop, determined that Virgin continue of its present path, with, apparently, the approval of the other directors.

But does Singapore want to own/control the majority holding in Virgin? There are many positives, among them giving Singapore access to the long-desired trans-Pacific routes. Against that must be set the dark hole of Virgin's finances, and how would Etihad feel about this?

If it is a dark horse - the mystical Chinese airline - then it has to be one with deep pockets, because it's tough to think that the recent capital injection by the three foreign airlines will be tha last. And that dark horse airline would have to make a huge decision - whether to keep Virgin on its present path, or revamp the whole thing, as Luxon wanted, probably inevitably leading to the departure of Borghetti.

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sunrisevalley
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RE: Air NZ Selling Share In Virgin Australia?

Sat Apr 02, 2016 1:28 am

Seems to me we need to know a whole lot more about Elizabeth Bryan and what makes her tick and what the other influences are in the background. Perhaps it was no more than she was able to give Luxon/NZ their comeuppance aided and abetted by EY and SIN. By the way, who are the other directors and how are they aligned?
 
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RE: Air NZ Selling Share In Virgin Australia?

Sat Apr 02, 2016 1:56 am

Quoting sunrisevalley (Reply 47):
Perhaps it was no more than she was able to give Luxon/NZ their comeuppance aided and abetted by EY and SIN.


I'm not sure that she did "win" - the battle perhaps, but not the war? Luxon (and Air NZ's) departure has created what several analysts (and at least one newspaper) have described as "a defining moment" at Virgin Australia.

I'm starting to think that "the crisis" was engineered by Luxon, perhaps as a way out. It's clear (and publicly said) that he has been unhappy for some time.

Again, from today's Fin Review article, posted in the Australian thread:

'The showdown has been brewing for some time, with Luxon's criticism of Virgin Australia under John Borghetti​ – where increasing passenger yields have been outpaced by its increasing cost base – becoming less discreet over time.

The two men are oil and water – the former a teetotalling shampoo salesman and the latter a petrolhead aesthete. The former with a 25.9 per cent stake in (and a seat on the board of) the latter's flagging and debt-laden business."


We also know that Luxon was chided - publicly - by Elizabeth Bryan for speaking out.

He's nobody's fool, and he have known which way the wind was blowing, what he was up against, but took his responsibilities as a director seriously and suggested an alternative path. We know, from another article, that he sent some "senior execs" from Air NZ over to Oz to try and sort it out, before the fateful meeting, and I guess they reported back.

So perhaps Luxon created the showdown and went into the meeting with two plans (i) the rather forlorn hope that he could make a difference or (ii) the determination to leave if he couldn't - knowing full well what that meant.

Virgin is - presently - a financial sinkhole and perhaps Luxon was looking after his own:

http://australianaviation.com.au/201...ighlights-kiwi-carriers-ambitions/

"Air NZ move to exit Virgin shareholdings highlights Kiwi carrier’s ambitions"

Quoting sunrisevalley (Reply 47):
By the way, who are the other directors and how are they aligned?

The Virgin board:

http://www.virginaustralia.com/nz/en...rgin-australia-board-of-directors/

Three were appointed in tha days of Virgin Blue and one just around the time of the change.

mariner

[Edited 2016-04-01 19:06:08]
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RE: Air NZ Selling Share In Virgin Australia?

Sat Apr 02, 2016 11:44 am

Quoting AirNiugini (Reply 21):
To be fair, VA Flexi fares have the same T&C's as the QF's on the domestic front. I fly with both QF and VA often for work and leisure, and they are both great airlines that offer an amazing level of service. I will agree with you that VA's SYD airport is a mess, but the cabin service/offerings are pretty good.

Except whenever I've turned up for a flight early, QF quite happily pop me on the next available rather than making me wait. VA - nup. At the very least they should automatically charge the change fee rather than asking for an upfront payment. Does VA even know how corporate travel works? It's usually farmed out to some agency to avoid this kind of hassle.

Onboard service - I've never seen a QF crew NOT complete a service between SYD-MEL. I'd say around half my VA flights fail to complete the onboard service. I believe this is because of the extra hassle of the buy-onboard system still in place.

Quoting AirNiugini (Reply 23):
Expand if you disagree, but I would not say VA's airport operations are classed as 'LCC'.

Their tarmac and airbridge ops in Sydney leave a lot to be desired. Super thin on the ground and very inflexible because of that. I believe SYD has been a long term problem left to linger (20 minutes waiting at an empty gate for an airbridge operator - come on). Am I right in saying this has been contracted out?

Quoting mariner (Reply 17):
I doubt that the share price is going to get any better any time soon.

Well, yeah so why the public dummy spit? The share price has only been made worse by the very public nature of this. NZ cutting off it's nose to spite its face?

The only immediate solution, I believe, is VA being taken fully private by a single airline, preferably SQ.

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