Originally Posted by
crosscutter
It should be noted state government funding was going to be contingent on VA. It will still be available when the new Virgin rises, joining forces with whoever else joins the party...and it’ll be a party. My point...a sad situation, but there is hope. My thoughts sincerely, to all the great Virgin staff who deserve far better. I hope everyone can be flying again soon.
Virgin reported losses, as Qantas made profits
Jonathan Rochford, a funds manager at Narrow Road Capital, told ABC News Virgin Australia had been poorly managed for years, and he thought insolvency would be the best option.
"Virgin has a myriad of problems and a government bailout without insolvency will get in the way of fixing these problems," he said.
Mr Rochford argues Virgin has consistently struggled to attract the high paying customers to be a strong competitor to Qantas.
After an IPO at $2.25 in 2003, its shares have rarely traded above $0.50 in the past decade, he said.
"The company has pursued growth over profits adding marginal routes that weighed down the good business it had servicing the capital city routes," Mr Rochford said.
"This failed strategy has left the airline overloaded with aircraft.
"The sale and subsequent repurchase of part of the frequent flyer business has left it loaded with debt, with most of the fleet and the frequent flyer business locked up by secured creditors."
A nation of travellers is grounded and Virgin is asking for government help to the tune of $1.4 billion. Here's how a bailout of the Aussie airlines could work.
He said a government bailout, if put in place without insolvency, would "delay and obstruct the necessary restructuring and increase the risk that Virgin ultimately ends up like Ansett".
He also pointed out that about 75 per cent of the debt is believed to be owed to foreign lenders.
"A bailout of Virgin without an insolvency is likely to result in hundreds of millions of dollars being transferred from Australian taxpayers to foreign lenders," Mr Rochford said.
A revamped Virgin Australia would be better off concentrating on profitable critical domestic routes, employing less staff and reducing its fleet, he said.
In such a scenario, Virgin Australia's loss-making low-cost offshoot, Tigerair Australia, would disappear, and new owners would step in.
As seen on ABC.website. Quite telling re multi millions being transferred from Australian Taxpayers to foreign lenders. Nuff said.