The Jonathan Rochford analysis is spot on. As it stands the current shareholders have indicated they will not put in another penny. The Australian Government will also do nothing. What they have done for the industry is useless as both majors are effectively grounded. As it stands, VAH will simply run out of cash in 3 months.
This is deja vu all over again.We have had this debate in 2014 when Joyce went to Canberra with his begging bowl. Certainly QF was not in the same situation as VAH but discussion at the time is worth re-visiting. It centred around insolvency laws and whether we need a Chapter 11 type system in Australia. This is a system David Bonderman of TPG used to refer to as the "car wash".
Our insolvency laws have not changed since 1993. As they stand they invariably lead to viable businesses failing and insolvency firms making a motza...think Ansett here.
Creditors all seek to to protect their OWN position in the short-term without coordinating with other parties. They actually work against their own positions by being so short-sighted. The administrator's sole task (apart from making money for itself) is with recovering money for creditors. This single-minded approach leads to the almost instantaneous destruction of any residual value in the company and just cents in the dollar for creditors.
The other major problem with our system is that management is totally sidelined whereas Chapter 11 allows the company to put its affairs in the hands of trustees without having to windup the business and lose key contracts. A company has no chance of recovering once contracts are suddenly voidable.
There is also the issue of director liability if a company trades while insolvent. They will put a company into early administration to protect themselves.
That said, voluntary administration is probably the best option to save the business and make it a viable investment option for one of the big private equity operators with experience in the aviation sector such as TPG. The clock is ticking and if this process drags on until mid year, VAH will be scrap and shareholders and creditors alike will be wiped out. Residual value goes to the liquidators in our system.
Sad indeed but sometimes the facts and the truth are just that.