There is specualtion in the finance community that VBA will be shortly completing a capital raising:
Virgin capital raising won't fly
June 27, 2009
INVESTORS are expected to take a lukewarm approach to any attempt by Virgin Blue to raise capital to help it steer its way through the downturn in aviation.
Despite repeatedly ruling out a capital raising, Virgin managers are understood to have been canvassing investor appetite for the issue of new shares during a series of broker roadshows.
But analysts believe it would be difficult for Virgin to successfully promote a capital raising because the airline would be using the cash to fund losses rather than new investments.
"Their problem is a lack of demand," an analyst said. "I certainly wouldn't see [a raising] as a fait accompli. Virgin's problem is that they are losing money. [Investors] would be more inclined to say, 'Why don't you cut loss-making routes?"'
Management would also have to win the support of Virgin's largest shareholder, Richard Branson, who has steadfastly ruled out a capital raising for the airline. He would be loathe to have to invest more money into Virgin to avoid a dilution of his 25 per cent stake.
Matt O'Sullivan
Also over the last few weeks we have had this from Macquarie Equities - Mr Robert Shaw, who are probably keen to help with the capital raising as they would take a % if they got the job.
AIR New Zealand should consider an alliance with Virgin Blue to cut costs and create a stronger competitor to Qantas, Macquarie analysts led by Russell Shaw said this week.
A tie-up, through a takeover or "significant" investment by Air New Zealand in Virgin Blue, would improve profitability on routes and save money by eliminating engineering and maintenance duplication, they said. "With both airlines struggling in the current environment, we believe a merged entity or even some level of corporate investment by Air New Zealand in Virgin Blue would give these carriers improved longer term prospects," Mr Shaw said. A combined company "would stand a far greater chance of remaining competitive against regional powerhouse Qantas longer term". Macquarie said selling new shares to fund the deal might also dilute the government's 75 per cent stake in Air New Zealand, making it more attractive to domestic and foreign investors
Now rather than wait for AIR to take a stake in VBA and possibly they don't have the money to do it, perhaps VBA after a capital raise could look to purchase a stake in AIR to start to tie up schedules, code share, maintenance, ground handling, back of house facilities, etc.
The NZ govt would be concerned at the moment about the way the trans-tasman is being flooded with flights and may accept this as a way to get through the current downturn. With VA, QF, UA, DL on SYD-LAX they would also be concerned about losing market share to those who used to choose AIR to fly to LAX.
A tie up could see less competition on certain routes or at certain times of the day similar to the way QF and J* share the domestic ports in OZ.
This is all a little left of field and is the reverse of what has been talked about but I would be interested to hear what people have to say on this. I would imagine AIR also need to do something at the moment as PB and J* would be hurting them.