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cx828
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CX Rumour To Buy Virgin Australa Stake from NZ

Wed May 11, 2016 7:23 am

According to the Australian Financial Review, CX could be interested in buying a stake in Virgin Australia from Air New Zealand in order to fend off rivals Qantas Airways and Singapore Airlines. However, the company would not comment on market rumours.
 
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LAX772LR
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CX Rumour To Buy Virgin Australa Stake from NZ

Wed May 11, 2016 7:31 am

There's a big difference between "buying Virgin Australia" and buying a minority stake in Virgin Australia....
I myself, suspect a more prosaic motive... ~Thranduil
 
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aerorobnz
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CX Rumour To Buy Virgin Australa Stake from NZ

Wed May 11, 2016 7:31 am

Quoting cx828 (Thread starter):
fend off rivals Qantas Airways

Rivals from the same Alliance.

It;s plausible certainly, but anyone could buy the shares, including a non Airline, The one thing I hope for VA is that they pull out of international services and let their partners operate with a VA codeshare.
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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LAX772LR
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CX Rumour To Buy Virgin Australa Stake from NZ

Wed May 11, 2016 7:33 am

Quoting aerorobnz (Reply 2):
Rivals from the same Alliance.

Which means nothing. CX and QF have never exactly been the best of buddies...
I myself, suspect a more prosaic motive... ~Thranduil
 
sq256
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CX Rumour To Buy Virgin Australa Stake from NZ

Wed May 11, 2016 7:34 am

Quoting aerorobnz (Reply 2):
It;s plausible certainly, but anyone could buy the shares, including a non Airline, The one thing I hope for VA is that they pull out of international services and let their partners operate with a VA codeshare.

After the drama with Jetstar HK, it's only a rumour and a garbage rumour at that.

Even in the unlikely case of that happening, the Australian Government will probably move to block it in retaliation to the Jetstar HK drama.
 
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enzo011
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CX Rumour To Buy Virgin Australa Stake from NZ

Wed May 11, 2016 7:40 am

Quoting sq256 (Reply 4):
After the drama with Jetstar HK, it's only a rumour and a garbage rumour at that.

Even in the unlikely case of that happening, the Australian Government will probably move to block it in retaliation to the Jetstar HK drama.

Can the government get involved in a private company selling it shares in an open market?
 
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Francoflier
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CX Rumour To Buy Virgin Australa Stake from NZ

Wed May 11, 2016 7:43 am

This is from a local HK free english newspapaer:

http://www.thestandard.com.hk/section-news.php?id=169165

The stake would apparently be for 26%...
I'll do my own airline. With Blackjack. And hookers. In fact, forget the airline.
 
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mariner
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CX Rumour To Buy Virgin Australa Stake from NZ

Wed May 11, 2016 7:49 am

Quoting Francoflier (Reply 6):
The stake would apparently be for 26%...

They couldn't do that. The most they could buy - in the first instance - is 19.9%, followed by increments of 3% every six months.

The only way they could buy more is if they launch a full takeover for Virgin.

mariner

[Edited 2016-05-11 00:50:15]
aeternum nauta
 
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zeke
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CX Rumour To Buy Virgin Australa Stake from NZ

Wed May 11, 2016 7:51 am

Quoting sq256 (Reply 4):
Even in the unlikely case of that happening, the Australian Government will probably move to block it in retaliation to the Jetstar HK drama.

How is the fact that Qantas could not put together a compliant submission the fault of anyone but Qantas ?
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
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CARST
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CX Rumour To Buy Virgin Australa Stake from NZ

Wed May 11, 2016 7:55 am

Quoting LAX772LR (Reply 3):
CX and QF have never exactly been the best of buddies...

CX isn't the buddy of any airline. I don't know of one OneWorld airline they are really working together with or with which they do extensive code-sharing.

They still seem to be in a way to luxurious position in HKG that they don't feel the need to work together like most other airlines do these days.
 
zkncj
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CX Rumour To Buy Virgin Australa Stake from NZ

Wed May 11, 2016 7:56 am

Quoting LAX772LR (Reply 3):
Which means nothing. CX and QF have never exactly been the best of buddies...

NZ is an alliance with CX, so even more to add to by QF doesn't like CX.
 
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LAX772LR
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CX Rumour To Buy Virgin Australa Stake from NZ

Wed May 11, 2016 8:34 am

Quoting CARST (Reply 9):
I don't know of one OneWorld airline they are really working together with or with which they do extensive code-sharing.

Can't say that's fair, as CX codeshare rather extensively with AA and BA, and probably others too.

What they don't seem all that interested in, is intercon J/V
I myself, suspect a more prosaic motive... ~Thranduil
 
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enilria
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Wed May 11, 2016 10:21 am

Quoting Francoflier (Reply 6):

What about DL? They seem to be on a buying spree.
 
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mariner
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Wed May 11, 2016 10:53 am

Quoting enzo011 (Reply 5):
Can the government get involved in a private company selling it shares in an open market?

In Australia, yes. Any investment at or above 20% by a foreign entity for an Australian company that is worth more than $252 million is reviewed by the FIRB - the Foreign Investment Review Board.

https://firb.gov.au/investment/business/

"The Government screens foreign investment proposals to ensure they are not contrary to Australia’s national interest."

Certain friendly countries such as the US, Japan, NZ etc, have a higher threshold of capitalisation and China will have that once the Trade Agreement comes into force.

This is why Cathay Pacific (or Delta) could buy 19.9% of Virgin Australia, but could not buy any more without approval by the FIRB and then only in 3% increments every six months.

As above, the only way that changes is if the foreign airline launches a full takeover, for at least 51% control, and that, of course, would be subject to approval by the FIRB. It is not impossible but it would very difficult, because it would require (a) the full Air NZ holding plus agreements by Singapore and/or Etihad, or some combination of one of those airlines and/or the Branson shareholding (10%) and/or the entirety of the free float that is on the open market (20%).

Air NZ's 26% is an important key to any potential take-over, but it isn't the whole enchilada. The best bet is that either Singapore will launch a takeover (SQ's present holding plus the NZ holding plus Branson) or someone else will come in for 19.9% and not launch a takeover.

That's if anyone wants a holding in Virgin Australia and at what price.

mariner
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enzo011
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Wed May 11, 2016 11:57 am

Quoting mariner (Reply 13):
In Australia, yes. Any investment at or above 20% by a foreign entity for an Australian company that is worth more than $252 million is reviewed by the FIRB - the Foreign Investment Review Board.

https://firb.gov.au/investment/business/

"The Government screens foreign investment proposals to ensure they are not contrary to Australia’s national interest."

Interesting, thanks. My question then is, if they pay $251 million for the shares it would not be under review? Just a question and not related to this case as I don't know how much the proposed stake would cost.

Also, I guess the Australian Government would have a hard time not agreeing to the selling of the stake from one overseas company to another when they have approved previous similar shareholdings in the same company.
 
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hongkongflyer
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Wed May 11, 2016 1:59 pm

Quoting enzo011 (Reply 14):
Also, I guess the Australian Government would have a hard time not agreeing to the selling of the stake from one overseas company to another when they have approved previous similar shareholdings in the same company.

Both QF and CX belong to oneWorld could be a strong reason for Aus Gov not approving the transaction as it means that oneWorld will have too much control of the domestic market and could lead to unfair competition.

oneWorld is already too big in Australia.
 
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enzo011
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Wed May 11, 2016 5:06 pm

Quoting hongkongflyer (Reply 15):
Both QF and CX belong to oneWorld could be a strong reason for Aus Gov not approving the transaction as it means that oneWorld will have too much control of the domestic market and could lead to unfair competition.

oneWorld is already too big in Australia.

But SQ owns 22% of Virgin Australia and Etihad another 24% and neither one of those are in OneWorld. If this information is not correct please correct it for me. I could see a problem if all the airline shareholders were of one alliance and there were rumours of joining said alliance, but this doesn't seem to the case here.
 
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LAX772LR
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Wed May 11, 2016 5:43 pm

Quoting hongkongflyer (Reply 15):
as it means that oneWorld will have too much control of the domestic market and could lead to unfair competition.

OneWorld is for all intents and purposes a loose marketing agreement. Most of the airlines within it, still fiercely compete with each other.

If we were talking about two anti-trust immunized carriers in a joint venture, then that'd be different.... but QF and CX are certainly not that, nor will they be annnny time soon.
I myself, suspect a more prosaic motive... ~Thranduil
 
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mariner
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Wed May 11, 2016 7:06 pm

Quoting enzo011 (Reply 14):
Interesting, thanks. My question then is, if they pay $251 million for the shares it would not be under review? Just a question and not related to this case as I don't know how much the proposed stake would cost.

It isn't what the investor pays - it its what the Australian company is valued at. If it's valued at more than $252 million, then there will be a review for a 20% or more investment.

The Air NZ stake - 26% - cost around $400 million and they've never been in profit on the purchase. They paid an average of about 40-45 cents for each share. But the share price has dropped - it's now under 30 cents, so if the airline sold on the open market it would take a financial hit.

The expectation - or hope? - id that they'll be able to do a deal with a prospective investor/airline for a somewhat higher price.

I'm not sure it will happen quite like that. Whoever buys the stake will have serious financial work to do at Virgin which has been a money pit for the present investors for the past six years.

mariner
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Motorhussy
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Wed May 11, 2016 11:41 pm

Quoting mariner (Reply 18):
Whoever buys the stake will have serious financial work to do at Virgin which has been a money pit for the present investors for the past six years.

And potentially want a say in who's running the show - given the incumbent's inability to turn anything anywhere near a profit.
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LandSweetLand
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Thu May 12, 2016 12:56 am

Speaking of just buying the shares, there's been quite a large upswing in the volume of VAH shares traded this month (since their Q3 trading update). http://www.asx.com.au/asx/research/company.do#!/VAH
 
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sunrisevalley
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Thu May 12, 2016 1:23 am

Quoting LandSweetLand (Reply 20):
there's been quite a large upswing in the volume of VAH shares traded this month (since their Q3 trading update

Speculators moving in ... ?
 
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mariner
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Thu May 12, 2016 1:33 am

Quoting sunrisevalley (Reply 21):
Speculators moving in ... ?

  

Probably.

I imagine a fair few speculators are thinking it's worth a quid or two to buy in now - it's cheap enough - in the expectation that someone may make play for the airline.

mariner
aeternum nauta
 
timtam
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Thu May 12, 2016 5:16 am

CX are not fools.

QF would have a very strong argument on competitive grounds to seek the blocking of this by the Australian Government.

If Jetstar HK had got up then CX could have built an argument for purchasing VA. But Jetstar HK was blocked and so any idea of CX buying VA is a dead duck. Wont get past the FIRB process.

This is a rumour leaked by a merchant banker to create the impression that there is more interest in VA than there really is. This is standard practice in Australia whenever there is any corporate activity.

Whats next? CX going to buy the Kidman cattle empire.......run that headline.....LOL
 
bill142
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Thu May 12, 2016 5:17 am

Quoting sq256 (Reply 4):
Even in the unlikely case of that happening, the Australian Government will probably move to block it in retaliation to the Jetstar HK drama.

Last I checked such tit-for-tat retaliation wasn't part of our foreign policy. As long FIRB views the purchase as being in our national interest, it won't be blocked because of the JQ HK debacle no matter how loudly QF cries.

In other news, nothing is going to happen here until any interested foreign parties know which government they're dealing with.
 
DeltaB717
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Thu May 12, 2016 6:37 am

I think there's another important question here (which I didn't see discussed anywhere, so apologies if it has been), which is whether the existing shareholders (SQ, EY, etc.) have to approve the purchaser of the NZ shares?
 
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mariner
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Thu May 12, 2016 9:23 am

Quoting DeltaB717 (Reply 25):
I think there's another important question here (which I didn't see discussed anywhere, so apologies if it has been), which is whether the existing shareholders (SQ, EY, etc.) have to approve the purchaser of the NZ shares?

No, they don't. Or not to my knowledge. If - and it's still if - Air NZ is making its shares available to buyers, then they - Air NZ - can take the best offer they get.

The only way the other present shareholders could stop it would be to make an offer for the shares themselves.

mariner
aeternum nauta
 
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zeke
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Thu May 12, 2016 10:44 am

Quoting hongkongflyer (Reply 15):
Both QF and CX belong to oneWorld could be a strong reason for Aus Gov not approving the transaction as it means that oneWorld will have too much control of the domestic market and could lead to unfair competition.

oneWorld is already too big in Australi

You got to be kidding, CX has something like 5% of the market share, and what market share do QF/EK have (60-70% ?) CX/QF are both part of oneworld, everyone knows they compete, unlike QF/EK, VA/EY, VA/SQ etc.

Quoting timtam (Reply 23):
QF would have a very strong argument on competitive grounds to seek the blocking of this by the Australian Government.

People in glass houses should not throw stones, how anti-competitive is the QF/EK partnership ? It is killing SQ/MH/TG on the Australian to Europe routes.

Quoting timtam (Reply 23):
But Jetstar HK was blocked and so any idea of CX buying VA is a dead duck.

The only people to Qantas can blame is themselves for failing to comply with the law. But that is not in the Australian culture, the Australian culture is it is always the fault of others or the government. Qantas simply could not demonstrate that their business model which had the backend airline operations being performed in Australia like the other franchises in Asia complied with the HKG law.

If Qantas tried that same business model in Europe that also uses the same principle place of business test, an application there would fail as well. It was nothing more than a facade in Hong Kong, the structure and foundations were in Australia. It is obvious when Qantas did the sums with the airline backend functions being done in Hong Kong to comply with the law, they just could not make it work because they did not have the economies of scale to build off the other airlines.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
timtam
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Thu May 12, 2016 3:33 pm

Quoting bill142 (Reply 24):
As long FIRB views the purchase as being in our national interest,

Please explain how the deal would be in Australia's national interest? Your going to need a very compelling argument to counter the competition issues that Qantas can raise and these arguments are strengthened by the rejection of Jetstar HK by the HK Government.

Another important factor would be the attitude of China's Government because the Australian Government is much more interested in China than in Hong Kong. China represents the future and Hong Kong represents the past.

Zeke, your comments are interesting but irrelevant - in fact your reasoning strengthens the competition arguments that QF could put forward.

Another twist could be that QF may not be opposed to CX buying into VA. For all the talk of a poor relationship between the two airlines, they are part of the same alliance and may be more inclined to behave "rationally".
 
timtam
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Thu May 12, 2016 3:55 pm

Another interesting twist to all of this would be the lobbying by the British Government with the Australian Government on CX buying into VA. After all, CX is a British controlled airline that is based in Hong Kong.
 
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RyanairGuru
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Thu May 12, 2016 7:56 pm

Quoting enzo011 (Reply 14):

Selling from New Zealand interests to any other foreign interest would very much be scrutinised by FIRB. It's not really a case of 'it's already foreign held anyway' as we have a much more open trade policy with the 'cuz across the ditch. FIRB approval for New Zealand investors is normally just useless bureaucracy, whereas for investors from other countries they can absolutely disrupt the deal. They can for New Zealand as well but it's incredibly rare.

Quoting bill142 (Reply 24):

We also have a dispute with HK over the tobacco companies and the investor state dispute resolution provisions and of course we are tying them up in knots over the bilateral. Australia does not get along particularly well with Hong Kong at the government-to-government level. They are one jurisdiction that I can see us playing games with.

Either way I expect it would fail on national interest grounds with the need to get into petty economic nationalism arguments, that is of course if it ever gets that far which I doubt as this isn't any more than an unsubstantiated rumour.
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zeke
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Fri May 13, 2016 10:35 pm

Quoting timtam (Reply 28):

Qantas and Qantas alone are the only reason their application failed, it was not a political decision. The law is clear in Hong Kong, the principle place of business must be in Hong Kong.

Qantas has a demonstrated its failure to make any investment with its franchises in Asia and New Zealand.

The Jetstar business model in Asia and New Zealand is for all of the backend airline functions to be run out of Australia, the franchises never make any money, the money all flows into Qantas. Because the airlines do make money, the local economy does see the investment, that is transferred to Australia where the majority of the core airline functions are performed.

Hong Kong law requires the business to be run in Hong Kong, it is for that reason, and that reason their application failed.

Qantas would have no grounds to complain about Jetstat HKG to the FIRB, the FIRB woukd see it simply as a case of Qantas failing to comply with the laws of another state. This would happen hundreds if not thousands of times a year in different industries across the world.
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
zkncj
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Fri May 13, 2016 11:57 pm

Quoting zeke (Reply 31):
The Jetstar business model in Asia and New Zealand is for all of the backend airline functions to be run out of Australia, the franchises never make any money, the money all flows into Qantas. Because the airlines do make money, the local economy does see the investment, that is transferred to Australia where the majority of the core airline functions are performed.

Jetstar New Zealand, isn't an franchise. Its simply just apart of Jetstar Australia and is apart of there AOC, there fleet is apart of the Australian fleet with VH regos.

Jet Connect - is an Qantas fully owned airline, with an New Zealand AOC and its aircraft has ZK registrations and are used to operate Qantas Tasman Flights.
 
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RyanairGuru
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Sat May 14, 2016 1:29 am

Quoting zeke (Reply 31):

There was never a shred of proof presented that the Asian franchises are controlled by Melbourne and that all profits are transferred to the Australian entity. At best the situation is opaque, but simple logic dictates that the likes of JAL and Mitsubishi in GK or Vietnam Airlines with BL didn't invest billions of dollars just to subsidise Qantas' balance sheet. The local partners expect a return on their investment. As such to suggest that money is transferred to Australia is absurd given that Qantas only has a minority interest in each of the overseas franchises. The principle benefit to Qantas is in license fees to use the Jetstar trademark, which is the same model that Virgin Group uses.

Throwing New Zealand into the mix with the Asian franchises is a massive misnomer intended to distract people from the glaring fallacies in your argument because, as you know, there is no such thing as Jetstar New Zealand. The New Zealand operation is Jetstar Airways Pty Ltd taking advantage of the Australia-New Zealand reciprocal access provisions using their Australian AOC. Of course the New Zealand operation is run out of Melbourne, it's the same airline!
Worked Hard, Flew Right
 
Planesmart
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Sat May 14, 2016 6:18 am

If VA needs a white knight quickly enough, it's amazing how legislation and rules can be amended quickly to preserve competition and jobs.
 
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zeke
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Sat May 14, 2016 8:34 am

Quoting zkncj (Reply 32):
Jetstar New Zealand, isn't an franchise. Its simply just apart of Jetstar Australia and is apart of there AOC, there fleet is apart of the Australian fleet with VH regos.

At one stage Jetstar in Australia was hiring cadets via Jetstar NZ on NZ contracts and working them in Australia. The pilots complained that they were being underpaid as the NZ contract was considerably less than the Australian FWA agreement. Nick Xenophon in an Australian Rural Affairs and Transport Senate hearing in 2011 had Bruce Buchanan CEO of Jetstar appearing before him asking about the independence of the airline. Jetstar Australia were claiming Jetstar NZ were independent airlines so the pilots employed in NZ should not be subject to the Australian FWA agreement.

There was also lengthy discussions how Jetstar was using using foreign based cabin crew to fly domestic sectors on wages below FWA agreements.

http://blogs.crikey.com.au/planetalk...y-by-jetstar/?wpmp_switcher=mobile

Quoting RyanairGuru (Reply 33):
There was never a shred of proof presented that the Asian franchises are controlled by Melbourne and that all profits are transferred to the Australian entity.

There is lots of proof, including the service agreement Qantas submitted as part of their Hong Kong application. Qantas had to submit the service agreements to demonstrate how the airline would function. There is also the submissions Qantas has made to the ACCC to permit collusion between the Asian franchises, where they have stated in black in ad white it is for the benefit of Qantas, and not the local airlines.

There there is the Qantas employees that were jailed in Vietnam for their role in the fuel hedging losses by Jetstar Pacific.

BTW, I never mentioned Melbourne, thanks for confirming exactly what I had thought of your posts.

Quoting RyanairGuru (Reply 33):
Throwing New Zealand into the mix with the Asian franchises is a massive misnomer intended to distract people from the glaring fallacies in your argument because, as you know, there is no such thing as Jetstar New Zealand.

Tell that to the pilots that Jetstar Australia employed on Jetstar NZ contracts working in Australia.

From the Jetstar website

"These claims relate to cadet pilots employed in late 2010 by a Jetstar New Zealand subsidiary for work on its New Zealand domestic network. However, subsequent to the cadets being engaged in New Zealand under New Zealand terms and conditions, CASA required that the cadets be rostered from an Australian east coast base for at least one year to ensure an appropriate level of supervision with access to some of the most experienced Jetstar pilots. http://bit.ly/1FX7sUi

from

"The case will now be heard in the Federal Court.

Independent Senator Nick Xenophon says the development raises wider questions about Jetstar's parent company, Qantas.

"This is not just about a handful of cadets and their contracts, it raises broader and deeper issues about the future of the Qantas group, in terms of their strategy to continue to offshore," She said.

"To rely more and more on foreign-based crew, particularly cabin crew, and it raises fundamental and deep issues about the future of the Qantas group strategy into Asia.'"

http://www.australiaplus.com/interna...y-pilots-as-foreign-workers/795510

http://www.brisbanelegal.com.au/arti...tstar-fined-for-breaching-fwa.html

"Jetstar Group Pty Ltd and Jetstar Airways Pty Ltd have each been fined $45,000 in the Federal Court in Sydney after admitting to breaching the Fair Work Act.

The case, involving six cadet pilots who were unlawfully made to pay for their own training, was taken up by the Fair Work Ombudsman."
Human rights lawyers are "ambulance chasers of the very worst kind.'" - Sky News
 
Gemuser
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Sat May 14, 2016 8:45 am

Quoting bill142 (Reply 24):
Last I checked such tit-for-tat retaliation wasn't part of our foreign policy.

Don't you believe it! Goes on all the time in various areas, by most countries, it just doesn't make the papers. Also it gets very complicated as the tit-for-tat does not necessarily happen in the same industry as the original.

Gemuser
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zkncj
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Sat May 14, 2016 8:48 am

Quoting zeke (Reply 35):
Tell that to the pilots that Jetstar Australia employed on Jetstar NZ contracts working in Australia.

No different to NZ crew operating SYD/BNE-NLK (Domestic Flight) on there New Zealand Issued Contract.

Under the current agreement between the two countries, there is an joint aviation market we're airlines are allowed to bass staff in either.

It makes more sense for JQ/QF to have there New Zealand staff on New Zealand contracts on New Zealand. In the same with that VA employs New Zealand bassed crews on New Zealand Contracts.

For example tomorrow NZ could decide to start SYD-MEL-SYD with an A320. Its perfectly within the agreement that they can use New Zealand based crews on New Zealand Contacts and New Zealand Licencnes.
 
qf002
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Sat May 14, 2016 1:21 pm

FIRB isn't interested in a tit-for-tat response, they are interested in protecting the interests of Australians and Australian businesses. They aren't going to view a blocked attempt by QF to invest in an HK-based carrier favourably when assessing an application by CX to invest in a similar venture here.

It is not about mistakes QF may have made in their application, it's about what HK's laws do to prevent reciprocal access and investment. Why should CX be allowed to have substantial influence and control over an international airline based here if QF can't in HK?
 
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zeke
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Sat May 14, 2016 11:37 pm

Quoting zkncj (Reply 37):
No different to NZ crew operating SYD/BNE-NLK (Domestic Flight) on there New Zealand Issued Contract.

It is very different, as those pilots are not based in Australia. The pilots employed on the NZ contracts working in Australia did not have the 500 hours to work in NZ. It was simply a way to pay them less than 60% of what other first officers were being paid in Australia. Jetstar were found guilty.

Quoting qf002 (Reply 38):
It is not about mistakes QF may have made in their application, it's about what HK's laws do to prevent reciprocal access and investment.

Hong Kong gladly accepts Australian investment, it is the city of choice for Australian companies to have their "China" office.

There is absolutely nothing preventing Qantas from setting up an airline in Hong Kong, even if it was 100% Australian owned, it just would not be able to use the Jetstar business model where the airline is run remotely from Australia. Qantas knows however that Hong Kong is far more competitive than Australia, it cannot compete here on a level playing field.

You are suggestions it is unfair, I can tell you that the Australian Government is looking very closely at arrangements like Google which earn a couple of billion dollars of revenue in Australia but pays less than $80,000 in corporate tax, it is fundamentally wrong and is hurting the average Australian as the government is missing the revue. They are also looking very closely at the sham arrangements in the mining sector that deliberately sell mineral resources at below market values to Singaporean shelf companies to bypass Australian Commonwealth corporate tax and State mining royalties.

Australia looks to maximize its earning potential, and the principle place of business test is in place to make sure Hong Kong gets its slice of the revenue, and not being siphoned off via service agreements to be done in Australia.

No reasonable person can say the Jetstar franchises in Asia are being locally run, many of the positions you need in an airline to run just dont exist, and that because those role are being done in Australia. It is doing to those countries aviation sectors what Google is doing in Australia.

Quoting qf002 (Reply 38):
Why should CX be allowed to have substantial influence and control over an international airline based here if QF can't in HK?

If CX follows the law when making the transaction, there is little anyone can do about it. CX could startup a 100% foreign own airline tomorrow and fly domestically, there is nothing the FIRB could say about it. CX could setup a 100% foreign owned airline in NZ tomorrow, and operate it domestically in Australia, nothing the FIRB could do about it.

The precedent is there, there have been a number of 100% foreign owed airlines in Australia, Tiger, Skywest, Rex, Vincent.

Air NZ is not an Australian entity, there would be no change the Australian involvement if CX were to obtain 19% initially, it would be one foreign investor replacing another.
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Sun May 15, 2016 12:30 am

Quoting zeke (Reply 35):

What exactly is your argument? You can't claim that it's Jetstar hire crews in New Zealand on inferior contracts to their Australian colleagues because Qantas and Virgin Australia are doing the exact same thing. It doesn't indicate any form of intent on the part of Jetstar. Moreover those crew operate under the Australian AOC and CASA oversight and not NZCAA. That argument is therefore false prima face.

So what is it then?

We get it, you don't like Jetstar. That is your prerogative, but you sidetrack thread after thread with unsubstantiated rumours in the pursuit if some blind ideological agenda. But I still can't figure what your contention actually is.

Please humour me by answering one thing, what exactly did I just confirm for you about my posts? Now I'm really confused.
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747m8te
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Sun May 15, 2016 2:05 am

Quoting zeke (Reply 39):
It is very different, as those pilots are not based in Australia. The pilots employed on the NZ contracts working in Australia did not have the 500 hours to work in NZ. It was simply a way to pay them less than 60% of what other first officers were being paid in Australia. Jetstar were found guilty.

Ummm what on earth is the point you are trying to make??? We get it, you hate Jetstar, but your rants on numerous posts are nothing but trolling to your agenda and not on topic. Jetstar New Zealand is not a franchise. Your comments about where crew are hired are irrelevant to the discussion.

Quoting RyanairGuru (Reply 40):
What exactly is your argument? You can't claim that it's Jetstar hire crews in New Zealand on inferior contracts to their Australian colleagues because Qantas and Virgin Australia are doing the exact same thing. It doesn't indicate any form of intent on the part of Jetstar. Moreover those crew operate under the Australian AOC and CASA oversight and not NZCAA. That argument is therefore false prima face.

Exactly!

Quoting zeke (Reply 27):
Qantas simply could not demonstrate that their business model which had the backend airline operations being performed in Australia like the other franchises in Asia complied with the HKG law.

What would CX need VA for? A loss making airline when CX make profits, CX are very careful in who they invest in and no doubt they would stand for an airline making mountains of losses. The only reason CX may be interested is to use VA to operate flights for them, for extra capacity/frequency between Australia and Hong Kong seeing as CX are at their limit with the bilateral. All the more reason the Australian government could have cause for concern to block the move by CX to buy into VA, it could be seen as a way by our government as a Hong Kong based airline are trying to circumvent the bilateral agreement. Very similar argument from an Australian perspective to that of Hong Kongs law from your opinion that QF didn't demonstrate the backend ops of Jetstar HK we not in Australia. Of course CX would have a vested interest, there would be no other reason for them buying into VA.

But I don't see CX being interested in VA, for one, they don't need them or their feed and they do perfectly fine getting domestic feed from oneworld partner QF. Sure QF/CX don't get along best, but through the oneworld alliance it still works. Pumping/losing millions of dollars into VA would get them what in return more than QF gives them? Nothing! Unless of course they intend to use it as a vessel to get more frequency to HKG....then again as above the Australian Government would justifiably find reason to block it.

CX are wise investors, I take this talk from the AFR with a grain of salt.
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Sun May 15, 2016 2:33 am

Quoting 747m8te (Reply 41):
CX are wise investors, I take this talk from the AFR with a grain of salt.

  

I think Virgin is going to be a tough sell, and if anyone does buy the share block they should expect to sink a lot of money into it, beyond the original investment.

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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Sun May 15, 2016 6:45 am

Quoting zeke (Reply 39):
It is doing to those countries aviation sectors what Google is doing in Australia.

And I assume you have evidence to support this claim? Why would two other major investors sign up and pour cash into the venture in the knowledge that any profits were just going to flow straight back to QF?

Quoting zeke (Reply 39):
If CX follows the law when making the transaction, there is little anyone can do about it. CX could startup a 100% foreign own airline tomorrow and fly domestically, there is nothing the FIRB could say about it. CX could setup a 100% foreign owned airline in NZ tomorrow, and operate it domestically in Australia, nothing the FIRB could do about it.

You are correct, but that's not what we are talking about here so I fail to see the relevance.

Quoting zeke (Reply 39):
Air NZ is not an Australian entity, there would be no change the Australian involvement if CX were to obtain 19% initially, it would be one foreign investor replacing another.

True, but again irrelevant. What purpose would such a stake serve for CX? They would only invest if it gave them some degree of influence and control over VA and being the smallest of three major shareholders does not do that.

Quoting 747m8te (Reply 41):
CX are wise investors, I take this talk from the AFR with a grain of salt.

   At the end of the day a CX stake just doesn't make any sense anyway IMO.
 
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Sun May 15, 2016 7:10 am

Quoting zeke (Reply 39):

If CX follows the law when making the transaction, there is little anyone can do about it. CX could startup a 100% foreign own airline tomorrow and fly domestically, there is nothing the FIRB could say about it.

Wrong, the FIRB could review and disapprove it if they judge the investment contrary to Australia's national interest [not saying it is, but that is a decision the FIRB makes]

Quoting zeke (Reply 39):
CX could setup a 100% foreign owned airline in NZ tomorrow, and operate it domestically in Australia, nothing the FIRB could do about it.

No it couldn't. Such a company would not be an NZ company if 100% owned by CX.

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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Sun May 15, 2016 9:24 am

Quoting RyanairGuru (Reply 40):
What exactly is your argument?

You were the one above who stated above "there is no such thing as Jetstar New Zealand", when even the Jetstar press release says there is.

Quoting RyanairGuru (Reply 40):
You can't claim that it's Jetstar hire crews in New Zealand on inferior contracts to their Australian colleagues because Qantas and Virgin Australia are doing the exact same thing.

Jetstar was found guilty of employing pilots in NZ to operate aircraft in Australia to bypass FWA agreements. That is on the public record.

None of the pilots employed in NZ to operate the NZ subsidiaries are employed by Qantas, Virgin, or Jetstar. They are employed by the local subsidiary under NZ contracts.

Quoting RyanairGuru (Reply 40):
It doesn't indicate any form of intent on the part of Jetstar. Moreover those crew operate under the Australian AOC and CASA oversight and not NZCAA. That argument is therefore false prima face.

It is not false at all, Jetstar was found guilty of employing pilots under the NZ subsidiary to fly aircraft in Australia to bypass the FWA agreement. There was a Senate inquiry that this was all uncovered this along with the use of Thai cabin crew to operate domestic sectors.

Quoting RyanairGuru (Reply 40):
That is your prerogative, but you sidetrack thread after thread with unsubstantiated rumours in the pursuit if some blind ideological agenda.

Yet you are not consistent with the same people state that Hong Kong blocked the Qantas application.

The application was not blocked, the application failed to meet the legal requirements. They had every opportunity to address the issues that were non-compliant and resubmit. Qantas made the decision not to.

Quoting 747m8te (Reply 41):
We get it, you hate Jetstar, but your rants on numerous posts are nothing but trolling to your agenda and not on topic.

I dont hate Jetstar, I dislike the people people who claim that each franchise is an independent airline when the evidence clearly shows it is not. I also dislike the people who portray Hong Kong as blocking the Jetstar Hong Kong application, the fact is it failed to meet the requirements because of the business model it wanted to employ. The only party that should be held accountable for that is Qantas.

Quoting 747m8te (Reply 41):
Jetstar New Zealand is not a franchise.

Jetstar New Zealand is a subsidiary of Jetstar Australia, it is not a New Zealand airline.

Quoting 747m8te (Reply 41):
What would CX need VA for? A loss making airline when CX make profits, CX are very careful in who they invest in and no doubt they would stand for an airline making mountains of losses. The only reason CX may be interested is to use VA to operate flights for them, for extra capacity/frequency between Australia and Hong Kong seeing as CX are at their limit with the bilateral.

I have mentioned other reasons before, people choose to ignore them. Not all parts of an airline are profitable.

Quoting 747m8te (Reply 41):
Very similar argument from an Australian perspective to that of Hong Kongs law from your opinion that QF didn't demonstrate the backend ops of Jetstar HK we not in Australia.

No, there is not requirement in Australia to have the principle place of business in Australia. You guys should actually know what the law says BEFORE telling me what I am wrong. Australia only requires 51% local ownership for international flights, nothing about where the airline backend functions are performed.

Quoting qf002 (Reply 43):
Why would two other major investors sign up and pour cash into the venture in the knowledge that any profits were just going to flow straight back to QF?

You are twisting my words, I did not say "any" profits did I ? The service agreements mean that Qantas gets the cash flow BEFORE profits. So each ticket booked, each flight dispatched the franchisee pay Qantas fees.

Quoting Gemuser (Reply 44):
Wrong, the FIRB could review and disapprove it if they judge the investment contrary to Australia's national interest [not saying it is, but that is a decision the FIRB makes]

No, the FIRB does not look at every foreign transaction in Australia, the key point to my statement is if they followed the law in doing the transaction.

Quoting Gemuser (Reply 44):
No it couldn't. Such a company would not be an NZ company if 100% owned by CX.

Of course it could be, incorporated in NZ.
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Sun May 15, 2016 9:41 am

Quoting zeke (Reply 45):
Of course it could be, incorporated in NZ.

Just to clarify:

http://www.transport.govt.nz/air/int...-internationalairserviceslicences/

"Ownership and control

3.4 A scheduled international air service licence will not be granted to a New Zealand airline unless it is substantially owned and effectively controlled by New Zealand nationals. The right of an airline to operate international scheduled services can otherwise be challenged under most of New Zealand’s bilateral air services agreements. Accordingly, an application must also include affidavits with details showing:

(a) that New Zealand nationals -

(i) own at least 51% of the paid-up capital of the airline, and

(ii) have effective control of the airline by holding a majority of the positions on the board, including that of chairperson (in addition, if services are to be provided to Australia, at least two-thirds of the board positions must be held by Australian and/or New Zealand nationals);

(b) that not more than 25% of the airline is owned by a foreign airline (or foreign airline interest), and not more than 35% in aggregate is owned by foreign airlines (or foreign airline interests);

(c) that the airline’s head office and operational base will be in New Zealand; and

(d) whether or not arrangements relating to the operation of the proposed service in effect vest control of the airline in a foreign interest."


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Gemuser
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Sun May 15, 2016 9:50 am

Quoting zeke (Reply 45):
No, the FIRB does not look at every foreign transaction in Australia, the key point to my statement is if they followed the law in doing the transaction.

Right it does not, usually BUT it CAN if it deems it advantageous to the FIRB's mission.

Quoting zeke (Reply 45):
Of course it could be, incorporated in NZ.

See Mariners reply above. Also I'm pretty sure the CER treaty has a similar provisions.

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aerokiwi
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Sun May 15, 2016 12:31 pm

Quoting Gemuser (Reply 44):
Wrong, the FIRB could review and disapprove it if they judge the investment contrary to Australia's national interest [not saying it is, but that is a decision the FIRB makes]

Are you sure about that? From my understanding there are value thresholds before the FIRB kicks in and with the recent Aust-China FTA that is likely to have been lifted. I'm not a hundred per cent sure on that but the recent talks between Oz and Singapore resulted in an increase in the value cap to $A1 billion. I'd imagine there's something similar for China (a quick google search isn't proving fruitful).

Quoting zeke (Reply 45):
The application was not blocked, the application failed to meet the legal requirements. They had every opportunity to address the issues that were non-compliant and resubmit. Qantas made the decision not to.

Boom. There it is. I can't tell if it was some amazingly Machiavellian plot by QF (to do what, I dunno) or just amateur hour, but QF consistently failed to address the fact JQ HK was run out of Melbourne - revenue, purchasing, fleet. QF just decided not to do anything about it.

In the end though, in whose interest is it to stoke speculation about bidders? NZ's, that's who. The share price has tanked after Luxon threw his boardroom wobbly - cunning, completely incomprehensible QF-style Machiavellian scheme perhaps? - so of course NZ wants to stoke talk of a flurry of bidders.

I highly doubt a CX purchase. Though maybe a block of SQ? Ultimately, I think an SQ or EY full takeover is ideal.
 
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RE: CX Rumour To Buy Virgin Australa Stake From NZ

Sun May 15, 2016 12:41 pm

Quoting mariner (Reply 46):

I was not talking about international, I was talking about a Vincent Aviation situation where a NZ AOC holder can operate in Australia ZK registered aircraft. I know this is possible as Alliance is looking at dumping its CASA AOC for a NZ CAA one due to the incompetence of CASA, that will be an Australian owned NZ CAA AOC operating in Australia.
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