Originally Posted by
Vindiesel
Anyone thinking the government will pour $1.4b into a long-term loss-making company is dreaming,
$1.4b for a ~70% stake with market cap less than half that amount in a company with a bloated cost base and a $5b debt book significantly denominated in USD would be one of the greatest misuses of public money in history.
The argument about helping the tourist industry recover is naive, The recovery will be more U shaped than V shaped and there will be more than enough overseas capacity and capability that could be introduced into Australia to assist the tourism recovery - all without the need for throwing good taxpayer money after bad into a debt-laden company. Even in 3 years, this taxpayer money will never be recovered and VAH's debt will still be there.
If VAH's billionaire and state-backed shareholders won't tip money in, then why should Joe Public? What steps is VAH taking to immediately address its cost-base? Has it asked employees to make permanent changes to its cost base? Has it renegotiated leases? Until these changes are seen, I wish you all good luck...
I agree about the recovery.
It will be sluggish domestically but even if it does come back strongly both Qantas and Jetstar will have surplus wide body aircraft (JQ 11 787s, Qantas 40ish A330s and 787s) that can fill the void, as I’m sure no one doubts that international will take quite a bit longer to come back (50 wide bodies would be around the same capacity as virgins 77 narrowbodies).
looking beyond the 18-24 month mark, JQ alone have 18 A321LRs due which could be used for growth to fill the domestic vacuum as international demand comes back, I’m sure Qantas would do similar. Beyond this point, a new entrant would be seen into the market most likely.
so the notion that the australian domestic tourism market will be crippled by the absence of virgin is false in my view.