A new player joins VA.

[Kranky]

Just In: Virgin Australia strikes partnership with China's HNA
Virgin Australia strikes airline deal with China's HNA Aviation - ABC News (Australian Broadcasting Corporation) (http://abc.net.au/news/7461902)

[TBM-Legend]

Change the name from Virgin "Australia" to Virgin "Everywhere"!

[Ken Borough]

Change the name from Virgin "Australia" to Virgin "Everywhere"!

Nah! It's Virgin-on-The-Ridiculous. I can't decide if this saga is a comic opera or a tragedy of significant proportions that even Shakespeare couldn't better.

[C441]

Virgin Australia strikes partnership with China's HNA

Maybe they'll become Lucky Virgin Airlines (http://www.hnagroup.com/en/business/hna-airlines/aviation-introduction/lucky-air.html)! :cool:

[B772]

All flight numbers to have as many 8's in them as possible !

[slice]

At last, some Communist Overlords to show us Capitalist running dogs the way of the great chairman! :}

[mcgrath50]

At last, some Communist Overlords to show us Capitalist running dogs the way of the great chairman!

In fairness HNA Airlines is one of the few privately (and therefore capitalist) owned arlines in China. Sadly, we will have to wait longer before we can learn the tricks of the workers paradise :(

[AerialPerspective]

Nah! It's Virgin-on-The-Ridiculous. I can't decide if this saga is a comic opera or a tragedy of significant proportions that even Shakespeare couldn't better.
It truly is... this would have to be the worst run airline in the region... yes, Ansett collapsed in part due to bad financial management in the 80s/90s but it still had airline professionals in its management ranks. VA in every category is poorly managed. What gets me is how the mail room bloke has survived. We all know there's some who still blame Air NZ for Ansett's demise but Air NZ is a very different company now and arguably one of the best run airlines in the world and they want out which speaks volumes.

[t_cas]

It truly is... this would have to be the worst run airline in the region... yes, Ansett collapsed in part due to bad financial management in the 80s/90s but it still had airline professionals in its management ranks. VA in every category is poorly managed. What gets me is how the mail room bloke has survived. We all know there's some who still blame Air NZ for Ansett's demise but Air NZ is a very different company now and arguably one of the best run airlines in the world and they want out which speaks volumes.
Air NZ......... Karma.

[kiwiandrew]

I think NZ have learned their lesson well.

They were very foolish to get involved with the disaster waiting to happen that was AN. The unprofessional NZ management of that era allowed themselves to get panicked into the foolish decision of going from a 50% stake in a dying airline to a 100% stake in a dying airline - if they had done a due diligence rather than panicking they would have known not to throw good money after bad. They should have allowed SQ to buy the other 50% AN would still have died (let's be honest, it was such a mess of over staffing and absurd fleet decisions that nothing could have saved it in a deregulated environment ) but NZ would have taken much less of a hit both financially and reputationally from the demise.

VA is showing every sign of turning themselves into AN mark II and NZ should exit as quickly as possible.

Without the artificially protected environment of the two airline policy the Australian market simply isn't big enough for two full service carriers. Virgin Blue may have been a bit rough around the edges, but I would argue they were far closer to what the market needed ( and could support) than Virgin Australia's attempt at being a second Qantas.

[rexxxxxy]

Some analysis :cool:

HNA Flies to the Wrong Destination - Bloomberg Gadfly (http://www.bloomberg.com/gadfly/columnists/AQrSL0m_2u4/david-fickling/articles/2016-05-31/hna-taints-a-good-aviation-business-by-buying-airlines)

[TBM-Legend]

All VA needs now is to hire Toomey and its MA...

[Icarus2001]

VA in every category is poorly managed.

That is a big claim AP, do you have any specific examples? Evidence?

[Berealgetreal]

It's some positive news for 1600 pilots so that's hardly a bad thing.

It's also money into the economy so again, that's hardly a bad thing.

[LeadSled]

Folks,
Can't speak for anything about commercial aspects of the group, but HNA Airlines are technically very competent, and has, for many years, worked closely in conjunction with Lufthansa for technical training and standards.

At executive level, all the people I have met have had post graduate degrees from (mostly) US universities (Harvard, Stanford, MIT), in two cases their first degrees were ANU. At a lower level, they were all graduates of the Lufthansa Technical School.

In their "day jobs" they have been quite impressive in a practical approach to the real world.

Tootle pip!!

[The Green Goblin]

Some good news. They still need another few hundred million. Who else will buy in?

[RampDog]

LinFox and his little buddy?? Nooooo!!

Q: How do you make a small fortune investing in Virgin?
A: Start with a large one!
Boom Boom :}

[B772]

Hong Kong Airlines and Hong Kong ( HK ) Express are part of the HNA airline group. Hong Kong Airlines fly to OOL and CNS.

Jetstar (Hong Kong) efforts to become established in HKG were stymied by the HNA Group and HK Express a HKG based LCC.

Expect to see more Chinese on Virgin and the possibility of a Virgin A330 in Haikou.

[Goat Whisperer]

Probably not Haikou, B772, more likely the routes that HNA airlines are getting shut out of... HKG to SYD/MEL, or CAN/PEK/PVG to Aus. The former losing to CX, the latter losing out to the 3 big state owned groups.

[VR-HFX]

Kiwiandrew

Hate to let facts get in the way of things but the following quote from a post in 2004 is on the money. The true facts never saw the light of day.

As to HNA, one of the biggest Ponzi schemes among many in China.


I hate to ruin a good stoush so will go no further back in time than the late 90's.

Personally, I think our friend the Night Owl gives conspiratorial credit where it is not totally due.

Indeed Singapore plays a central role in this pantomine but for somewhat different reasons. By 2000 it had long become the HQ of one Brierley Investments, the major shareholder in AirNZ and therefore indirectly a major figure in the 50% of Ansett not owned by News Corp.

Air NZ had pre-emptive rights on the balance 50% of Ansett should it come up for sale.

News Corp wanted and needed to exit. They found a buyer in SQ and spent a lot of time stitching together a deal for AUD 500m that would ensure the recapitalisation and fleet renewal of Ansett and provide a footprint for the Star Alliance in Oceania.

Whilst I agree that AirNZ tried to blindside and outsmart SQ, this was only cobbled together in response to immense pressure from Selwyn Cushing and his fellow travellers who shared the same conflict of interest...namely being directors of both Brierley and AirNZ.

Air NZ,given the price they paid for the first 50% of Ansett, and through them Brierley, would have to make substantial write-downs on their investments (AirNZ in Ansett and Brierley in AirNZ) if the direct deal between Ansett and SQ went through.

Selwyn Cushing used his immense influence (and Brierley voting block) as Chairman of AirNZ to force AirNZ to bet the whole company.

Sure they banked on the NZ Govt to come to their rescue, and there was a certain amount of naive arrogance in thinking that SQ would pour good money after bad, but that all came after Selwyn Cushing (as Chairman of AirNZ and Brierley) decided to put HIS national carrier at risk to protect Brierley Investments balance sheet (which could ill afford to take a write down of that magnitude).

In my view the Hall of Shame is missing one portrait...and one that is very much alive and indeed very wealthy at the expense of many.

Well he may be knighted but I suggest he be better stuffed and mounted in the above Hall of Shame.

[oicur12.again]

"let's be honest, it was such a mess of over staffing and absurd fleet decisions"

Thread drift I know but, what exactly were the "staffing issues"? And what absurd fleet decisions?

[rexxxxxy]

Interesting commentary in the AFR suggesting James Hogan was behind it and that JB is out in 2016

Life after Virgin for James Hogan, Christopher Luxon, John Borghetti? | afr.com (http://www.afr.com/brand/rear-window/life-after-virgin-for-james-hogan-christopher-luxon-john-borghetti-20160605-gpbxld)

Life after Virgin for James Hogan, Christopher Luxon, John Borghetti?

http://i.imgur.com/KEbeupu.png
http://i.imgur.com/MAEHkM5.png

[chuboy]

http://www.brisbanetimes.com.au/business/aviation/chinas-nanshan-group-to-buy-virgin-australia-stake-from-air-new-zealand-20160609-gpfw5q.html

Looks like Air New Zealand has found a buyer, also Chinese.

[TBM-Legend]

Yes, crew meals now flied lice and dim sum!

[Goat Whisperer]

No chance of VA crew meals becoming edible, TBM.

[B772]

Interesting to see the Virgin saga continue with the airline now to be controlled by Asian interests. Stand by for the capital raising announcement.

James Hogan would not be happy with the AFR article referring to him as a former Ansett trolley dolly. From memory James worked on the check-in counter in the International Terminal at Tullamarine.

[mcgrath50]

James Hogan would not be happy with the AFR article referring to him as a former Ansett trolley dolly. From memory James worked on the check-in counter in the International Terminal at Tullamarine.

Interesting the same paper had an article trumpeting a young entrepreneur (who's start up was fully backed by their rich Dad) yet a guy who has risen to the top of a listed company from a entry level position is given that rather demeaning write up.

[TWOTBAGS]

Nanshan Group own 55% of Qingdao Airlines....... what are the odds that there is a side deal done back in China? evens or better??;)

[B772]

Do not know anything about Qingdao Airlines but should you ever visit Qingdao make sure you visit or stay at the Hilton Golden Beach. It is an eye opener.

[Squawk7700]

Great news for the A330 crews that will get to fly somewhere other than to Perth daily !

[cavemanzk]

Great news for the A330 crews that will get to fly somewhere other than to Perth daily !


Provided that they don't open up an China crew base

[Goat Whisperer]

I think China is still a net importer of A330 pilots. It's the Aus side of the traffic rights they want. And if I have to ferry Chinese tourists between Aus and China for them, I say Ni Hao and welcome.

[Captain Dart]

So you've never experienced the 'delights' of operating in Chinese airspace then (think 'Bizarro-world').

That's an eye-opener as well.

[porch monkey]

I guess the next V Learn is going to be "Mandarin in 5 easy lessons". I wouldn't worry about it too much GW, Cairns and Hammo are already like that.

[TBM-Legend]

Why is Virgin Australia considered an Australian airline when it is not Australian owned??

[Snakecharma]

The ownership structure of the international airline is different to that of the domestic airline.

Domestic airlines are allowed to be 100% foreign owned, whereas Australian designated international carriers must be 51% Australian owned.

The exception to all of this is Qantas by virtue of the Qantas sale act - how exactly it differs I couldn't tell you as I have not bothered to look other than I remember the discussion when VA split itself up into different entities in order to facilitate the differing ownership structures.

[moa999]

Albeit Virgin's structure is a little too 'cute' imho.

Reportedly the shareholding structure was 'grandfathered' before the foreign airlines bought in when it still was 51% Australian owned.

Albeit - the International airline doesn't seem to have a separate management team, or Board (although it seemingly did initially), it doesn't publish separate financials and given the recent losses in Qantas International, assuming Virgin was the same, it would seem strange that foreign shareholders would make shareholder loans that ultimately support an entity in which they have no interest

And then you have Tiger which obviously previously couldn't fly internationally (being 100% Singapore owned) now operating under this structure.

[Ken Borough]

Qantas must remain at least 51% Australian owned This is enshrined in the Qantas Sale Act that was passed by the Australian Parliament. On the other hand, the international arm of Virgin Australia is notionally Australian owned but reality may suggest otherwise. Some very clever but legal structures were devised by VA to circumvent the requirement that Australian flag carriers be "Australian owned" to the extent that they have established that the international subsidiary complies with that requirement. Just how that is so remains a mystery to me.

As an aside, I think it's very bad government policy that an Australian domestic airline can be 100% foreign owned. Why are we allowing anything that moves to be dominated by foreign interest? :ugh::ugh::mad::mad:

[TBM-Legend]

So where is the media, Shorten, ACTU, CMFEU, MUA, Katter, Barnaby etc etc crying about a great Australian enterprise falling into Chinese/ foreign ownership

[chuboy]

Air New Zealand already owned the shares? It was already foreign owned.

As long as they keep Aussie jobs I don't see how it matters. The majority of the wealth the country has seen in the last 10 years has been off the back of foreign owned companies.

[B772]

TBM

If it was not for foreign investors propping up Virgin at great financial expense to themselves Virgin would have been dead and buried for some time due to insolvency.

You may be aware it was necessary to borrow $425,000,000 from the 4 major shareholders less than 3 months ago to pay bills. Since then a further $159,000,000 has been received from the HNA Aviation Group. A major capital raising of possibly $1,000,000,000 will be necessary very soon and possibly initiated prior to 30/06/16.

[Goat Whisperer]

I don't imagine pollies are too concerned about foreign airlines blowing their dough on the Australian aviation industry casino table. It's not exports that benefit us so much as the money paid in return, and Virgin is a neat little importer of foreign money.

Less than illustrious history and circumstances for the company Air NZ sold its Virgin Australia stake to..

http://www.afr.com/news/world/asia/corrupt-china-official-had-australian-links-20141210-124hsz

[TBM-Legend]

I don't have a problem with foreign investment . The whining that takes place when the Chinese try and buy a few cattle stations is what I meant. You can't take those out of the country .

It has still got me stuffed how the mailroom boy stays in place with the numbers like they are

[rexxxxxy]

ANZ buys their stake for 400+ Million
Sells for half.

:D

[cnsnz]

ANZ buys their stake for 400+ Million
Sells for half.

:D

Yeah they should have learnt about investing in poor performing Aussie Airlines a long time ago.

[B772]

Do not forget Air New Zealand were the largest shareholder in VAH and have only sold a part of their holding in VAH to the Nanshan Group.

There is a lot more to this story to follow during the next 12 months or so including a delisting from the ASX as I indicated in another thread on 30/03/16.

[TBM-Legend]

The "mailroom clerk" does not have a clue>>>>

Virgin Australia taps shareholders for $852 million, jobs shed in restructure - ABC News (Australian Broadcasting Corporation) (http://www.abc.net.au/news/2016-06-15/virgin-australia-taps-shareholders-for-852m/7512508)

[Icarus2001]

http://www.taiwanese-secrets.com/image-files/chinese-symbol-for-good-luck.jpg

[B772]

VAH shares are now down 60% since mid January 2016.

Debt covenants looking shaky !.

[TBM-Legend]

Shades of Custer to Sitting Bull : Surrender, we have you surrounded!

[TBM-Legend]

Here is the news:

Virgin to book big annual net loss
32 MINUTES AGOJULY 6, 2016
By Lilly VitorovichAAP

Virgin Australia is set for a big full-year loss after announcing its restructure will cost as much as $450 million.
Australia's second biggest airline has reaffirmed its guidance for pre-tax underlying profit of $30 million to $60 million, but its bottom line will be hit by costs and writedowns of between $410 million and $450 million.
That includes $100 million of fourth-quarter restructuring costs, and $155 million to $175 million of non-cash impairments associated with a three-year cost-cutting program announced by the carrier last month.
The remainder of the costs and writedowns confirmed on Wednesday include the $59.4 million already announced in the group's interim results, plus an additional $100 million to $115 million related to an overhaul of its fleet.

[Oakape]

Isn't this what QF did? Big write down, doom & gloom all round. Then a surprising turn around the following year. If that is the case, Virgin will come back with a big profit next year. Nothing to worry about. :E

[Strewth]

Hong Kong Airlines Virgin Australia CAPA (http://centreforaviation.com/analysis/hong-kong-airlines-to-grow-in-australia-via-virgin-australia-partnership-auckland-launches-nov-2016-297036)

[porch monkey]

Oakape,
Yes they did, and NO they won't. But you knew that.......:}

[Ollie Onion]

Looks like pay freeze and new EBA's all round then, just like Qantas.

[atlas12]

Yep, followed by big profit announcements. Sounds all to familiar :yuk:

[Snakecharma]

Atlas, can't see any big profit announcements - that would mean they would have to actually make a profit! :)

[atlas12]

hehe too true!! :p

[AerialPerspective]

The ownership structure of the international airline is different to that of the domestic airline.

Domestic airlines are allowed to be 100% foreign owned, whereas Australian designated international carriers must be 51% Australian owned.

The exception to all of this is Qantas by virtue of the Qantas sale act - how exactly it differs I couldn't tell you as I have not bothered to look other than I remember the discussion when VA split itself up into different entities in order to facilitate the differing ownership structures.
The Qantas Sale Act requires a number of things to ensure the long-term viability of Qantas v.v. the national interest and to meet the obligations of International Air Services as per the Air Navigation Regulations.
The carrier must be 51% Australian owned, it must maintain it's principal business headquarters and operational base in Australia, the Chairman must be an Australian Citizen as must the CEO (not sure about the last one but I think the CEO does have that requirement), the trading name used for "... international passenger services offered by the Company..." must include the expression 'QANTAS'. Foreign ownership is thus capped at 49% and originally any airline or other consortia holding an interest was limited to 35% with any single airline limited to 25% but these last two have been removed and there is just the 49% foreign cap now. The Board is required to review the register monthly and any shares in excess of the 49% cap are to be stripped of voting rights which then vest in the Chairman and the Board while those shares are compulsorily acquired or subject to forced divestment to ensure the 49% cap is maintained. It is arguable that the old 25/35 limit is not required now as many investment banks and other institutions like the Commonwealth Bank are significant shareholders so the likelihood would seem slim that an airline would be able to get more than 20%.
The Commonwealth of Australia retains one single share in Qantas Airways Limited called the 'Golden Share' which provides special rights and privileges to the Commonwealth to veto any decision of the Board or Management which is not in the national interest. Costello chose not to exercise it though when APA were looking to aggressively acquire Qantas so it would seem to depend on the will of the Minister at the time.