20 buyers now circling Virgin Australia

[MelbourneFlyer]

Virgin Australia administrators Deloitte confirm 20 buyers are now circling Virgin Australia, adding "we remain confident that our target of achieving a sale by the end of June is achievable.”

https://www.executivetraveller.com/news/virgin-australia-sale-very-competitive-with-high-quality-bidders

[Buster Hyman]

Turned into a brochure at the end but, that's what they're trying to do I guess.

[exfocx]

BREAKING NEWS: Administrator (of any business) talks up number of potential buyers, uses online industry rag, I mean mag to do so!

[MelbourneFlyer]

I don't reckon Deloitte needs any website's help in selling Virgin Australia, especially not if rumours of Twiggy Forrest, Wesfarmers and Macquarie Bank are true!

[DanV2]

There were also rumour reports in the papers that Temasek directly was also interested in talking to BGH about a joint bid for VA Mk2.

At this stage it's only a rumour and that 'VA Mk 2' (as co-owner with BGH) would operate alongside SQ/SIA as 'Sister Companies' under the Temasek umbrella, as opposed to the old 'SQ/SIA takes over VA' line that's been trotted out over the past five years.

Probably the first time that it's been reported that Temasek directly may be interested (rather than their "child" SQ/SIA).

https://www.smh.com.au/business/companies/singapore-inc-could-stick-with-virgin-australia-through-bgh-bid-20200428-p54ny9.html

[deja vu]

BREAKING NEWS: Administrator (of any business) talks up number of potential buyers, uses online industry rag, I mean mag to do so!
yeah, what an opportunity to make a small fortune, ...............just as long as you start with a huge fortune!

[longjohn]

Money talks..... Bull**** walks!

In 2002 not 1, but 2 billionaires walked away from resurrecting Ansett because their deal was contingent on Government $$ which Mr Dixon at QF made sure never came.

So far, word on the street is that any serious buyers are looking for Government cash first.

Whether that is real or not remains to be seen.

no doubt Alan will want a similar deal for QF or JQ, as should Scott at Alliance.

long way to go I’d say before we get anywhere near hearing a fat lady

[JPJP]

Virgin Australia administrators Deloitte confirm 20 buyers are now circling Virgin Australia, adding "we remain confident that our target of achieving a sale by the end of June is achievable.”

https://www.executivetraveller.com/news/virgin-australia-sale-very-competitive-with-high-quality-bidders

The accompanying article regarding Velocity really made me wonder WTF Virgin Oz management were doing.

• In 2014 they borrowed $150 Mil from Velocity.

• in 2014 they sold 35% of Velocity for $335 Mil.

• Virgin Oz lost $350 Mil that same year.

• They then bought back the same 35% of Velocity for $700 Mil, five years later. From the same group they’d sold it to originally.

• They never paid back the original $150 Mil loan from Velocity.


:sad:

[machtuk]

Will be interesting to see how any new buyer will make it work especially when VA where going down the toilet fast pre CV19, is someone going to wave a magic wand post CV19 and everyone will live happily ever after? This ought to be good! -)

[Sunfish]

“20 Buyers”? Most of them will be tire kickers and idiotic “entrepreneurs” who have no money. If I was Deloittes, I would spend a few days right now on weeding out this group or prepare to waste months in discussions of gorgeous possibilities that eventually go nowhere.

The BS normally starts with : ”I represent a Saudi Prince / Chinese Billionaire / Asian Company / American venture capital group that wishes to buy your airline but the name must be kept secret and everything must be in strictest confidence”.

I hope there is at least one genuine buyer for the whole airline.

[mates rates]

One thing A new Virgin Australia will need is a guarantee from Government that they will give it 50% of the government work.Not allow Qantas to have the majority of the Government warrants because the fat cats and politicians want their Qantas club and free red wine.

[Beer Baron]

I don’t know much about how administration typically works out so this is just a question for others.

Would having considerable interest in buying VAH (20+ parties) actually work against the company that emerges for a couple of reasons?
1) Presumably the successful candidate is the one that pays the most. So if all the interest bids the price up then the new owner will be holding more debt themselves once they restart the company.
2) When you demonstrate there are numerous interested parties, some with very deep pockets, doesn’t it become clear that the government has no need to provide any support. Obviously all parties will put their hand out but it’s hard to see how Temasek, etc. could actually NEED the support, it would just lower their risk and increase their return.

[TCAS v2]

20 Buyers

Yep - Look at Fox and Lew with Ansett. They were real serious until the terminal deal with SACL didn't go their way. The airline was incidental to the real commercial grab.

This time round, it is no different. Nothing is what it seems.

[Lookleft]

One thing A new Virgin Australia will need is a guarantee from Government that they will give it 50% of the government work.Not allow Qantas to have the majority of the Government warrants because the fat cats and politicians want their Qantas club and free red wine.

Thats assuming a new Virgin Australia will still be a full service airline. Most government contracts specify that business class is available. It also assumes that its network will be as comprehensive as QF. I think the policy is still that public servants must use the airline with the best fare of the day but if one airline has a more convenient schedule then thats the airline that will get the booking.

[itsnotthatbloodyhard]

One thing A new Virgin Australia will need is a guarantee from Government that they will give it 50% of the government work.Not allow Qantas to have the majority of the Government warrants because the fat cats and politicians want their Qantas club and free red wine.

I’m sure it’d be nice for it to have half the government contracts, but if it’s a much smaller outfit should it really be entitled to the same amount?

[TBM-Legend]

Will be interesting to see how any new buyer will make it work especially when VA where going down the toilet fast pre CV19, is someone going to wave a magic wand post CV19 and everyone will live happily ever after? This ought to be good! -)


Really! QF was three times the size of VA with a vastly bigger network. Since when does a public institution have an obligation to split business 50/50 because the airline requirements are tendered not just handed out.

[MelbourneFlyer]

One thing A new Virgin Australia will need is a guarantee from Government that they will give it 50% of the government work.Not allow Qantas to have the majority of the Government warrants because the fat cats and politicians want their Qantas club and free red wine.

I don't think the Government should get in to this degree of meddling in the market, especially not if Virgin is not competitive against Qantas in terms of schedules and product. This is why I think the likes of Twiggy and Wesfarmers and Macquarie Bank could be useful as owners, they could make it company policy that all their staff travel is on Virgin as first preference and there's got to be a very very good reason to fly Qantas. That would divert a huge amount of travel rom Qantas to Virgin.

[junior.VH-LFA]

One thing A new Virgin Australia will need is a guarantee from Government that they will give it 50% of the government work.Not allow Qantas to have the majority of the Government warrants because the fat cats and politicians want their Qantas club and free red wine.

That's ridiculous as it is let alone trying to apply it to a LCC Virgin 2.0 on likely limited routes.

[DanV2]

While SIA/SQ's parent Temasek may be rumoured to be interested in a partnership with BGH Capital for Virgin Australia. However, Singapore Airlines (SQ) has ruled out further investment/involvment in Virgin Australia for the foreseeable future. SQ will commit to investing in their Vistara (India) investment, which provides a greater return to the SIA group.

One questions if some of that $13B that Singapore Airlines raised from parent company Temasek may be put aside towards their Vistara (India) investment, which is SQ's only overseas investment at this time.

Source: https://www.forbes.com/sites/willhorton1/2020/04/30/singapore-airlines-has-no-obligation-to-virgin-australia-cash-infusion-committed-to-vistara/#19c7eb2823b4

[Paragraph377]

Really! QF was three times the size of VA with a vastly bigger network. Since when does a public institution have an obligation to split business 50/50 because the airline requirements are tendered not just handed out.
That’s a really good point. I recall Virgin setting up lounges and a half business class and then whinging that most Government business went to Qantas. Qantas used to compete with Ansett for Government contracts and Ansett offered a better premium service. Virgin just wanted to waltz in and say ‘hey, give us half’. Typical self righteous lazy attitude of the day. Qantas had worked long and hard to get those contracts and then meet the requirements and expectations of the airline. Virgin just wanted that work to land in their laps. Typical of their method of riding others coattails. Now now before all the VA acolytes have a hissy fit, in recent years VA did work harder to get some of those contracts but they were still not satisfied and wanted more, but without offering the QF drippings (which are ****e today by yesteryear standards).

[t_cas]

That's ridiculous as it is let alone trying to apply it to a LCC Virgin 2.0 on likely limited routes.

and herein lies the problem.
we privatize the business, yet virtually monopolize the contracts to it. QF get 95% of government contracts!
How is a competitor to grow on applicable routes without the seed access.
VA should be achieving around 30% given the total market share is closer to 40% (pre COVID).
it is clearly skewed in QF’s favor, no matter which way you look at it.
and the above post alludes to QF earning it. QF always had it, (it was government owned) Ansett worked to gain some of it and was making a success of it. Ansett collapsed, Virgin Blue was a LCC, QF therefore got ALL of it back. Virgin then proceed down the path of a ridiculously expensive and ambitious timeline to get some of that market back. The investment has left them exposed and they still only achieved 5% due to QF favoritism (clear), without the yield, it is near impossible to achieve rapid ROI.

[chance]

Allan Joyce and QF are not just going to throw out the red carpet to allow a V2 a gilt edged inside running back into the market because its nice to have two mainline airlines. Like wise with ANZ should a trans Pacific service be operated by V2.
Qantas will flood the market with excess capacity at a discount price that will secure the already nervous customer base from forward purchasing tickets and chancing their luck with V2 or a travel agent like Flight Centre with the possibility they might fold. The market loves stability. A short term drop in yield by QF would be worth the long term gain of driving V2 out of the market or reducing their market share so that they are just a fringe player. All this is speculation of course and assumes that Deloitte can do a deal with some punter with very deep pockets who is willing to recover their multi-billion dollar investment over a long period of time given the skinny yield in in the game

[RodH]

This article from ABC News 24th April contradicts your concerns.

“ Australia's competition watchdog has warned Qantas it will take swift action against anti-competitive behaviour such as attempts to swamp airline routes, artificially push down prices or lock in exclusive deals with airports and suppliers.”

[chance]

The ACCC record is not covered in glory. Relatively toothless and they have to prove anti-competitive behaviour versus QF just giving the customer what they want, i.e, cheap seats and plenty of them. On routes where there is no V2 - its open slather and we will pay dearly.
Just look at the ACCC's complete lack success on the price of fuel at the bowser if you need an example of their inability to have much influence on the market.

[Telfer86]

Much hype , promises and dazzling showmanship in the talking up by Virgin/administrators

Really just a continuation of the showmanship and big talk and big promises emanating from Virgin Australia over the last ten years

A truly dazzling former boss of Virgin , custom designer suits , smooth as silk words

Why an earth would anyone pay a one dollar for a business where you immediately owe $7 B & losses 200 M every year

Does anyone actually believe these stories about "buyers circling"

Does it make any sense ?

[hotnhigh]

https://www.lawyersweekly.com.au/biglaw/28156-the-law-firms-who-are-key-players-in-the-virgin-australia-fallout

sounds like the plans are going well.....
It is also understood that KWM put their concerns in writing, telling Deloitte that after 60 days, lessors would take possession of aircraft, engines, technical records and so on, if administrators did not agree “to perform all future obligations”.

[non_state_actor]

Why an earth would anyone pay a one dollar for a business where you immediately owe $7 B & losses 200 M every year Does anyone actually believe these stories about "buyers circling" Does it make any sense ?

That is the point of Voluntary Administration. To knock down the debt and make the operation a viable proposition. However for that to happen the debt holders are not going to get paid at 100%. If they make a stand it will be all over as noone is going to buy it at current debt levels. If the debt holders can come to an arrangement then someone will buy the airline.

[Telfer86]

Pardon my naivety but does the debt goes away when the company is liquidated & it is just a sale of hardware ?

The AOC is owned by the company so you have to buy the company to get the AOC , not my area but how can you say abbra caddabbra all debts disappear

If liquidated the debts go , but also the company goes & thus the AOC is gone

I find the amount owed to aircraft lessors incredible , nearly $ 2 000, 000, 000 or the cost of 20 A320 neos

They can't have been paying leasing costs for months or years , maybe five aircraft lessors each owed $ 400, 000 , 000

That is serious coin & not great form on the part of Virgin

How is the Airline able to fly aeroplanes around now( & incur further maintenance costs , devalue) that they don't own and have not paid lease fees on & are not currently paying any lease fees on.

Is that not a bit cheeky ?

Surely the right thing to do would be return the aircraft to their owner

[JPJP]

The BS normally starts with : ”I represent a Saudi Prince / Chinese Billionaire / Asian Company / American venture capital group that wishes to buy your airline but the name must be kept secret and everything must be in strictest confidence”

Have you ever actually heard anyone say any of those things Sunfish ? Have you ever been in the room with a Saudi Prince, a Chinese billionaire or the head of a Venture Capital firm ? No ? I thought not.

Perhaps you could reserve your many, many, wild, port soaked musings to another area of the site. Spotters corner, or whatever other section they have for the ‘long retired, very thoughtful, and tinfoil positive’ ? Perhaps drag Paragraph377 with you. If he’s not ambulatory.

Unless of course you’re actually an airline pilot, who has direct and current insight into all of the many, many subjects that you’ve mentioned. Saudi Princes etc. etc.

Cheers.

[crosscutter]

I’ll have a crack.

The value of Virgins parts are worth much less than it is as a whole after a bit of surgery. This is important because it puts liquidation further down creditor preferences.

So, it is possible all creditors, not just the unsecured bondholders, may be prepared to accept a write down of some of the debt. Maybe as a trade for new equity? Maybe a haircut is the only option. It’ll be a negotiation. Virgin might be “saved” because instead of having $7B in debt, it may move forward with $3B. Some of the reductions will be write downs, some won’t exist such as a result of cancelled lease agreements, some won’t be needed such as employee redundancy provisions. The DOCA will specify it all if that’s the path forward.

However, the Deloitte administrator recently commented they “probably have the assets for employee entitlements.” Not a great advertisement of their financial position. There is no guarantee the Virgin brand will remain. It’s looking shaky especially if there is an agreement whereby private equity buy the liquidated assets and simultaneously do a deal with existing secured creditors to guarantee their votes.

It has to be acknowledged the opposing desires of the potential new owners and existing creditors. Obviously the existing creditors want the biggest return, but the new owners want minimal liabilities. St Nick is there for a reason too. The distressed private equity specialists will find the politics too much trouble when there are numerous competing equity options without similar interference.

[Hoosten]

Unless of course you’re actually an airline pilot, who has direct and current insight into all of the many, many subjects that you’ve mentioned. Saudi Princes etc. etc.

Are you serious? A pilot making sound financial decisions? That's a laugh.

I don't know the dude, have never met him, or spoken to him but I know he has business management qualifications as well as a host of other. You don't like what he says but I'll take his summation of the 'suitors' over a line pilots any day of the week.

[machtuk]

We sure do live in a crazy world!
You can run a business like VA borrowing boat loads of cash, rack up large debts, the fat cats get paid big bucks, the back slapping goes on behind the scenes with lots of glossy advertising people come and go with golden handshakes all the while the work force at the coal face bring in the $$$$ to cover said perks for those fat cats then along comes the straw that breaks the camels back (CV19) the fat cats ask for billions of dollars to keep the sinking Titanic from going down a little longer cause the trough ain't quite empty yet and bingo, into recievership and all bets are off, so sorry thanks for the free hand but no funds to pay our debts!
......next!

[Hoosten]

Privatise the profits and socialise the losses, great society that is.

[Telfer86]

But who would invest in an airline when the worldwide airline industry has ceased ? You have a massive debt , a basket case business , & a global airline meltdown & nobody travelling - & they
are telling you people are going to pay money for this

& at the same time listen to more Virgin spin (if you are a creditor)

Wouldn't the creditors just be wanting to grab whatever cash they can

The arrogance of continuing to use leased aircraft that that you are miles behind in payments on is well very interesting

[wheels_down]

Pardon my naivety but does the debt goes away when the company is liquidated & it is just a sale of hardware ?

The AOC is owned by the company so you have to buy the company to get the AOC , not my area but how can you say abbra caddabbra all debts disappear

If liquidated the debts go , but also the company goes & thus the AOC is gone

I find the amount owed to aircraft lessors incredible , nearly $ 2 000, 000, 000 or the cost of 20 A320 neos

They can't have been paying leasing costs for months or years , maybe five aircraft lessors each owed $ 400, 000 , 000

That is serious coin & not great form on the part of Virgin

How is the Airline able to fly aeroplanes around now( & incur further maintenance costs , devalue) that they don't own and have not paid lease fees on & are not currently paying any lease fees on.

Is that not a bit cheeky ?

Surely the right thing to do would be return the aircraft to their owner
Might need to dig deeper on leases as I think it’s not quite as you say. I’m not sure anyone can elaborate as it’s all pretty confidential stuff.

AirAsia wanted to push back payments for a month on its 330 fleet and were told when hell freezes over basically. I don’t think Virgin are years backed up.

They might pay quarterly, leasing companies could be using forward figures. Who knows.

[Mendi Matt]

Fingers crossed some sort of rescue deal/purchase can be negotiated. A lot of good people here, deserving to keep flying, and stay employed. A fair few are ex-PNG bush pilots - my ex-colleagues. Good luck to all.

[Lead Balloon]

It is also understood that KWM put their concerns in writing, telling Deloitte that after 60 days, lessors would take possession of aircraft, engines, technical records and so on, if administrators did not agree “to perform all future obligations”.One wonders what, precisely, the lessors would do with the aircraft etc after taking possession of them. :confused:

[air command]

Okay Telfer, I’ll try and explain it for you. Virgin is not years behind in leases. Normally leases are just a monthly expense, that would be paid for periodically out of cash flow. But once administration commenced , the leasing company becomes a creditor for the total cost of that lease, through to the end of the lease agreement. eg If you were one year into a ten year lease and entered VA, there is still another 9 years to run on that contract. The leasing company will be claiming a debt for the remaining 9 years of the lease. You could imagine how big this number could be for 60+ aircraft, with long leases to run.

[Sunfish]

Jpjp: Have you ever actually heard anyone say any of those things Sunfish ? Have you ever been in the room with a Saudi Prince, a Chinese billionaire or the head of a Venture Capital firm ? No ? I thought not.

Yes. That’s what they claimed to be.....

I left out the one who claimed to be the nephew of an Indonesian Government minister. He told our company that Indonesia was in the market for a new car registration computer system. We build and run it, he said, and we get $5 per car per year.The company spent over two million dollars scoping the system before it turned out the guy was an “entrepreneur’ who wanted to try the idea out. Nephew? No.

Then AUSTRADE arranged an interview for me in LA with a “major aerospace investor”. I was working for HdeH at the time. His “business plan” turned out to be us making defence stuff from the FSCM for him and selling it via Australia to thwart U.S. sanctions with him taking a commission for arranging these deals. I would still be in jail if that deal had legs.

Then there was the billionaire turkish businessman who wanted land in Geelong for a wool scouring plant. He waste two years of people’s time and money.

The venture capitalist with no capital, but big ideas......

etc., etc. , etc. The common theme is that they have no money but think they might be able to play both ends against the middle, create a deal out of thin air and take a commission.

If you haven’t met such characters, you’ve lived a sheltered life. Everybody with business experience has had to deal with clowns like these. I would expect several are in Deloittes list and Deloittes would know this is possible too. Some get around it by asking for $10,000 to get into the data room.

Sorry to be negative, but it’s the truth.

[Telfer86]

AC thanks, the only figure that really matters then is how much they are behind in payments that have fallen due

A leasing company was making that point the other day that Virgin were behind (& I don't know how much) in leasing payments & still flying the Aircraft around like
they owned the dam thing. Think it was an A320 doing runs out to the Pilbara

Thing all getting lost in the fog

Why would anyone touch this basket case of a "business" in these current circumstances

AC question for you : How do say abbra cadabbra & make a $7 B debt go away without liquidating a company , is it all getting naked chanting around the fire when you have a full moon etc etc. How do they do it ?

[normanton]

Jesus you talk some crap Sunfish.

[Section28- BE]

Righteo then-

'With' All the/this 'Biatch-Slapping', 'you' folk- 'apparently' need to Do, could 'you' please, nominate a 'Prime' frequency for 'this' Virgin Gig- as, in which 'thread'- 'you' nominate for the purpose of 'THOSE' IN 'IT'.....

LIKE freekin HF, with SanFran, this Cluster-Fcuk!!!!

Just- askin.....????? Ta!!!

Rgds all
S28- BE

[Hoosten]

Jesus you talk some crap Sunfish.

I think he has far more insight on this subject than you.

The users on this board just cannot handle someone having more knowledge than themselves (self taught economists, accountants, auditors, business analysts etc)

[exfocx]

Pardon my naivety but does the debt goes away when the company is liquidated & it is just a sale of hardware ?

The AOC is owned by the company so you have to buy the company to get the AOC , not my area but how can you say abbra caddabbra all debts disappear

If liquidated the debts go , but also the company goes & thus the AOC is gone

I find the amount owed to aircraft lessors incredible , nearly $ 2 000, 000, 000 or the cost of 20 A320 neos

They can't have been paying leasing costs for months or years , maybe five aircraft lessors each owed $ 400, 000 , 000

That is serious coin & not great form on the part of Virgin

How is the Airline able to fly aeroplanes around now( & incur further maintenance costs , devalue) that they don't own and have not paid lease fees on & are not currently paying any lease fees on.

Is that not a bit cheeky ?

Surely the right thing to do would be return the aircraft to their owner

This is my understanding of Admin.

1. not my area but how can you say abbra caddabbra all debts disappear: You don't. The Administrators go to the creditors and put a proposal to them, that usually means a haircut on the debt because the company is unlikely to be a going concern. The creditors vote on the proposal and the majority of the creditors (as in majority of the debt, not numbers of voters) carry the day. From what I've read it'll be less than 10c in the $.

2. I find the amount owed to aircraft lessors incredible , nearly $ 2 000, 000, 000 or the cost of 20 A320 neos. They can't have been paying leasing costs for months or years , maybe five aircraft lessors each owed $ 400, 000 , 000: Not completely sure on this, but I believe the debt owed to the lessors is not for past use, but for the whole future of the lease agreement, so if there was 3 yrs left on an A/C lease, that debt is countered. So as I understand it the lease debt is for lease costs up to the end of the leases.

If liquidated the money received goes to the debt holders, but the unsecured debt holders (likely everyone bar the banks) are paid out AFTER the secured debt holders, so unsecured are likely to receive only Cs in the $, if anything! The AOC is still there I believe, but of what value would it be worth? The cheapest and quickest way (you'd assume) to start up would be to do a deal with the Admin and buy VA. The assets themselves in this environment would be unlikely to receive anything like book value, who'd want to buy used 737s atm; what would spares be worth, ground equipment etc? A likely Ansett style sell off which took 10 yrs and made the 2 Marks very wealthy!

[George Glass]

OK Hoosten , what exactly do you really know about the “users on this board” ?
In almost 40 years in the game I’ve flown with graduates in Law , Medicine , Veterinary Science and a few Accountants as well.
They had all decided that the choice they had made at Year 12 had been a mistake . They enjoyed flying better. Maybe they will have to go back from whence they came. Then there were the graduates of the Empire Test Pilot School and US Marine Naval aviators. Etc. Etc.
All humble. Never told you unless you asked.
Myself, I only have a humble BSc ( Hons.)

So spare me the condescending cr#p.

What , pray tell , are your special qualifications that entitle you to preach to the masses ?

[Sunfish]

George, there is a difference between being a graduate and actually practicing. When I read some of the comments here on business matters, I am reminded of what some of you derisively call “spotters”. I have direct, costly and often very painful experience of that which I speak of. Particularly people in business purporting to be things they are not. I fully expect so does Deloittes.

I hope Deloittes has a handful of genuine buyers of Virgin as a going concern out of the “twenty”. I assume they are diligently checking right now.

Are you one of these people who think “anyone” with an AICD ticket or similar can be a public company Director or CEO?

[Hoosten]

OK Hoosten, what exactly do you really know about the “users on this board"

Ok George, I know what a fair amount of what you do or have done, through PM conversations, what you've revealed on here and observation. You, I reckon I pretty much know your MO but I'll spare you the psychoanalysis on a public board, can do it via a PM if you like?

In almost 40 years in the game I’ve flown with graduates in Law , Medicine , Veterinary Science and a few Accountants as well.

Pray tell? Tell me what a Lawyer can tell us about the financials of an airline in admin? Unless they were a commercial lawyer of course. I've seen plenty of bankrupt Doctors, Lawyers and probably Vets, maybe a lesser cross section of Accountants. But maybe one or two of them as well.

They had all decided that the choice they had made at Year 12 had been a mistake . They enjoyed flying better. Maybe they will have to go back from whence they came. Then there were the graduates of the Empire Test Pilot School and US Marine Naval aviators. Etc. Etc. All humble. Never told you unless you asked.

That makes any of them qualified how? To talk the **** that's been talked on these threads for the past month or two? I'm pretty careful in these situations, there's a truckload of folk that are on the edge at the moment. I read of a Virgin Husband and Wife pilot combo, both facing the chop, with a young family. But, we have every expert in the world on here telling them they're done for, from a lot of Boomer a-holes, on their pension, safe. Or from the other side, got 6 months more cash in the bank, thinking they're safe.

Maybe I should have been a little clearer, if you're not qualified to talk on it, how about showing a bit of common decency toward these people.

Myself, I only have a humble BSc ( Hons.)

Not too proud yourself I see. Maybe you could put your degree (with Hons.) to work by volunteering at the local hospital? I see by your post history you have plenty of time.

I wouldn't swap your quals for mine in a heartbeat. I'm happy to PM ya if ya want, but you're more than likely to breach 'the code' and post them here as has happened before.

So spare me the condescending cr#p.

Nah, just STFU about the things you know nothing of.

What , pray tell , are your special qualifications that entitle you to preach to the masses ?

As above, old chap. Further, I tend not to post about **** I know nothing of. Now, spend the next three or four hours searching my post history for a trip up, off ya go.

[Sunfish]

i’m out of this. Pilots as a group contain some of the most vicious individuals I have ever seen.. Maybe that is why Aviation in australia is such a sad and over regulated profession.

For the record, There may be any number of “buyers” in Deloittes “twenty” and it is possible that some of them have the most diabolically bad agendas you could possibly imagine.
‘
Deloittes would know this. I know this. I hope ferchrissake it all works out.

However I’m done here, with pprune, because I have never seen a less supportive, more vindictive, useless so called “profession”t in my entire life - with one or two exceptions of members of course.

You deserve your regulator. You deserve what happens to you, because you have no charity or fellow feeling whatsoever. It probably results from a totally unhealthy combination of the demands of flying and the Australian character. The result is toxic.

[junior.VH-LFA]

https://youtu.be/BSVu0Z1UkKc

[Slezy9]

However I’m done here, with pprune, because I have never seen a less supportive, more vindictive, useless so called “profession”t in my entire life

Here I was feeling a bit down about the world situation... then I read this and was right back up again!!

This time can you stay away??? You’ve posted very similar before.

[DirectAnywhere]

However I’m done here, with PPRuNe,

C’mon, you’ve only got two more posts to crack 8000. That’s gotta be some kind of record.

10 bucks says you break the 8000 barrier.

[normanton]

Come on guys, he's just attention seeking. He will be back blurting his anti Qantas stance in no time!

[cloudsurfng]

i’m out of this. Pilots as a group contain some of the most vicious individuals I have ever seen.. Maybe that is why Aviation in australia is such a sad and over regulated profession.

For the record, There may be any number of “buyers” in Deloittes “twenty” and it is possible that some of them have the most diabolically bad agendas you could possibly imagine.
‘
Deloittes would know this. I know this. I hope ferchrissake it all works out.

However I’m done here, with pprune, because I have never seen a less supportive, more vindictive, useless so called “profession”t in my entire life - with one or two exceptions of members of course.

You deserve your regulator. You deserve what happens to you, because you have no charity or fellow feeling whatsoever. It probably results from a totally unhealthy combination of the demands of flying and the Australian character. The result is toxic.

honestly, I’d say that’s a shame. Your posts quite often add good insight, however your incessant attacks on QF and QF staff and constant gloating about ‘business class here’ and ‘luxury cruises there’ do you no favours.

back to topic, fingers crossed for a positive outcome for all VA staff. The sky needs the velocity call sign (or whatever company name may be used instead) chin up everyone, it feels like we are slowly on the way out of this mess.

[Beer Baron]

honestly, I’d say that’s a shame. Your posts quite often add good insight, however your incessant attacks on QF and QF staff and constant gloating about ‘business class here’ and ‘luxury cruises there’ do you no favours.
Well said. Summed it up nicely. Makes the whole holier-than-thou sign-off seem pretty hypocritical.

[machtuk]

The one thing I have found on Prooooone that's consistent is that its entertaining! None of us can singularly do a damned thing about the goings on in the aviation business, it is what it is despite all the crying all the vitriol and all the wild predictions!

[j3pipercub]

See you in a couple of months Sunfish. You leaving pprune must be almost into double digits by now.

[Oriana]

Pilots as a group contain some of the most vicious individuals I have ever seen

You forgot to add 'until it's time to actually fight'.

Sunfish has often added alot of insight to these boards.

The same can't be said for quite a few heroes spruiking absolute nonsense on these boards.

[CamelSquadron]

Its been a tough 2020 for the bottom feeder.

He has lost all of his online VA Angel campaigns lately including:

QF industrial action
Jetstar industrial action
Project Sunrise action
Government Bailout for VA

Then his VA has gone into administration.

Then the news that Macquarie Bank is lining up to buy his beloved VA ("rip their face off" merchants).

Now the VA administrator is stopping his "Angel" payments so he has headed for the exit door under the disguise of a dummy spit....

[C441]

"i’m out of this. Pilots as a group contain some of the most vicious individuals I have ever seen.. Maybe that is why Aviation in australia is such a sad and over regulated profession."

Of the 5 or 6000-odd airline pilots in Australia I'd reckon there's probably less than 50 or 60 who post regularly and passionately here on Pprune.
To suggest that this 1% represents a common sentiment in the industry or has any has any impact on the regulatory or industrial landscape as a whole is drawing a particularly long bow…….

[Lookleft]

Sunfish has often added alot of insight to these boards.

Thats the second time someone has stated this. What particular insight do you refer to?

His constant references to his overseas travel?
His bizarre ideas to blackmail political candidates to support GA?
His constant references to himself when topics are about you know, actual flying?
His constant references to people he knows that give him "special insight" into government, politics and business?
His pathological hatred of all things Qantas?
His pathological hatred of all things CASA and ATSB?
His paranoia of all things Qantas, CASA and ATSB?

etc,etc etc....

Or to put that another way, no one was interested in being subservient to his narcissistic postings so he has stormed off in a huff.

[SandyPalms]

Your appreciation (or lack thereof) of Sunfish’s insight, would most likely hinge on whether or not you were a QF employee. He/she wanted my employer to go broke and take all us all with them because of some bizarre resentment that QF didn’t fly to Melbourne.

I never found anything they wrote insightful. Good riddance I’d say. But they have done this before. I’m sure he will be back.

[itsnotthatbloodyhard]

I’m happy for Sunfish that he’s left. Hopefully he’ll now be able to find something more positive, healthy and productive to direct his energies into.
Just under 8000 posts, of which about 7950 would be histrionic denunciations of Qantas, CASA, the ATSB, the RAAF, and the Avalon airshow, suggests a bloke who’s not in a very good place. I wish him well and hope things get better for him.

[junior.VH-LFA]

I’m happy for Sunfish that he’s left. Hopefully he’ll now be able to find something more positive, healthy and productive to direct his energies into.
Just under 8000 posts, of which about 7950 would be histrionic denunciations of Qantas, CASA, the ATSB, the RAAF, and the Avalon airshow, suggests a bloke who’s not in a very good place. I wish him well and hope things get better for him.

You're a good bloke. I've had my fair share of frustrations with the guy but I tend to agree with this.

[Blueskymine]

To put it another way - he will just start another user name. Addiction and FOMO will see to that.

Interesting that he has 8000 odd posts in a professional pilot forum, yet isn’t one.

[George Glass]

“Interesting that he has 8000 odd posts in a professional pilot forum, yet isn’t one.”

Yup. Never quite understood that...............

[Icarus2001]

Interesting that he has 8000 odd posts in a professional pilot forum, yet isn’t one. Yes a little bit like a pilot going on to a forum for train drivers and getting miffed when no one will listen.

Come back Sunfish, just accept that like the real world, this forum has its share of tossers. Just because people disagree does not make you wrong (or right).

[Hoosten]

I'm sorry to see him go.

It will be impossible for him to post under a new user name, without being instantly recognisable.

He has had a great deal of grief to deal with, that may have coloured his postings at times. But he does have more professional experience than most of you will give him credit for. You lot love to think because you've got an ATPL and a jet command or right seat that you're experts in everything else. It's the Type A pilot way.

I don't know him, I know of him and I know his qualifications through a few sources. I reckon he'd be an interesting dude to have a beer with.

And why the **** not can a bloke in his 70's have a chat about his travels, whether they're first, business or economy, he's earned it. If you see this is as rubbing your nose in it, you're a bit fragile.

[George Glass]

Good grief

Hoosten , how can you so completely lack self awareness?

Maybe sunfish is right about one thing. Prune has outlived its usefulness.

Too many unstable impostors.

[Hoosten]

George, you're nothing but a miserable prick. Retired, know it all, Bachelor of Science (with Hons, of course), baby booming thief (who paid for your Hons? Your children? Amortised over how many decades? Who's paying their HECS debt? Unlikely you)

PPRuNe, you reckon it's solving aviations ills eh? Or meant to?

[das Uber Soldat]

This is why I don't hang out with pilots.

[George Glass]

Priceless Hoooosten.

All your own work

Couldnt have destroyed yourself more comprehensively if you’d planned it

[Buttscratcher]

George, you're nothing but a miserable prick.

Priceless!....spat me beer!

[Mach E Avelli]

We have gone from speculation on who is going to buy VA to psychoanalysing Sunfish to boomer bashing in 4 pages. Classic ADHD.
Mods how about canning this thread? There are 6 threads running on the subject of VA alone - enough to tax most attention spans.

[tail wheel]

https://www.theaustralian.com.au/business/dataroom/oaktree-etihad-team-up-in-virgin-autralia-rescue-battle/news-story/cd6a76cf1e65521c11bf891e2ab375af?fbclid=IwAR1oGfF9v1pTP1GX7b 8BCocH29OGELSU5IDHx9q8aWzb6mDKhYxSp6WinKs

[ampclamp]

Australian pay walled usual Tail wheel. Can you post the text if allowed please?
heaven forbid we stay on topic and stop the nonsense.

[Hoosten]

Priceless Hoooosten.

All your own work

Couldnt have destroyed yourself more comprehensively if you’d planned it

Whatever ya reckon mate. I thought you would have gathered by now I don't care too much what the likes of you think of me.

Reason: Grammar.

[Hoosten]

This is why I don't hang out with pilots.

Really? You should try it someday. Be selective though, there are some real wankas out there.

[j3pipercub]

Anyhow, in what may be a forlorn attempt to get this back on track. Has anyon seen this?

https://www.afr.com/street-talk/queensland-heavyweight-qic-bankers-up-for-virgin-bid-20200504-p54pja

[Chris2303]

Anyhow, in what may be a forlorn attempt to get this back on track. Has anyon seen this?

https://www.afr.com/street-talk/queensland-heavyweight-qic-bankers-up-for-virgin-bid-20200504-p54pja

This is paywalled

[j3pipercub]

Funny, wasn't when I read it.

try googling Virgin Australia and QIC in the news tab of google

[Hoosten]

He's a keen sailor, He's probably like a lot of us, love Sydney, but hate the absolute joke of an airport and anything associated with it.

[rmm]

It's straying from the topic but he's been checking in quite regularly. You only have to look at his public profile.
This may change now as he's been outed.

[Fliegenmong]

H's been outed??

[Hoosten]

It's straying from the topic but he's been checking in quite regularly. You only have to look at his public profile.
This may change now as he's been outed.

So you check to see if he's checking in? Why?

[rmm]

So you check to see if he's checking in? Why?
Purely & simply to see if he lived up too his word.

[galdian]

So are there still 20 tyrekickers (sorry, interested parties) circling VA?
Administrator's gotta say what he administrators gotta say, bit like a house auction where bids are submitted by persons only seen by the auctioneer in the far, far distance.

More questionable financials will be discovered to a point where VA becomes untouchable. Receivership.
Individual assets may then be released (primarily from an operational perspective Tiger AOC and VARA) who can regenerate as new entities and operate, grow and employ as they see fit.
If nothing else might minimise the VA Village mentality that has proven so....interesting.

Hopefully I'm wrong, IF some consortium comes along learn from the AN experience: if it contains a component of airline experience then there's a chance SOMETHING of an airline may be possible.
IF the consortium has NO component of airline experience they will just be there to rape and pillage and turn a profit by doing so. Refer Lew and Fox and AN2, couldn't run far or fast enough after stamping their little feet.

Macquarie might invest in infrastructure but they would NEVER invest in an airline; they may be brutal but they are in any game to make money, airlines (generally) do not. However if they can rip it apart.....

Twiggy? Buy the VARA component, run primarily as a closed airline, charge a sh*tload of $$ for seats charged to the mining ops, "airline" makes money, costs used as tax losses for the mining ops and guaranteed FIFO.

Alliance? Someone slides up and suggests an investment for expansion hope they'd say "yeah, maybe....but run the alliance way and no VA Village idiots", now THAT could be viable.

Cheers. :ok:

[Hoosten]

They may be brutal but they are in any game to make money

What I have noticed and experienced from this time is that there are a bunch of financial institutions being pragmatic about this mess. I know of Macquarie being extremely accomodating with obligations. Maybe they're thinking: it's better to delay receiving payment and getting it in full, rather than repossessing an object, trying to re-sell in a non-existent market and getting sweet f@ck all? On a bigger scale, are lessors thinking this way? Dunno.

I've been extremely impressed with a number of organisations (big ones) and the relief they're providing. I've benefitted in a number of ways, I'll remember who's provided it and who hasn't. I'm sure business will be doing the same. This is a big time for reputations to be made and destroyed. Perth Airport comes to mind, what an embarrassment. I'm sure that when things are back on track and money's being made, the airlines will unite against these arse-clowns, it's started already. How are Sydney and Melbourne airports behaving? It'll be interesting.

[Section28- BE]

"triple its earnings to $5B....."

ex Sky News link here: https://www.skynews.com.au/details/_6154160259001

Rgds
S28- BE

[ampclamp]

Revenue, earnings, turnover whatever...... how about a profit.

[Flaming galah]

Poor sunfish. He was destined to unravel the moment the injustice of the transgender lobby and feminists stopping schoolboys taking rifles on trams was perpetrated. Get well soon champ.

he seems a smart dude. I never agree with a word he says but the forum is a better place with him here.

[Hoosten]

I never agree with a word he says but the forum is a better place with him here.

Never? Not even once?

[3 Holer]

Being a cricket tragic, I would have liked to see Sunfish get those last two runs before retiring. 8000 looks better in the Cricketer's Almanac than 7998 but then again, he had a wicked sense of humour!

[veryoldchinahand]

Taking a cold hard look from a distance at VA as a business it seems to me that the 20 potential buyers eagerly circling this sought after prize asset are largely little more than administrators hype unless of course the creditors are prepared to largely write off the A$7 billion of debt.

Otherwise why would anyone believe that this is anything other than a dead dog of a business that has lost huge amounts of shareholders cash.

What is actually worth investing in ?

Some aircraft – no shortage of those at knock down prices.

Experienced management – plenty of those about who are almost certainly going to be better trained and more productive than the present mob.

Infrastructure - nothing there that is not easily replaceable and in the right location.

Customer base -fickle at best.

Brand – tarnished

Pilots – unfortunately no shortage of available experienced crew



The real value is perhaps only the possibility of profit to be made and value to be built at some time in the fairly distant future.

Any interested investor is almost certainly going to be a cashed up existing large operator with deep pockets and a strong supportive shareholder base looking for a long term strategic investment.

Are there any of those about at the moment ?

If not I rather suspect that Virgin Australia is in all likelihood unfortuantly another failed dead airline.

[Flaming galah]

Never? Not even once?

Poetic licence dictates I have to take a binary position: either I’m all in, or I’m all out.

[Hoosten]

Sorry about the late reply, I had to google that then understand it ;-)

[Buttscratcher]

Hey Galdian
Nice to see you here, though there's not much happening at the mo'
How's it all going?
Hope you're doing ok

[Section28- BE]

This maybe, relevant to all- that ARE 'In' it-

"the Administrators’ Proposed COI comprising 35 members representative of all categories of creditors."

Link to the 'said' proposed COI group/statement here: https://www2.deloitte.com/content/dam/Deloitte/au/Documents/finance/insolvency/virgin/deloitte-au-fa-virgin-group-circular-to-creditors-050520.pdf

Rgds
S28- BE

[galdian]

Greetings Buttscratcher

Enforced retirement for now (probably permanent, time will tell) due the MAX screwup but that leads into the CV situation.
Get to do stuff on the property to fill in time so better off than some.
Occasionally knock off some bunnies, very satisfying after you've assigned them some nemesis from the past! :)

Amazing how the pilot landscape's changed so violently in such a short time, started with the MAX courtesy Boeing and CV19 just keeps the fun rolling along.
Hope all OK for you and family.
Cheers :ok:

[machtuk]

"IF" VA comes back under some sort of guise they will come back in a very fragile market! The whole country has been decimated on so many fronts (forget the world) so yield will be low at least in the foreseeable future.
To make any attempt work the new "Co" will have to be a very lean operation. Now what can be cut!
Leasing? Hardly!
Maint? Nope!
Fuel? They wish!
Airways charges? Hardly!
Airport leases and associated costs? In yr dreams!
CREW/personel? Exactly!
The hunan element is the only area that can be squeezed & they will come flocking!
Interesting times ahead! If the flying game returns anywhere near pre the CV BS then it won't return for everyone!

[MickG0105]

This maybe, relevant to all- that ARE 'In' it-



Link to the 'said' proposed COI group/statement here: https://www2.deloitte.com/content/dam/Deloitte/au/Documents/finance/insolvency/virgin/deloitte-au-fa-virgin-group-circular-to-creditors-050520.pdf

Rgds
S28- BE
You might have noticed that despite the lengthy list of representatives on the COI there is no one representing customers who are currently holding travel credits.

That is because while the business remains a going concern no one holding a travel bank credit is considered a creditor; they are what are known as contingent creditors and the travel bank credits (what is usually known as Unearned Revenue) are contingent debt. Because of that contingent position the value of the travel bank has not yet been reflected in the business's declared $6.88 billion debt position. When you include those travel bank credits Virgin's truer liabilities are more like $8 billion than $6.8 billion.

And to a certain extent the contingent debt represented by the travel credits is more difficult to deal with for an administrator than noncontingent unsecured debt like bonds and bondholders. That's because unlike other unsecured debt that can be negotiated down, any prospective buyer really has no option other than honouring travel credits at full or close to full face value if they hope to bank on customer loyalty shoring up their market share on the other side, . That contingent debt becomes pretty much non-negotiable.

That's conservatively a $1 billion hit to revenue that any buyer is going to have to suck up in their first year of flying.

So, yeah, that odd shaped brownish object bobbing up and down at the deep end of the pool, that's not a Chokito.

[Vindiesel]

Virgin headed for another disaster, says REX chairman

https://www.afr.com/companies/transport/virgin-headed-for-another-disaster-says-rex-chairman-20200506-p54qb3
“Mr Lim said Virgin's EBAs had lumbered the airline with high fixed costs and they needed to be fixed while Mr Strawbridge had the powers of an administrator and before the release of a deed of company arrangement.

"It is well known that in the last 10 years Virgin's management has been extremely lax and extremely non-courageous in their negotiations over EBAs," Mr Lim said”

[Colonel_Klink]

"IF" VA comes back under some sort of guise they will come back in a very fragile market! The whole country has been decimated on so many fronts (forget the world) so yield will be low at least in the foreseeable future.
To make any attempt work the new "Co" will have to be a very lean operation. Now what can be cut!
Leasing? Hardly!
Maint? Nope!
Fuel? They wish!
Airways charges? Hardly!
Airport leases and associated costs? In yr dreams!
CREW/personel? Exactly!
The hunan element is the only area that can be squeezed & they will come flocking!
Interesting times ahead! If the flying game returns anywhere near pre the CV BS then it won't return for everyone!

Well actually....

- Leases: Good chance the leases will actually be cheaper - and if the leasors dont come to the party in any new business, they can have their aircraft back, because all won’t be required. And as an aircraft owner, you would not want to own second hand jets at the moment.

- Fuel: Not sure if you have seen the price of oil at the moment. But in a soft economy, that price of fuel isn’t going up in a hurry any time soon.

- Maintenance: You’re quite possibly right here. But less flying means less maintenance overheads.

- Airport leases: Yup fair enough.

- Staff wages: Again you are probably right. Having said that, if the airline is sold as a going concern, all employee EAs remain in force. That of course doesn’t stop a new owner from shrinking the workforce, or unions negotiating with new owners to keep more people employed but on lower Ts and Cs.

Very simplistically airline costs are 1/3 fuel, 1/3 employee costs and 1/3 fixed overheads. Those fixed overheads also include real estate leases etc etc. All of which you’d expect to be up for renegotiation.

This certainly doesn’t mean things will be fine and beaut. Obviously things aren’t going to be great at Virgin for quite a while. To start from an almost $0 revenue position is going to be very very difficult.

Once travel restrictions are lifted, I am planning on being on 50% salary for 12-18 months. From that point who knows - but any serious buyer of VA would (you would hope) understand the market they are getting themselves into. And assuming it’s not bought by private equity with the intention of chopping it up, or flicking it in 3 years time, within the medium term, it COULD be a profitable business.

[SecretAngel]

To make any attempt work the new "Co" will have to be a very lean operation. Now what can be cut!
Leasing? Hardly!
Maint? Nope!
Fuel? They wish!
Airways charges? Hardly!
Airport leases and associated costs? In yr dreams!
CREW/personel? Exactly!
The hunan element is the only area that can be squeezed & they will come flocking!
I don't think that's quite right. Aircraft and airport leases could both quite possibly be reduced. For aircraft, that's pretty straightforward - there's a global surplus of aircraft, and the administrator has the power to cancel contracts, which means they can credibly say to lessors, "You can keep your lease, at an X% discount, or we'll cancel it and talk to the other lessors."

For airports it's a bit trickier because most airports are monopolies in their city, but still possible because the administrator only needs a majority of creditors to agree to their plan - they can say "Agree to a discount now, or we'll cancel the contract and you can try to renegotiate it in an environment where your terminals are half empty and VA only needs two thirds of the floor space."

Obviously, maintenance activities can't easily be cut. But there may be savings to be had on parts and labour. There'll be a glut of parts, and a lot of MRO shops hunting for business

Fuel and charges - agreed.

Also, don't forget all of the other supplier costs - catering, uniforms, cleaning etc. All of that is up for negotiation too.

[machtuk]

It's only my take on it, nobody knows for sure how and even if VA will come back. The 'human' element covers most of the day to day operations not just the guys at the pointy end.
Fuel will get more expensive once the thruput goes up in fact 'if' normality returns then everything cost wise will rapidly increase, just not wages, that's the bit that can be 'fiddled' with. Bit like'89 that was a turning point in aviation as far as conditions go so will this disaster!

[KRUSTY 34]

Gotta agree with machtuk.

Workplace T&C’s will be squarely in the sights of any future owner.

Assuming VA can be saved?

[Colonel_Klink]

Gotta agree with machtuk.

Workplace T&C’s will be squarely in the sights of any future owner.

Assuming VA can be saved?

Workplace Ts and Cs will be squarely in the sights of all airlines at the moment. QF pilots are very fortunate they signed off EAs before the real damage of this pandemic was known.

I don’t envy JQ pilots having to essentially restart negotiations in the current climate.

And I certainly don’t envy VA pilots who’ll be no doubt asked to take pay cuts to save jobs, and even then you’d have to question whether or not it will be enough to save all jobs.

[normanton]

I don’t envy JQ pilots having to essentially restart negotiations in the current climate.
I think you will find for once it's the company wanting to restart the negotiations!

Agreed about the Qantas LH EBA. Very lucky indeed. If a NO vote won the subsequent negotiations would have been a blood bath.

[Section28- BE]

The following extracts ex the Deloitte/Virgin webpage (https://www2.deloitte.com/au/en/pages/finance/articles/virgin-australia-holdings-limited-subsidiaries.html) and the Administrators correspondence to "Unsecured Noteholders" of 06 May:

'SEEKING EXPRESSIONS OF INTEREST IN RESPECT OF NOTEHOLDER CONSULTATIVE COMMITTEE'

And: 'We also refer to the following notes issued by Virgin Australia Holdings Limited:

USD350M 7.875% unsecured senior notes due 2021.
AUD150M 8.25% unsecured fixed rate notes due 2023.
AUD250M 8.075% unsecured fixed rate notes due 2024
USD425M 8.125% unsecured senior notes due 2024
AUD325M 8% unsecured senior notes due 2024

(together the “Notes”).'

The 'margin' is interesting ('I' thought ???), given the times relative to the broader economy and global rate cutting/quantitative easing etc. by Central Banks of recent years. Be a tough 'Gig' chairing/running this 'consultative process'................, I would have thought.

Rgds
S28- BE

[Paragraph377]

The following extracts ex the Deloitte/Virgin webpage (https://www2.deloitte.com/au/en/pages/finance/articles/virgin-australia-holdings-limited-subsidiaries.html) and the Administrators correspondence to "Unsecured Noteholders" of 06 May:

And:

The 'margin' is interesting ('I' thought ???), given the times relative to the broader economy and global rate cutting/quantitative easing etc. by Central Banks of recent years. Be a tough 'Gig' chairing/running this 'consultative process'................, I would have thought.

Rgds
S28- BE
The percentages are quite high but that’s most likely because of the element of ‘risk’ associated with said loans. Although not huge amounts in the context of a large business with 10,000 staff, aviation is/has always been a risky venture to invest/loan money to. The publicised national interest rates although at an altime low in Australia and the USA are predominately aimed at those with cash in bank (robs them of interest). Interest rates for home buyers, businesses, car loans etc are normally much higher than the published Reserve Bank official rates. The whole fractional banking system is a Ponzi scheme set up to enrich the 1% while screwing over the remaining 99%. Central banks should be called the Mafia because that is what they are. Negative interest rates, quantitative easing, whoever heard of such BS. They are desperate to keep the Ponzi scheme going. Good luck with that. The string has been unravelling bit by bit but has really sped up recently. Sadly, there is no value in the VA carcas. And as for QF, I wouldn’t believe everything you read. They too have numerous creative measures that they employ to ensure the business looks healthier than what it is. As long as the right boxes are ticked (tricked) on paper and the Big Dogs are getting their bonuses the rest of the business is just ‘stuff’.

When will people understand that the system is rigged.

[Ragnor]

I don’t envy JQ pilots having to essentially restart negotiations in the current climate..

I don’t think there will be any mention of negotiation until 2021. JQs focus will be on the business and I’m happy with that. I’m sure there will be ppl who disagree and think they deserve more.

[Lookleft]

If the chest beating PIA hadn't taken place an agreement may well have been reached before the C19 shutdown. There will probably be a wage freeze for at least two years and no back pay when an agreement is signed. Whats the bet that single sector BOC will be no longer rostered.

[Flaming galah]

I'm sorry to see him go.

It will be impossible for him to post under a new user name, without being instantly recognisable.

He has had a great deal of grief to deal with, that may have coloured his postings at times. But he does have more professional experience than most of you will give him credit for. You lot love to think because you've got an ATPL and a jet command or right seat that you're experts in everything else. It's the Type A pilot way.

I don't know him, I know of him and I know his qualifications through a few sources. I reckon he'd be an interesting dude to have a beer with.

And why the **** not can a bloke in his 70's have a chat about his travels, whether they're first, business or economy, he's earned it. If you see this is as rubbing your nose in it, you're a bit fragile.

Hoosten has been banned? Conspiracy theorists may assume that’s evidence he was Sunfish’s alter ego.

[krismiler]

QF Pilots have a strong company and a strong union, they are likely to be able to maintain their T&Cs unless the company is still experiencing heavy losses in 6-12 months time. Obviously their Pilots will be earning less as flying pay, overtime, duty allowances, night stop allowances etc will down due to less flying, but the basic structure should still be intact.

A new pay deal will be high up on the list of any potential purchaser of VA, who will want to know the exact running costs of the new entity. No one will agree to buy and start enterprise bargaining with the workforce once they take over. A 2 year agreement on similar terms to JQ is likely to be on the table and needs to be signed off before any sale goes through.

[Icarus2001]

and the administrator has the power to cancel contracts, which means they can credibly say to lessors, "You can keep your lease, at an X% discount, or we'll cancel it and talk to the other lessors."
Well that is partly true I guess. One could also say that the the lessors can force liquidation to recoup some of their contracted lease fee.
The administrators cannot wave a magic wand to make debt disappear. If enough creditors agree they can force liquidation.

[aroa]

Very educational to read thu this thread. Only have a PHD in the School of Life.
Sorry about Suuny, At least he was correct about the regulator we have. We can blame ourselves for that...never united enough to tell CAsA to Foxtrot Oscar. Altho I see of recent times that Phil Hurst has the cajones to tell ;em their latest brain fart is crap.
Some laughs along the thread way too , but top marks go to Junior for the Downfall exerpt. A winner !!
Best belly cackle for years Thanks.

[ozbiggles]

Krismiler, I hope you are right regarding Qantas but I don’t see how? The PM today just said international travel is not even on the radar and jobkeeper runs until October I think. Using AirNZ /BA as an example everyone is going to have to take a hit, it is just a matter of how many and how much. Anything else just isn’t plausible in the short term. The same for VA if it comes back no doubt at all.

[ozbiggles]

Your opinion matters to me angryrat!
I’m slightly confused but I will work on it!
On the positive side at least there will be some bumper tax returns in Jul 2020 and 21

[Colonel_Klink]

A new pay deal will be high up on the list of any potential purchaser of VA, who will want to know the exact running costs of the new entity. No one will agree to buy and start enterprise bargaining with the workforce once they take over. A 2 year agreement on similar terms to JQ is likely to be on the table and needs to be signed off before any sale goes through.

Whilst it may be high up on the list of a potential purchaser’s To Do list - it absolutely doesn’t not need to be signed off before any sale goes through - and any suggestion that it does, is a complete nonsense.

[krismiler]

Any purchaser is in a much stronger negotiating position before a sale goes through as he can always threaten to pull out if he doesn't get what he wants. Once the sale is finalised, the employees position becomes more equal as money has been committed and laws governing workplace rights come into play.

The buyer of VA would be crazy not to take full advantage and insist on a comprehensive pay agreement being in place prior to signing on the dotted line.

[C441]

As posted on another thread….
The most recent basic Pilot's award (https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=11&ved=2ahUKEwjl27m7-6PpAhXfzjgGHXZMCXEQFjAKegQIBRAB&url=https%3A%2F%2Fwww.fairwork.gov.au%2FArticleDocuments%2F8 72%2Fair-pilots-award-ma000046-pay-guide.pdf.aspx&usg=AOvVaw3t4MeLpTrLWEwyVySKQ9St) as published by Fair Work.

Let's hope it doesn't come to this…...

[MickG0105]

... the administrator has the power to cancel contracts ...
An administrator cannot cancel contacts unless there is a clause in the contact permitting the company to void the contract if it enters administration. These are known as ipso facto clauses. Such clauses that work in favour of the party entering administration are extraordinarily rare. Ipso facto clauses normally run the other way, they typically provide certain rights of relief to one party if the other party enters administration. However a recent amendment to the Corporations Act 2001 (specifically section 451E Stay on enforcing rights merely because the company is under administration etc.) now limits the enforcement of certain rights arising from ipso facto clauses.

A liquidator can disclaim a contact outright. The best that an administrator can do is repudiate contracts requiring performance by the company that the administrator cannot meet, such as the payment of monies that the administrator does not have. A repudiated contract is not cancelled, it is still in effect and the counterparty can sue for breach of it.

[chance]

Richard Branson is still in the game for Virgin V2 . According to the AFR he is potentially linked to Cryrus Capital Partners (who were one of the backers of Virgin America) and The Australian says he is linked to Bain in the final four contenders identified by Deloittes. The bad smell will not go away it appears and the Virgin name will still be on the tail.

[topend3]

Wouldn’t surprise me in the least. Branson is chasing ‘money for jam’. Allowing the Virgin name and logo to remain on the aircraft and in the company earns him millions and millions of dollars per year for not having to lift a finger. Australia can do better than that. This is VA’s opportunity to start fresh with a clean sheet of paper. Why should the new company be connected to that pathetic git from the tax free haven of Necker island? VA mk 2 can surely do better than that. Branson is outdated, he isn’t an iconic brand. He is an opportunist and isn’t need in our country.

You talking about Aus or NZ?

[BNEA320]

An administrator cannot cancel contacts unless there is a clause in the contact permitting the company to void the contract if it enters administration. These are known as ipso facto clauses. Such clauses that work in favour of the party entering administration are extraordinarily rare. Ipso facto clauses normally run the other way, they typically provide certain rights of relief to one party if the other party enters administration. However a recent amendment to the Corporations Act 2001 (specifically section 451E Stay on enforcing rights merely because the company is under administration etc.) now limits the enforcement of certain rights arising from ipso facto clauses.

A liquidator can disclaim a contact outright. The best that an administrator can do is repudiate contracts requiring performance by the company that the administrator cannot meet, such as the payment of monies that the administrator does not have. A repudiated contract is not cancelled, it is still in effect and the counterparty can sue for breach of it.
& then there were no bidders at all.

Rex plan looking the best by far now, but how long before they have enough aircraft to fly to the regions like CNS ?

Wonder if they fast tracked, if V2 doesn't happen, how quickly they could be flying B738s around, probably ex VA, wirth ex VA crews.

[slice]

There is NO fast tracking with CASA. Many many months at a minimum. Rex would have to stand up an entire Operational structure that would more or less be separate to its current operation, and then have it approved by CASA.

[SecretAngel]

An administrator cannot cancel contacts unless there is a clause in the contact permitting the company to void the contract if it enters administration. These are known as ipso facto clauses. Such clauses that work in favour of the party entering administration are extraordinarily rare. Ipso facto clauses normally run the other way, they typically provide certain rights of relief to one party if the other party enters administration. However a recent amendment to the Corporations Act 2001 (specifically section 451E Stay on enforcing rights merely because the company is under administration etc.) now limits the enforcement of certain rights arising from ipso facto clauses.

A liquidator can disclaim a contact outright. The best that an administrator can do is repudiate contracts requiring performance by the company that the administrator cannot meet, such as the payment of monies that the administrator does not have. A repudiated contract is not cancelled, it is still in effect and the counterparty can sue for breach of it.
​​​​​​Yeah, that's a fair call. It's only once the Administrator is at the point if proposing a deed of company arrangement, which is wherecwhere VA is heading, that contracts can be cancelled - with the agreement if the majority of creditors by number and value. The Administrator just has greater capacity to not comply with contractual obligations up til that point, since there are limits on creditors suing for enforcement or winding up while the company is in administration.

[Sunfish]

Informed people are now asking how long Qantas can remain solvent. same with Universities. The suggestion is in all cases whole layers of management will need to be removed. The corollary to this is that the MBA is a dead letter; actual experience of that which you are managing will again (shock horror) become a prerequisite for senior roles......and perhaps Directorships.

[j3pipercub]

Welcome back.

[das Uber Soldat]

Didn't he quit with much fanfare?

[Mach E Avelli]

Sunfish can’t help it. Not only Is he back, but banging on about Qantas and universities on a thread supposedly about Virgin. ADHD?

[Double_Clutch]

SUNNY, your back!

[normanton]

He just couldn't help it.

[Lookleft]

Qantas is already talking about restarting domestic flights in July STGA.. They are in a very different position to VA. BTW someone must have found some heavy duty disinfectant to apply to the dummy.

[Denied Justice]

Qantas starting in July will also reveal the true situation as to how Virgin (or a successor) is able to operate domestically (if at all).

[Green.Dot]

Welcome back Sunfish! That didn’t last long!

[rmm]

He never went away, he was always lurking in the background.

[megle2]

Sunny good to see you back

[DirectAnywhere]

Sunny good to see you back

Until next time...

[Chris2303]

SUNNY, your back!

what's wrong with his back?

[machtuk]

Remember the 'Sun' always rises.:O

[Slezy9]

See you in a couple of months Sunfish. You leaving pprune must be almost into double digits by now.

18 days... Can't help himself

[MelbourneFlyer]

Bain and Cyrus "are the dual and duelling finalists in line to buy Virgin Australia for up to $4 billion". BGH bundled out, in a surprise move.

https://www.executivetraveller.com/news/virgin-australia-bain-cyrus

From what I've read, Bain wants Virgin 2.0 to be more 'hybrid' while Cyrus is closer to the Scurrah's own plans to remain full-service and also swap the A330s and B777s for B787s down the track.

[Buster Hyman]

Sir Richard Branson's Virgin Group has held discussions with both Bain and Cyrus is understood to be ready to support the winning consortium (https://www.executivetraveller.com/news/virgin-australia-administration-branson) with a cash injection to help recapitalise the airline, along with dropping or steeply discounting his annual $15 million Virgin brand franchising fee at least over the next few years until the airline is back on its feet and back in the air.

My money's on whoever tells that grinning fool to :mad: off!

[industry insider]

I hope for the hard working loyal employees' sake that Bain and Jayne don't win. But at least it will be fun boys and girls. Free FA singing lessons start next week.

[normanton]

Branson should be banned from having any involvement again. Didn't stump up the money last time, well then get stuffed!

[Icarus2001]

The fee to Branson is not a huge drain, imagine the cost of an immediate rebranding.

["Littlebird"]

Is it permissible for the winning bidder to change the name of the airline?

I would be quite certain that the airlines patronage had nothing to do with the name painted on the aircraft.
How is it financially jusitfiable for a new owner to pay million's of dollars a year for naming rights for a business that has rarely ever made a profit?
It makes no sense that Branson keeps getting money for nothing.

Actually, the airlines patronage has a lot to do with the branding. Branding is everything! It's an art in psychology. For example. Imagine McDonalds is sold tomorrow and the new owner renames the business and changes the branding. How do you think the new business will go? Why do you think a sour faced Kardashian or I need to go to the toilet face, Justin Bieber, get paid millions to photograph with a product and the product goes to sell billions? No doubt it's contributed to branding. It plays a big role and Branson knows it.

As far as the business never making a profit goes...You can blame the 'look at my new Maserati' whilst I do the Captain Concordia shuffle for that!
The current CEO Paul, had the airline back on track and trending well before all this Covid business broke out.
L.B

[Colonel_Klink]

Interesting point....my understanding was originally Branson was paid royalties as a percentage of REVENUE. This was then re-negotiated as a flat fee. You would think any deal would, as you said above, would make any payments as a percentage of profit.

[Oz Pilot]

Multiply that 15m x 20yrs, and you don’t think it’s huge? Wake up

[mrs nomer]

If you look at it from a minimum entry cost perspective, it will be much cheaper to pay a royalty then spend millions on re-branding. So, I reckon the name will stay for the time being, but the basis of royalties payable will be re-negotiated.

[MickG0105]

The current CEO Paul, had the airline back on track and trending well before all this Covid business broke out.

The FY20-H1 Interim Report that he handed down in February would roundly contradict that notion; they were the worst half year results since the GFC putting the business on track for a $500 million loss this FY, and that was before the coronavirus crisis had hit.

Here's an inventory of CEO Paul's achievements as at 31 December 2019,

- Paid $700 million for 35 percent of Velocity that had been sold five years earlier for $355 million.

- Funded the Velocity transaction entirely by raising debt; a $750 million notes issue at 8 percent interest.

- In just that single transaction managed to send the net equity of the business underwater (liabilities exceeding assets) to the tune of over $100 million.

- Allowed non-fuel operating costs to go up by over four percent when the business was meant to be cost cutting.

- Saw labour costs go up by 6.5 percent in the course of a 'rightsizing' program that should have been decreasing them by 5.5 percent.

- Knocked nearly 40 percent off the profitability of the domestic operation.

- Managed to spend $2.70 for every dollar of extra revenue gained.

- As noted earlier, delivered the worst half-year result since the GFC that included a 42 percent reduction in EBIT margin.

[normanton]

The current CEO Paul, had the airline back on track and trending well before all this Covid business broke out.
L.B
Come again?

[Servo]

Interesting that for the last number of weeks PS has been talking up the Administration and everything would be ok, come out the other end in one piece, but stronger.

Latest post now says that there is no doubt the airline will be coming out the other side a lot smaller (smaller than before) and staff should be prepared for job losses. Would seem all the wonderous support replies and thanks have dried up. Certainly didnt see any....................

When the music stops, I probably wont have a chair.

[Pundit]

Guys, it doesn't matter whether you like the grinning woolly jumper or not, if he is in the successful bid, he is in.

It would be unusual if either bidder kept the current management team.

[chookcooker]

Interesting that for the last number of weeks PS has been talking up the Administration and everything would be ok, come out the other end in one piece, but stronger.

Latest post now says that there is no doubt the airline will be coming out the other side a lot smaller and staff should be prepared for job losses. Would seem all the wonderous support replies and thanks have dried up. Certainly didnt see any....................

When the music stops, I probably wont have a chair.
Please quote where he said it would be a “lot smaller”

[Servo]

Please quote where he said it would be a “lot smaller”

My apologies. He states "smaller than before".

[tail wheel]

You would think any deal would, as you said above, would make any payments as a percentage of profit.

Franchise fees are normally either a fixed sum, percentage of turn over or combination of both.

The franchisor provides a name, business system and goodwill. The franchisee takes the business risk.

$15 mill for Virgin Australia is probably reasonable as franchises go.

[MickG0105]

Franchise fees are normally either a fixed sum, percentage of turn over or combination of both.

The franchisor provides a name, business system and goodwill. The franchisee takes the business risk.

$15 mill for Virgin Australia is probably reasonable as franchises go.
​​​​​​The arrangement with Branson isn't a franchise, it's a brand licencing agreement. With a franchise you ordinarily get access to business systems, training, group marketing, product and the like. Under a brand licence agreement you get to display the brand, typically within fairly rigid guidelines on usage. They are markedly different commercial arrangements.

The main thing keeping Branson at the table at the moment is the confluence of the one-off cost of rebranding (it'd likely be $8-12 million just to repaint the fleet) and the typically short term focus of new investors. Just back-of-the-napkin, assuming no leakage on loyalty, ditching Branson and rebranding would only become NPV positive on a 3-4+ year investment horizon.

[Buster Hyman]

​​​​​​... the one-off cost of rebranding (it'd likely be $8-12 million just to repaint the fleet)
Well, if they call it Tigerair, they can tell him where to go & part of the fleet is already re-painted...:}

[wheels_down]

Pretty sure SIA get a licensing fee from Virgin for the Tigerair brand also (why the heck you would pay for the brand is beyond me)

[Icarus2001]

Multiply that 15m x 20yrs, and you don’t think it’s huge? Wake up $15 million fee for a business generating $5 billion A YEAR, a cheap deal. You wake up.

[normanton]

$15 million fee for a business generating $5 billion A YEAR, a cheap deal. You wake up.
Yeah too bad they don't make money. You need to wake up mate.

[j3pipercub]

nO yOu wAkE uP

[Chad Gates]

My money is on Cyrus. It will stay Virgin Australia, and be a similar structure, although smaller than before. That’s my “best outcome” Thumbs up emoji

[The Bullwinkle]

My money is on Cyrus. It will stay Virgin Australia, and be a similar structure, although smaller than before. That’s my “best outcome” Thumbs up emoji
Agreed! Can't imagine the unions voting for Hardlicker!

[Blueskymine]

I can’t help but feel that Carla (she loves being called that by the way - she got stuck into the union boys for its use on here) will just finish the job that the mail room boy started.

So for my comrades at Virgin - pray to whatever god you choose that it’s not led by her.

[The Bullwinkle]

I can’t help but feel that Carla (she loves being called that by the way - she got stuck into the union boys for its use on here) will just finish the job that the mail room boy started.

So for my comrades at Virgin - pray to whatever god you choose that it’s not led by her.
That's what I envisage happening!
The Borghetti experiment going up against his old company was a complete and utter failure.
Can only imagine her trying the same and achieving equally disastrous results!

[Denied Justice]

Agreed! Can't imagine the unions voting for Hardlicker!

I don't think they will have much say in it.

[The Bullwinkle]

I don't think they will have much say in it.
Pretty sure they will. Employees giving their respective unions 9000 proxy votes should give them some say in it.
It’s ultimately the creditors who decide and hopefully 9000 votes will go against Bain.

[Icarus2001]

Employees giving their respective unions 9000 proxy votes should give them some say in it.

When a poll is conducted, a resolution is passed if both:

more than half the number of creditors who are voting (in person or by proxy) vote in favour of the resolution
those creditors who are owed more than half of the total debt owed to creditors at the meeting vote in favour of the resolution.

This is referred to as a ‘majority in number and value’. If a majority in both number and value is not reached under a poll (often referred to as a deadlock), the chairperson has a casting vote.

https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors/

[Section28- BE]

What 'Mr Icarus', said..... Number and Value!!!!

This is referred to as a ‘majority in number and value’. If a majority in both number and value is not reached under a poll (often referred to as a deadlock), the chairperson has a casting vote.

ex Mr Bullwinkle- hopefully 9000 votes will go against Bain - that then, yields $450 million in 'Weighted' Value.

The 'Chairperson' has...- and 'it', has all been mentioned time and again.......... on this journey.

Go Well....
Rgds
S28

[Rashid Bacon]

The administrator will do what's best for the creditors and $450 million v $6.8 billion in debt just won't work in a voting sense, so can't see how staff creditors can meaningfully affect an outcome here.

[non_state_actor]

The administrator will do what's best for the creditors and $450 million v $6.8 billion in debt just won't work in a voting sense, so can't see how staff creditors can meaningfully affect an outcome here.

The staff vote can force the decision back to the chairman. If the creditors and the majority debt holders can't agree then it's Deloitte's call. Ironically the process is somewhat stacked against the debt holders.
The trap for the administrators is to screw the debt holders and then wind up in court justifying your actions. Similar to what happened here and ended up with ANZ settling out of court: https://www.abc.net.au/news/2016-05-30/pankaj-radhika-oswal-sue-anz-receivers-burrup-fertilisers-sale/7460634

[Progress Wanchai]

Pretty sure they will. Employees giving their respective unions 9000 proxy votes should give them some say in it.
It’s ultimately the creditors who decide and hopefully 9000 votes will go against Bain.

It’s highly unlikely the employees will decide which way this swings. Bare in mind that if the secured creditors aren’t satisfied with the administration outcome, they always have the option of calling in the receivers. Tread carefully.

Sure this is a chat forum. But claiming to make a sound decision regarding the bankruptcy of your airline based on a rumored CEO/chairmwoman v the other bidders empty chair is a fair indication of the stress we are all under right now.

The idea to rebrand the airline also appears more emotional than logical. Any agreements (including 10,000,000 Velocity members, thousands who have purchased yet to be honored VA tickets and all it’s employees past, present and future entitlements) are between the concerned party and VA. The legal cost of rewriting those agreements and the data transfer that would involve would far outweigh any perceived benefit. And I can’t think of any airline that successfully emerged from administration under a new name. What would be the point? The buyer gets an AOC for the bargain basement price of a few billion plus the entitlements of 10,000 employees? The primary reason for the purchase of Virgin is for the brand. It might appear toxic for the employees on the inside (just as Apple is for its employees or football teams are to their players) but for the consumer it’s identifiable and marketable.
You don’t buy a “good airline but a bad business” to then change its name.

[Section28- BE]

Link here: https://www.afr.com/companies/transport/how-to-remake-an-airline-in-uncertain-times-20200604-p54zw7

Extract here (bolding):What Virgin Mark II will look likeJemima Whyte (https://www.afr.com/by/jemima-whyte-gkpi1r) Senior reporter

Updated Jun 5, 2020 – 5.39pm, first published at 5.00pm

We finally have a picture of what Virgin Australia Mark II might look like. It's union-friendly, retains at least two-thirds of its domestic fleet and is firmly focused on the leisure market.

Or at least, that's the slightly surprising-looking future based on the details leaking from the process of finding a new owner for the collapsed airline being run by administrator Deloitte.

Union leaders, including the National Secretary of the Transport Workers Union, Michael Kaine, are spending a lot of time with Virgin bidders. AAP

The amount of time New York hedge fund Cyrus Capital and private equity group Bain Capital are spending (https://www.afr.com/companies/transport/cyrus-bain-make-final-virgin-cut-20200602-p54yu9) with various unions, which represent most of Virgin's 9000 employees, is an indication of how much these bidders want the unions on side.

Binding offers from Cyrus and Bain, named this week as the final contenders for Virgin, aren't due until June 22, and creditors will meet in mid-August to approve a sale or put the company in liquidation.

The US funds will spend the next few weeks combing through the details, meeting with stakeholders and, of course, gauging how quickly they can get their money back running an airline in a constantly changing environment.

There are at least two obvious wild cards at play before any deal is done: the role of the bond holders and the quickly shifting domestic aviation environment. That's assuming a deal is done at all, and there are plenty of parties who say they are unsure about the prospect of a sale.

What looked ambitious just a few weeks ago – getting more than 40 planes in the air by the end of July – is now possible. In fact, Qantas said this week it expected to be back to 40 per cent of its pre-COVID-19 domestic capacity by July. (https://www.afr.com/companies/transport/qantas-moves-to-resume-flights-20200604-p54zdw)

Qantas' full plan includes ramping up domestic capacity from 5 per cent to 15 per cent by the end of June – the equivalent of putting on about 300 more weekly return flights. It's a way of helping the airline meet demand and defray the costs of owning a fleet and paying staff.

Industry rule of thumb – though these vary wildly – is the lease cost on a mid-life narrowbody aircraft would be about $250,000 a month.

'It's really just guesswork'

"Scope of operations", it was said, was key in selecting the final two bidders, with 80 planes the rough level that Virgin is expected to be able to effectively compete with Qantas. Where that leaves the final dollar number – something the bond holders will watch closely – isn't clear.

Deloitte picked the two final bidders apparently based on their commitments to keeping about 80 or so of Virgin's 130 domestic planes in the fleet and plans to quickly get them flying again, subject to demand.

"It's really just guesswork at this stage," says aviation expert Peter Harbison, executive chairman of CAPA Centre for Aviation, when asked about the environment in which a resurrected Virgin will operate.

Recreating Virgin's international network will be challenging, he says: "You'd want to keep away from that for at least a year."

So what about the domestic corporate market? That's looking tough as well, he says, noting that traditionally the business segment has been both profitable and strategically important for Virgin.

A commitment to keeping the planes – assuming the bidders stick to it – is interesting, because many saw the administration as an opportunity to reset the cost base, of which leases were one part.

What looked ambitious just a few weeks ago – getting more than 40 planes in the air by the end of July – is now possible.

"It [the airline] has got to have lower costs, that doesn't mean having fewer flights ... and if you can come out of administration and only lose 15 per cent of jobs, you are looking pretty good as well," Mr Harbison said.

While the unions are getting plenty of attention, and the employee vote is important in getting a deal approved, the bond holders seem oddly quiet.

For weeks, the bond holders have been banding together, (https://www.afr.com/companies/transport/how-bond-investors-might-take-control-of-virgin-sale-process-20200424-p54n1l) appointing Farraday and Corrs Chambers Westgarth as their advisers.

Representing as much as $1.8 billion of the total $6.8 billion owed, the bond holders are significant in numbers. One estimate is about 5000 owners, made up mainly of people holding the ASX-listed notes. Of those retail notes, most are Australian.

The creditors will be asked to approve any sale based on both a majority of numbers and value, and if there's a split, the administrator has the casting vote. On numbers and value, the bond holders represent an important creditor group.

There's been talk of needing a pay-out as others say they are unlikely to get anything, and even whispers of debt to equity swaps and alternative offers. How an improved domestic operating environment feeds into that remains to be seen.RelatedVirgin bidders lay out planned job losses (https://www.afr.com/companies/transport/virgin-bidders-lay-out-planned-job-losses-20200603-p54z66)So far, there has been no real action despite the endless discussions. Time is running out and any move, if one is to be made, must come soon.

Crystal-ball gazing for the new Virgin (which will only have that name if the bidder strikes a deal with Richard Branson's Virgin Group) is complicated.

Mr Harbison says it will be interesting to see how prime-time slots at Sydney Airport are awarded, if the new Virgin gives some up, and whether that will be overseen by the competition regulator.

But he's clear on one part of Virgin's future. "Two months ago this airline was owned by four international airlines. The primary goal was to deliver traffic to international airlines," he says.

"Making a profit wasn't top of the list. That will change."

Jemima Whyte (https://www.afr.com/by/jemima-whyte-gkpi1r) writes on business, specialising in companies, capital markets and innovation. Jemima has reported on business for The Australian Financial Review for more than 13 years. Email Jemima at [email protected]

Rgds
S28- BE

[MickG0105]

It’s highly unlikely the employees will decide which way this swings.
The employees, by virtue of numbers, can block any proposed Deed of Company Arrangement. They are the only creditor grouping with that power. Don't think for a moment that the unions do not understand that. They will have a big say in terms of which way this swings. Why do you think BGH were handed their hat?

And I can’t think of any airline that successfully emerged from administration under a new name.
Pinnacle Airlines in the US. They emerged from Chapter 11 as Endeavour Air.

The primary reason for the purchase of Virgin is for the brand.
The brand would not be in the top 4 reasons for trying to resurrect VA leave alone being the primary reason. You only need to ask the question, 'Everything else being equal, if it wasn't called Virgin Australia would there be as much interest?'
​​​​​​​

[Blueskymine]

The employees, by virtue of numbers, can block any proposed Deed of Company Arrangement. They are the only creditor grouping with that power. Don't think for a moment that the unions do not understand that. They will have a big say in terms of which way this swings. Why do you think BGH were handed their hat?


Pinnacle Airlines in the US. They emerged from Chapter 11 as Endeavour Air.


The brand would not be in the top 4 reasons for trying to resurrect VA leave alone being the primary reason. You only need to ask the question, 'Everything else being equal, if it wasn't called Virgin Australia would there be as much interest?'


the primary reasons for the purchase of Virgin are for the footprint it occupies. The slots. The terminals, the gates, the facilities. All barriers to entry into the Australian market for a new player.

It could/will be called whatever they like.

The rest is academic.

[MickG0105]

the primary reasons for the purchase of Virgin are for the footprint it occupies. The slots. The terminals, the gates, the facilities. All barriers to entry into the Australian market for a new player.

It could/will be called whatever they like.

The rest is academic.
Agreed. The AOC would be well toward the top of the list of reasons.

You can apply a very simple little thought experiment; think of a criteria (AOC, terminal leases, Sydney slots, whatever), imagine it was absent, ask yourself whether you'd still be interested in buying the airline.

[Lookleft]

The employees, by virtue of numbers, can block any proposed Deed of Company Arrangement. They are the only creditor grouping with that power. Don't think for a moment that the unions do not understand that. They will have a big say in terms of which way this swings. Why do you think BGH were handed their hat?

The only experience I have is what I saw and went through during the Ansett administration. Just to be clear Ansett didn't just suddenly stop flying, it was in administration for 5 months flying a limited service with the support of the ACTU. So the unions were well and truly represented during the whole period when KM were negotiating the sale to Fox and Lew. Lindsay Fox in particular was very chummy with the unions through his association with Bill Kelty. At the end of the day it didn't matter and the employees and the unions were left high and dry when the people with the money decided at literally the last minute to not proceed with the purchase.

My advise to any Virgin employee is not to put your faith in the union to secure the deal despite what they say because they can't force Bain or Cyrus to buy the airline if at the last minute they choose not to. The most devastating statement I heard during the whole Ansett debacle was Greg Combet on the news stating "There are no jobs to be saved at Ansett.".

[crosscutter]

Had a giggle today and was taken by surprise.

I was told KM was brought into the Bain bid because of the positive relationship it has with union secretaries and presidents.

KM is there to win sections of the union voting block. Not my opinion but from the horses mouth.

[Buster Hyman]

At the end of the day it didn't matter and the employees and the unions were left high and dry when the people with the money decided at literally the last minute to not proceed with the purchase.
We were going to be left 'high & dry' regardless. It was a opportunistic asset grab that parked the staff in Queenscross & the assets in Tesna so they were protected. We have SYD Airport to thank for saving us from more pain.

[MickG0105]

The only experience I have is what I saw and went through during the Ansett administration. Just to be clear Ansett didn't just suddenly stop flying, it was in administration for 5 months flying a limited service with the support of the ACTU. So the unions were well and truly represented during the whole period when KM were negotiating the sale to Fox and Lew. Lindsay Fox in particular was very chummy with the unions through his association with Bill Kelty. At the end of the day it didn't matter and the employees and the unions were left high and dry when the people with the money decided at literally the last minute to not proceed with the purchase.

My advise to any Virgin employee is not to put your faith in the union to secure the deal despite what they say because they can't force Bain or Cyrus to buy the airline if at the last minute they choose not to. The most devastating statement I heard during the whole Ansett debacle was Greg Combet on the news stating "There are no jobs to be saved at Ansett.".
Bear in mind that Ansett was somewhat different to Virgin in that there was only one party interested in Ansett.

In retrospect that lack of interest is sort of interesting in that Ansett's balance sheet was actually better than Virgin's. In today's dollars Ansett was carrying about $5.2 billion in debt and liabilities against $5.9 billion in assets for a net equity position of around $700 million. Virgin is carrying $6.9 billion in debt and liabilities against about $5.8 billion in assets to be underwater to the tune of $1.1 billion. Now, you can make the argument that the new accounting standard, AASB 16, means that aircraft lease liabilities are treated differently to how they were back in 2001, but even when you back that treatment out of the Virgin numbers you're still left with essentially zero equity.

There were clearly some operational issues for Ansett (think B767s) that Virgin doesn't have but the business should have been salvageable. Of course, probably the key difference between the two situations is that back then you had no other than Virgin Blue looking to slot into the spaces that Ansett was vacating. That's not a factor this time around.

Any old how, back then there was no choice between competing bids, competing business models and potentially different outcomes for the staff. Once Lindsay and Solly realised that they weren't going to get their hands on the Sydney terminal they quickly lost interest and that, as she wrote, was that. The unions being matey with Lindsay meant nothing at the end of the day because they were never presented with the opportunity to have a say in proceedings.

[Lookleft]

I disagree Buster but that is irrelevant. If you are a Virgin employee Mick then I can understand your optimism but there is a significant difference between VB's situation and Ansett. When Ansett was in administration there was a market and an economy that was part of the 29 years of continuous growth. Virgin has neither to try and recover in.As for no other competition QF has that sewn up with mainline looking after the premium end and Jetstar looking after the LC end. As for the 767 you can substitute the 330's in that section of the case study. Small fleet and maintenance intensive. Lets look at the similarities. Massive debt, taking on both ends of the market with a cost base that doesn't compete with either and the big one, not profitable. Wishful thinking is understandable but it will be an extraordinary chain of events that will make this result in a different outcome to March 2002.

[Section28- BE]

Link/Reference here: https://www.smh.com.au/business/companies/qantas-and-virgin-australia-suspend-remaining-international-flights-20200608-p550jl.html#comments

Extract here:Qantas and Virgin Australia suspend remaining international flightsBy Patrick Hatch (https://www.smh.com.au/by/patrick-hatch-hvf90)

June 8, 2020 — 3.45pm

Qantas and Virgin Australia have regrounded their remaining international passenger operations after government funding for the handful of overseas routes they were flying came to an end.

The Morrison government says it is reviewing whether it needs to fund further flights to get Australians home from abroad as some overseas airlines resume flying here.

Qantas and Virgin will again suspend their international passenger operations.

Under the government program, Qantas was flying a twice weekly London-Perth-Melbourne return service and a weekly Los Angeles-Melbourne service, the last of which landed on Monday morning.

Meanwhile Virgin - which is in voluntary administration seeking new owners (https://www.smh.com.au/link/follow-20170101-p54zix) - was flying a weekly Los Angeles-Brisbane service which ended Sunday.

Both airlines confirmed on Monday they had no further international passenger services scheduled following the end of the government scheme, with aircraft to be grounded and crews working the flights stood down.

A spokeswoman for the Deputy Prime Minister and Transport Minister Michael McCormack said the scheme with Qantas and Virgin was established to get Australians home as soon as possible amid the pandemic.

"The government is reviewing the program noting there are now alternative commercial flight options available from London and Los Angeles," she said.

The government also has previously arranged for ad hoc repatriation flights from Peru, Argentina, South Africa and India.

Government to extend financial backing for domestic flights (https://www.smh.com.au/business/companies/government-to-extend-financial-backing-for-domestic-flights-20200606-p5505l.html)

Qantas will continue to fly some international freight flights and said it was ready to fly any further repatriation flights for the government as needed.

A Qantas spokesman said the airline was "proud to have helped thousands of Australians return home as well as taking foreign nationals back in the other direction".

Over the weekend Mr McCormack announced the government will extend the underwriting over a minimum number of domestic and regional flights operated (https://www.smh.com.au/business/companies/government-to-extend-financial-backing-for-domestic-flights-20200606-p5505l.html) by Qantas, Virgin and Regional Express.

The end of Qantas and Virgin’s Los Angeles flights leaves United Airlines’ daily Sydney-San Francisco service as the only direct passenger air link between Australia and the United States.

Qatar Airways, Emirates and Etihad Airways have resumed regular flights connecting Sydney, Melbourne, Brisbane and Perth to the UK, Europe, Middle East and Asia via their Gulf hubs, while Air New Zealand is operating some trans-Tasman flights and Cathay Pacific is flying to Hong Kong.

There is a $165m plan for Qantas and Virgin to resume domestic routes.

Under current border restrictions, only Australian citizens, residents and immediate family members can travel to Australia and must go into quarantine for 14 days on arrival.

Australians have been banned from leaving the the country since March 25 unless they receive an exemption because their travel relates to work combating the COVID-19 pandemic, is in an essential industry, is for medical treatment or on compassionate or humanitarian grounds.

Patrick Hatch (https://www.smh.com.au/by/patrick-hatch-hvf90)
Business reporter at The Age and Sydney Morning Herald.

Rgds all
S28- BE

[Section28- BE]

The Australian is reporting-

"Virgin bond holders ‘increasingly anxious’, retirement savings at risk: Morgans."

Rgds
S28

[Goat Whisperer]

The bond holders are at the back of the queue, they took an unsecured position in exchange for a decent fixed return. Now they are finding why banks don't offer them 8%. They will cop a pasting. It may not be a 100% loss but it'll be close.

[didrechambers77]

The only experience I have is what I saw and went through during the Ansett administration. Just to be clear Ansett didn't just suddenly stop flying, it was in administration for 5 months flying a limited service with the support of the ACTU. So the unions were well and truly represented during the whole period when KM were negotiating the sale to Fox and Lew. Lindsay Fox in particular was very chummy with the unions through his association with Bill Kelty. At the end of the day it didn't matter and the employees and the unions were left high and dry when the people with the money decided at literally the last minute to not proceed with the purchase.

My advise to any Virgin employee is not to put your faith in the union to secure the deal despite what they say because they can't force Bain or Cyrus to buy the airline if at the last minute they choose not to. The most devastating statement I heard during the whole Ansett debacle was Greg Combet on the news stating "There are no jobs to be saved at Ansett.".

Correct, the unions involved are purely a mouth piece. Any sentiment regarding keeping watch on employee entitlements/rights is as good as a live feed from workplace "there there pet, it'll be okay, we god this".... any outstanding entitlements in the event on liquidation are underwritten by the FEG, no need for a mouthpiece for that. Keep in mind, your unions are also going through the process to make your respective agreements more "competitive" and "modernized" are the buzz words being thrown around. The drastic spill and fill is on its way for the corp staff, (both bidders have put together structures already, which only include 5-C suits [down from 9] and EBA staff well.... spill and fill, don't like it leave... nothing more nothing less.

As for workplace, think of it as anesthetic "deep breaths and it'll be fine" they said", and when you're passed out on happy gas the cutting begins.

[chookcooker]

Correct, the unions involved are purely a mouth piece. Any sentiment regarding keeping watch on employee entitlements/rights is as good as a live feed from workplace "there there pet, it'll be okay, we god this".... any outstanding entitlements in the event on liquidation are underwritten by the FEG, no need for a mouthpiece for that. Keep in mind, your unions are also going through the process to make your respective agreements more "competitive" and "modernized" are the buzz words being thrown around. The drastic spill and fill is on its way for the corp staff, (both bidders have put together structures already, which only include 5-C suits [down from 9] and EBA staff well.... spill and fill, don't like it leave... nothing more nothing less.

As for workplace, think of it as anesthetic "deep breaths and it'll be fine" they said", and when you're passed out on happy gas the cutting begins.
weren’t you banned paragraph377?

[The Bullwinkle]

As for workplace, think of it as anesthetic "deep breaths and it'll be fine" they said", and when you're passed out on happy gas the cutting begins.
:ok: Love it!!!

[Section28- BE]

And again.......

Link here: https://www.abc.net.au/news/2020-06-10/virgin-administrators-plea-government-support-for-airlines-covid/12338760

Extract here:Virgin's administrator pleads for government support to stop bidders from walking away amid coronavirus crisisBy business reporter Nassim Khadem (https://www.abc.net.au/news/nassim-khadem/10344356)

Posted 36mminutes ago, updated 35mminutes ago.

Virgin Australia went into voluntary administration in April.

Virgin's administrator has written to the Federal Government, saying it is worried bidders for the troubled airline might pull out in the absence of government support for the airline industry.

The global aviation industry is facing an uncertain future, with coronavirus halting international travel and airlines announcing job cuts and calling on governments for support.

On Monday, Virgin Australia and Qantas grounded their remaining international passenger operations after government funding for the handful of overseas routes they were flying came to an end.

The limited flights had been in operation to allow Australians stranded overseas to return home amid the COVID-19 crisis.

Sources have confirmed Virgin's administrator, Deloitte, wrote to the Government on Tuesday, requesting urgent support.

The bidders are not only concerned about Virgin's financial status, but the general future for airlines given the uncertainty over when international travel could resume.

The Federal Government has consistently argued it will not bail out individual companies, but has given some funding for local flights, including some operated by Qantas and Virgin.

Virgin Australia went into administration on April 21 (https://www.abc.net.au/news/2020-04-21/virgin-australia-goes-into-voluntary-administration-coronavirus/12167814), owing about $7 billion to about 12,000 creditors (https://www.abc.net.au/news/2020-04-30/virgin-australia-owes-7-billion-creditors-meeting-administration/12198130).

A number of bidders have been circling the airline, but the initial shortlist of 20 was narrowed to two bidders at the start of the month (https://www.abc.net.au/news/2020-06-02/virgin-two-bidders-bain-cyrus-capital/12308938): Boston-based private investment firm Bain Capital, and global investor Cyrus Capital Partners, which has links to British billionaire and Virgin founder Richard Branson.

Final bids are due this Friday.

More to come.

Posted 36mminutes ago, updated 35 mminutes ago

[Ragnor]

Surely the final two bidders would be well aware of the current state of Virgins financials and the environment they would be taking an airline into after they purchase it.

[ShandywithSugar]

Without the extension of the underwritten Government network would Virgin be flying anything at all other than FIFO ? QF are going up to 15% increasing in size as demand requires.
It appears any flying by VA at the moment is on the back of the Government network and without it would Deloitte even have anything up in the air?

[Green.Dot]

Another article indicating nervousness in the buyers- it just makes you wonder why anybody would want to buy an airline in this climate, let alone one with such a poor financial history as Virgin.

[C441]

The bond holders are at the back of the queue, they took an unsecured position in exchange for a decent fixed return. Now they are finding why banks don't offer them 8%. They will cop a pasting. It may not be a 100% loss but it'll be close.
And yet those same bond holders are probably the same people that prevented Virgin from going into administration months earlier; well before some anomaly called Covid.
Without the millions they provided the company may well have been liquidated already but the eventual winning bid will gladly hold on to that cash.
A better outcome would be for the successful bidder to agree to a partial or full repayment of the capital at a pre-determined time in the future.

[Turnleft080]

Key word in the article is might. Not will or shall. So take it as a pinch of salt. They need to sell papers.

[non_state_actor]

And yet those same bond holders are probably the same people that prevented Virgin from going into administration months earlier; well before some anomaly called Covid.

Not exactly. That debt was used to buy back the FF program and dole out a 9 million dollar bonus.to the FF CEO. That entire transaction was optional and something they obviously thought was a good idea at the time.

[wheels_down]

It’s pretty darn clear the Government is not coming to any Virgin party!

[Ragnor]

It’s being reported in the Australian Cyrus and Bain capital want the Federal Gov to guarantee jobkeeper for 9000 Virgin staff and guarantee Virgin ticket sales before committing to anything.

[Section28- BE]

It’s being reported in the Australian Cyrus and Bain capital want the Federal Gov to guarantee jobkeeper for 9000 Virgin staff and guarantee Virgin ticket sales before committing to anything.

Yes- above article updated, more detail: https://www.abc.net.au/news/2020-06-10/virgin-administrator-plea-government-support-airlines-covid/12338760

Extract:Virgin's administrator pleads for government support to stop bidders from walking away amid coronavirus crisisBy business reporter Nassim Khadem (https://www.abc.net.au/news/nassim-khadem/10344356)

Posted 1h ago, updated 48m ago

Virgin's administrator has written to the Federal Government, saying it is worried bidders for the troubled airline might pull out in the absence of government support for the airline industry.

The letter calls on the Government to extend the JobKeeper program for the airline's 9,000 workers for at least another six months, and guarantee Virgin tickets.

The global aviation industry is facing an uncertain future, with coronavirus halting international travel and airlines announcing job cuts and calling on governments for support.

On Monday, Virgin Australia and Qantas grounded their remaining international passenger operations after government funding for the handful of overseas routes they were flying came to an end.

The limited flights had been in operation to allow Australians stranded overseas to return home amid the COVID-19 crisis.

Sources have confirmed Virgin's administrator, Deloitte, wrote to the Government on Tuesday, requesting urgent support.

It said the two current bidders - Boston-based private investment firm Bain Capital, and global investor Cyrus Capital Partners (https://www.abc.net.au/news/2020-06-02/virgin-two-bidders-bain-cyrus-capital/12308938) - are not only concerned about Virgin's financial status, but the general future for airlines given the uncertainty over when international travel could resume.

The Federal Government has consistently argued it will not bail out individual companies, but has given some funding for local flights, including some operated by Qantas and Virgin.

Virgin Australia went into administration on April 21 (https://www.abc.net.au/news/2020-04-21/virgin-australia-goes-into-voluntary-administration-coronavirus/12167814), owing about $7 billion to about 12,000 creditors (https://www.abc.net.au/news/2020-04-30/virgin-australia-owes-7-billion-creditors-meeting-administration/12198130).

About 9000 of those creditors are Virgin's workers, (https://www.abc.net.au/news/2020-04-20/virgin-australia-pilot-calls-for-lifeline-against-insolvency/12165550) who are owed $450 million in entitlements.

A number of bidders have been circling the airline, but the initial shortlist of about 20 was reduced to four (https://www.abc.net.au/news/2020-05-18/four-bidders-shortlisted-to-take-over-virgin-australia/12259392), and then narrowed down to two at the start of the month.

Final bids for Virgin are due on June 22.Bidders are ready to move but want certain guaranteesSources say the letter says the sale process is at a stage where there are two strong bidders wanting to purchase the company.

But it adds that there is a threat to that sale being finalised unless the Government provides clarity around aviation support measures.

Those measures would include extending the JobKeeper wage subsidy (https://www.abc.net.au/news/2020-06-09/jobkeeper-changes-post-covid-infections-decreasing/12335342) for aviation workers after the end of September, when the scheme is legislated to end.

The letter also calls for an extension of 'use it or lose it' airline slots at airports, since planes have been grounded and slots are currently not in use.

The letter calls on the Government to ensure fair competition and to make sure Australia's competition watchdog is equipped with strong powers to fight possible anti-competitive practices such as the dumping of capacity (https://www.abc.net.au/news/2020-04-24/accc-boss-rod-sims-anti-competitive-qantas-virgin/12178208) by Qantas.

And it asks the Government to give people who have bought tickets a guarantee that they will not lose out and will be able to book future flights with Virgin.

It also suggests that the $715 million Australian airline financial relief package, (https://www.abc.net.au/news/2020-03-17/coronavirus-airline-support-package-qantas-rex/12064316) which Transport Minister Michael McCormack announced before Virgin went into voluntary administration, be extended until the end of the year.

The package was aimed at mainly giving airlines relief from government-imposed fees and charges, but has been of limited use given travel bans have grounded planes and domestic carriers have barely been flying.

The letter also urges the Government to extend domestic network subsidies to the end of the year, and to maintain support for trans-Tasman flights, which could soon resume.

Posted 1h ago, updated 48m ago

Rgds
S28

[Half Baked]

As has just been reported by GT on Sky, IF Bain or Cyrus and Co's can come to the table with $AUD 100B, then surely they can't seriously be asking for government handouts and guarantees........

The Adaministrators will be the ONLY winners out of this debacle.

Akin in to a train wreck in slow motion.

[Turnleft080]

Scomo/Fryingpan/McCormack with chips/AnnasticiaPinochet get your knee off our necks.

[Variable Incidence]

If the prospective new buyer(s) of Virgin need as much government support and guarantees that the Administrator is pleading for, I’d suggest the Virgin resurrection isn’t looking great!
Dead man walking!

[DanV2]

As has just been reported by GT on Sky, IF Bain or Cyrus and Co's can come to the table with $AUD 100B, then surely they can't seriously be asking for government handouts and guarantees........

The Adaministrators will be the ONLY winners out of this debacle.

Akin in to a train wreck in slow motion.

Can only wonder what a different path (of debacle) would've been had the KordaMentha mob took over as VAH administrators..

[crosscutter]

KordaMentha are a different beast these days. Why do you suppose KM was recruited by Bain? I can tell you it was for Union relations above all other restructuring advice as Bain knew they had problems in this area. Don’t get me wrong, their relationship is with union secretaries and Presidents and not employees...they just want the creditor votes. They hope to discredit the Cyrus bid and get said Unions to agree they (Bain) have a more sustainable path forward.

People are entitled to their dislike of a company. History cannot be rewritten. However, KordoMentha’s involvement contradicts the intent of your post at least from Bain’s perspective.

Furthermore, it appears both Bain and KM have a similar vision for Virgin II. So the KM debacle might be what’s implemented anyway.

Off to get my bullet proof vest.

[Turnleft080]

100B are sure that number is right that's 100 plus 9 naughts divide that by 150m you get 666 B787s.
All the reports in the media have no bearing on reality.

[mostlytossas]

Starting to smell like Tesna all over again. When Fox and Lew were going to do wonders by buying Ansett until the final hurdle when they wanted all sorts of government guarantees to ensure the taxpayer would carry any loss they might incur on memory. When that was not forth coming they walked.

[galdian]

Starting to smell like Tesna all over again. When Fox and Lew were going to do wonders by buying Ansett until the final hurdle when they wanted all sorts of government guarantees to ensure the taxpayer would carry any loss they might incur on memory. When that was not forth coming they walked.

and people are surprised because...............................? :ugh:

Debt of $5.5B becoming 7.5B and counting, into an uncertain market due covid, an aggressive multi tiered competitor who will draw their 'line in the sand" and protect it to the death.

I hope the pleading for assistance/relief is just standard ops 101 and someone can go forward - probably hoping ****loads of $$ will fix all the ills and reap a golden ROI.

Good luck with that - it is aviation after all, for too many an investment graveyard. Sure these guys have it sussed out! :ok:

[mostlytossas]

Don't disagree at all. You can't have those that spruke the virtues of the free enterprise system, minimizing taxation by sending profits offshore while demanding no government interference when things are good ,then put there hand out for taxpayer funds , protection etc when things go bad.

[Section28- BE]

Given, the subsequent Media-Cycle and events of today/the last 36hrs..............., this 'one' raises 'some' interesting (only an 'opinion')- stuff......

Referenced/Article link here (bolding): https://www.afr.com/companies/transport/virgin-sale-in-doubt-without-government-support-deloitte-20200610-p5513x

Extract here:

-UpdatedMorrison defiant as Deloitte warns Virgin sale could fail.Lucas Baird (https://www.afr.com/by/lucas-baird-h18hts) and Phillip Coorey (https://www.afr.com/by/phillip-coorey-hve1e) Updated Jun 10, 2020 – 5.33pm, first published at 12.22pm

Prime Minister Scott Morrison has slapped down a plea for extended JobKeeper support for Virgin Australia after the stricken airline's administrators Deloitte warned that its sale may still fail without further government intervention.
The administrators' concerns over JobKeeper come as the government looks to scale back the program. AAP

In a letter to Mr Morrison, Deputy Prime Minister Michael McCormack, Treasurer Josh Frydenberg and Finance Minister Mathias Cormann, Deloitte said bidders Bain Capital and Cyrus Capital Partners (https://www.afr.com/companies/transport/meet-virgin-s-final-bidders-20200602-p54yo5) could withdraw without more certainty around financial support.

The administrators primarily wanted clarity on the future of the JobSeeker wage subsidy program as the government looks at winding it back (https://www.afr.com/politics/federal/childcare-subsidies-and-jobkeeper-to-end-20200608-p550iu), but also proposed a guarantee on Virgin's ticket sales and other measures.

Without this support, Deloitte Partner and lead administrator Vaughan Strawbridge warned in the letter that the ability for the bidders to launch binding offers by the June 22 deadline would be significantly more limited.

But Mr Morrison rejected the suggestion that JobKeeper be extended for Virgin, saying the best medicine for the airline was for it to start flying again.This, the Prime This, the Prime Minister said, would require the states to meet their collective commitment to relax all interstate travel bans by July, under the three-stage lifting of restrictions agreed to by the National Cabinet on May 8.
"If we're concerned about Virgin employees ... it is very important that we open up the domestic borders in this country,'' he said.

"We need to get planes flying around Australia and if you want to see planes flying around Australia ... we need to open up these domestic borders."

Mr Morrison had aimed his comments at South Australia, Tasmania, Queensland and Western Australia.

"That is in Virgin's interests. It is in Qantas' interests. It's in the aviation sector's interest that we move to opening up travel in Australia as soon as possible."

Neither Bain or Cyrus would comment on Wednesday.

When asked whether it remained committed to launching a bid for the airline if further government support was not forthcoming, Bain directed The Australian Financial Review to previous statements.

The private equity firm and its local managing director, former Olympic diver Mike Murphy, emphasised Bain's strong capital base and desire to be a long-term partner for a relaunched Virgin late last month. (https://www.afr.com/companies/transport/bain-launches-public-offensive-as-virgin-race-heats-up-20200524-p54vx7)

Mr Strawbridge confirmed he had written to the government while not divulging the specifics.

"We are entirely comfortable with the process we have in place and the sale we are pursuing," he said. "Last night, we wrote to [the] government asking for clarification of their intentions regarding future and ongoing support for the aviation industry."

"It's important the bidders understand levels of government support, so they know how to structure their bids."

Mr Moore, former chief executive of Macquarie Group, was appointed the government's emissary (https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2 ahUKEwjd0-iWwPbpAhWYzjgGHcmrBtwQFjABegQIAhAB&url=https%3A%2F%2Fwww.afr .com%2Fchanticleer%2Fcan-moore-herd-big-names-into-virgin-rescue-20200421-p54lum&usg=AOvVaw18n6txMPotqXiq4hPro29h) to Virgin's administration when the airline tripped under a nearly $7 billion debt pile, a situation magnified by the COVID-19 pandemic, in April. (https://www.afr.com/companies/transport/virgin-collapses-appoints-deloitte-as-administrators-20200421-p54lno)Redundancy concerns drive letterThe Financial Review understands there were six key points to the communication.

The first was JobKeeper. As the government looks to wind back the scale of the payment as the economy recovers from the pandemic, most notably through the early removal of childcare operators from the subsidy, Deloitte warned against doing the same for the aviation sector.

Deloitte warned such action could mean thousands of Virgin staff are hit with redundancies before a new owner takes the reins, potentially saddling either Bain or Cyrus with a significant unexpected bill and spooking them out of the race.

The administrators also said a guarantee on Virgin's ticket sales (https://www.afr.com/companies/transport/only-enough-cash-to-get-through-the-sale-process-at-virgin-deloitte-20200518-p54tvt) could renew consumer confidence in Virgin, luring travellers back to the airline despite fears of liquidation and staving off a sluggish relaunch.

Plus they asked for an extension to airport slot protection measures and a further continuation of the domestic aviation network support to the end of the year.

The government had already extended the latter to September 30 over the long weekend.

Deloitte asked the government to ensure the Australian Competition and Consumer Commission had the requisite powers to ensure a relaunched Virgin is not killed at birth by an aggressive rival in Qantas as well. (https://www.afr.com/companies/transport/accc-boss-says-virgin-mark-ii-needs-to-be-full-service-20200426-p54n9v)

And they requested a commitment to a more equitable distribution of federal flight services tenders after Qantas raked in around $4.3 million in government contracts between 2017 and 2020. (https://www.afr.com/companies/transport/qantas-a-4-3m-winner-in-race-for-government-tenders-20200101-p53o21)

In comparison, Virgin earned just $35,400 from the government over the same period.

The theory administrators put to the government were that such changes would shore-up Virgin's immediate future, so Bain and Cyrus were encouraged to stay in the race until the very end.RelatedVirgin bondholders set to find their voice (https://www.afr.com/chanticleer/virgin-bondholders-set-to-find-their-voice-20200608-p550jm)
The letter emerged after Department of Infrastructure, Transport, Regional Development and Communications officials told parliament they had EY investigate Virgin's financial position after it first requested a $1.4 billion government loan in May.

The EY report informed the department's advice to the government on whether to provide a bailout or loan to Virgin.

Transport Workers' Union members also took to the lawns of Parliament House in Canberra to campaign for changes to the JobKeeper program on Wednesday, as some aviation companies were excluded from the subsidy due to their foreign ownership.

"This is a warning to this federal government – what's needed now is JobKeeper in aviation until the borders reopen," TWU national secretary Michael Kaine said.

"We need AviationKeeper because unless we get it, the aviation sector will crumble. There is a cliff coming in September; there are tens of thousands of jobs in aviation that will not be there in September if this government does not act."

Rgds all
S28- BE

[Sunfish]

Government will, predictably say no. VC’s try this all the time. Since QF no longer has any engineering capability and VB never developed it, neither company can be argued as being of “strategic national asset”; that would justify intervention.

QF closed down its overhaul and heavy maintenance operations, sold the equipment and retrenched the staff. VB never even built any engineering capacity. Line maintenance and simple checks is all there is. There used to be deep engine and component overhaul capability, but we outsourced all of it. I guess we can perhaps still retread tyres? Forget engine overhaul.

1st

[DanV2]

Starting to smell like Tesna all over again. When Fox and Lew were going to do wonders by buying Ansett until the final hurdle when they wanted all sorts of government guarantees to ensure the taxpayer would carry any loss they might incur on memory. When that was not forth coming they walked.

Also yet to be seen if there are any more skeletons in the closet of the VAH administration.

It would not surprise me if it revealed that VAH was offered for $1 at some point to certain parties (*cough* SIA) in a rehash of NZ offering AN to SIA and QF for $1.

[Australopithecus]

FFS Sunfish. Having an overhaul facility doesn’t determine a carrier’s value as a strategic asset, its the lift. Next time there’s a disaster abroad who do you call to repatriate Australians? GE or Rolls Royce?

The lack of overhaul facilities is a reflection of the engine builders' policies and controlling spares availability. Most airlines buy thrust by the hour and hence don’t need an in-house overhaul ability even if they could get parts support.

[mostlytossas]

Repatriation flights are over stated in my option.. Sure QF supplied a couple but the most flights were supplied by others. Qatar, was one of the more common but into Adelaide for example were charted flights from Indonesia bringing Indian Australians home .

[MickG0105]

QF closed down its overhaul and heavy maintenance operations, sold the equipment and retrenched the staff.
Really? So where is A330 and B737 heavy maintenance done? What happens at QF's Heavy Maintenance Base in Brisbane?

[Sunfish]

Really? So where is A330 and B737 heavy maintenance done? What happens at QF's Heavy Maintenance Base in Brisbane?

Mick, I stand to be corrected but my understanding is that there is no one doing heavy aircraft rotables or engines anymore. These are component overhaul functions. All your heavy maintenance operation consists of the gantries and work stands and sheet metal and interior shops to do the checks. The stuff you bolt on: landing gear, APU, Engines, etc. used to be overhauled in Australia but aren’t anymore. I’d be happy to be proved wrong.

All the sophisticated services that backed them up - surface treatment (plating, heat treatment, shot peen, large X-ray/ndt, etc) are gone too for anything larger than a King Air. I guess QF still would have some contractor doing tyres wheels and brake packs.

‘’As for engines, forgettaboutit. We don’t even have a tip grinder anymore.

[VH-ABC]

Great point, well argued... and has got what to do with buyers circling Virgin?

[neilki]

The employees, by virtue of numbers, can block any proposed Deed of Company Arrangement. They are the only creditor grouping with that power. Don't think for a moment that the unions do not understand that. They will have a big say in terms of which way this swings. Why do you think BGH were handed their hat?


Pinnacle Airlines in the US. They emerged from Chapter 11 as Endeavour Air.


The brand would not be in the top 4 reasons for trying to resurrect VA leave alone being the primary reason. You only need to ask the question, 'Everything else being equal, if it wasn't called Virgin Australia would there be as much interest?'

not quite. By emerged, read: bought by delta.
Endeavor is an amalgam of Colgan Air, Mesaba & Pinnacle.-you might also look at American Eagle, post bankruptcy 3 different wholly owned AA regionals...

[rmm]

Mick, I stand to be corrected but my understanding is that there is no one doing heavy aircraft rotables or engines anymore.

With the reliability of both the 738 engine and APU your engine shop may only see a handful of units a year. Is it worth it?
I'm not convinced that a buyer would see it as an asset.

[KRUSTY 34]

Are these guys (Deloitte, Bain, Cyrus, et al) for real!

They cry about the destruction of the market, uncertainty about Jobkeeper, and concerns about ticket sales, just to mention a few. Hello Macfly!

Maybe these obscenely paid wheeler and dealer types should go back to whatever business schools they graduated from and request their course fees back.

[Stationair8]

If Jayne from Bain gets the gong to run Virgin, this shouldn’t interfere with her tennis commitments over the summer?

[Forced Labor]

No mate - she's pretty right anytime after 3 pm for the tennis most days of the week. At a pinch, she might also be able to knock off some tennis stuff before 9 am.

Good luck with that one.

[Buster Hyman]

If Jayne from Bain ...
Isn't she mainly on the Plane?:}

[Section28- BE]

Referenced/Article link here: https://www.smh.com.au/business/companies/virgin-bondholders-will-get-nothing-after-failed-creditor-play-20200609-p550yw.html

Extract here:Virgin bondholders 'will get nothing' after failed creditor playBy Patrick Hatch (https://www.smh.com.au/by/patrick-hatch-hvf90)

June 11, 2020 — 12.00am

Bondholders risk walking away from a Virgin Australia fire sale empty handed, with aviation restructuring experts predicting the airline’s new owner will leave nothing on the table for institutions and hundreds of "mum and dad" investors.

The dire warning for holders of $2 billion worth of Virgin's unsecured debt came as the airline's administrator Deloitte told the Morrison government that more financial support was needed to ensure the sale process did not fail, (https://www.theage.com.au/business/companies/virgin-administrator-asks-canberra-for-jobkeeper-extension-ticket-guarantee-20200610-p5514z.html)including an extension of the JobKeeper program.

There are growing concerns about how much bondholders will recover from the Virgin sale.

The Sydney Morning Herald and The Age can reveal an attempt to rally unsecured creditors together around a plan to preserve their interest in the business has been wound up after it failed to attract creditors or Deloitte to its cause.

The Australia Connected Aviation Partners (ACAP) consortium was brought together by Sydney-based corporate leadership firm Spiique, and wanted to develop a "plan B" that creditors could fall back on if the package Deloitte put forward in August was unacceptable or fell over.

Spiique co-founder David Hewish said the group was concerned all the value in Virgin - and the upside from a future recovery - would be handed over to its new investors.

“Our suggestion was to do something to create an alternative - to fix the business plan with the support of the stakeholders and then compare that with whatever the sale process creates," said Mr Hewish, a restructuring veteran formerly with EY and KordaMentha.

"It would have created a floor that was an alternative to liquidation."

ACAP's proposal included bondholders converting their debt to equity in the company, rolling it over into a recapitalised business or taking a cash dividend. Virgin could have been sold at a later date - and for a better price - once the business had been more comprehensively restructured.

ACAP had the financial backing of wealthy American entrepreneur and venture capitalist Augie Fabela, who co-founded the NASDAQ-listed telecommunications group VEON, and recruited executives, including former Aer Lingus CEO Dermot Mannion and former AMP Bank CEO Sally Bruce to its team.

But ACAP wound down on Tuesday after failing to attract interest from larger creditors and being denied access to the sale process by Deloitte because it did not have secured funding.

Mr Hewish said he spoke to several institutional bondholders who were "preparing for the worst" and were resigned to the fact they will not recover any of the money they are owed.

"The most likely outcome is... there will be nothing for distribution to the creditors," Mr Hewish said.

“It feels like a $1 deal because there’s too many balls in the air - what are the [wage agreements] going to be for the staff, what are the leasing arrangements going to be for the leased aircraft.

"I just can’t see how anyone could convince their investment committee to handover a couple of hundred million dollars to be distributed to the former creditors.”

Virgin's bondholders include large institutional investors as well as hundreds of "mum and dad" retail investors, many of whom bought in as recently as November, when Virgin raised $900 million to take back full ownership of its frequent flyer business.

Sydney based advisory Faraday is trying to organise Virgin's bondholders. But having "meekly stood by the sidelines and done nothing", Mr Hewish said bondholders would have to either accept Deloitte's deal or let Virgin go into liquidation.

Separately, Deloitte wrote to the government on Tuesday asking it to extend the Jobkeeper wage subsidy for airlines to give Virgin's shortlisted suitors - Bain Capital and Cyrus Capital Partners - confidence to make binding bids. It also asked for a consumer ticket guarantee to give the public confidence in the airline, which collapsed in April owing $6.8 billion.

Bain and Cyrus have until June 22 to lodge binding bids and Deloitte will put a preferred rescue package to a creditors' vote in mid-August. There is growing concern among bondholders about how much of their investment they will recover.

Rgds
S28

[RodH]

I have been following Virgin's progress for quite some time now towards hopefully a resurrection soon but am starting to feel very uneasy about it succeeding.
Things are starting to look fairly messy and it would appear that without Government support for a few months it will quite likely not succeed and it seems that our Great Leader Scomo is not going to help - yet!
This would be a tragedy not only for the staff but the travelling public.
My own personal opinion of VA is that it's was amongst the best there is or was , especially in Business Class.
A truly great Airline!!
I fervently hope it does succeed in re starting in the same format as it was .
Let's hope so for all of the wonderful staff and also to stick it up the Leprechaun!

[Variable Incidence]

A truly great Airline!!!

Maybe, but a consistently badly run business that rarely made a profit and has caused the destruction of billions of dollars of shareholder and investor capital! Not sure that the unsecured bond holders about to lose all their hard earned or the investors about to take a significant haircut would agree with you either.

In my book, a truly great airline is also a consistently profitable and sustainable business for both investors and employees. Virgin has been neither and unlike most investment disclosures, past performance is the best predictor of future performance. The old model and the old team ain’t going to work IMHO!

[Section28- BE]

I fervently hope it does succeed in re starting......!

Without, wanting too say 'much' and attract 'fire'....., and divert the seriousness/attention of the Issue/'s at hand.

The observation, could/may- be 'reasonably' made- that the process, is not 'unified' in the 'cadence' of events/process....????, or Not- your call.

Unsecured 'they' (said, Bond Holders) are- however, there is now $2x Billion Out-Side the Tent on a $7B gig....

Ta- wishing for the best..... for All.
Rgds
S28- BE

[Sunfish]

Rod, I’m sorry to say that “Venture Capital” isn’t . At least in Australian circumstances VC’S only invest in a sure thing. The crap about risk and uncertainty is just BS. Bain and Cyrus will want government guarantees that they will at least double their money even if they have to walk away in a few months time. The idea that they are superwomen who are going to try every trick in the book to restart virgin is BS. They try and engineer a situation where they can’t lose, otherwise they don’t invest. Sorry to be blunt.

Expect to see dire headlines as the potential buyers and the administrators try and rumble the government into guaranteeing that VB will survive. Unfortunately for you the correct answer from government is $$#@off.

To do otherwise means you get headlines in three years time like:”Bain bought virgin for $2.00 and now is walking away with 3 billion taxpayer dollars.”

Government is going to make Bain work for a return. My experience is that very few VCs actually want to do that. Bain will have probably ten other deals like virgin on its short list right now.

Hope for the best, prepare for the worst. Good luck!

[Des Dimona]

To do otherwise means you get headlines in three years time like:”Bain bought virgin for $2.00 and now is walking away with 2billion taxpayer dollars.”

Let alone the comparison between Ansett and the odious Tesna Fiasco. Insert Bain and Cyrus for Tesna. They (Virgin and Ansett) will end up not being all that different. Bain and Cyrus both want something for nothing, just as Fox and Lew did all those years ago. SACL called their bluff and the pair walked from the deal.

[Sunfish]

Yes Des. They want a guaranteed return on investment otherwise they aren’t interested. If it was me and I could make the government blink, I would sell all the cash positive assets to myself - terminal leases, real estate, software, aircraft leases, facilities, etc. I would then parcel up the operational structure and float it to the mums and dads- leaving multi year contracts behind with all the now Bain owned asset companies that allowed them to strip cash out for years to come.

Thats the model/; strip the carcass, float what’s left, profit!

[Ragnor]

Cash-strapped airline to lift domestic flightsROBYN IRONSIDE
https://theaustralian.smedia.com.au/HTML5/get/NCAUS-2020-06-12/image.ashx?kind=block&href=NCAUS%2F2020%2F06%2F12&id=Pc0151000&ext=.jpg&ts=20200611161543https://theaustralian.smedia.com.au/HTML5/get/NCAUS-2020-06-12/image.ashx?kind=block&href=NCAUS%2F2020%2F06%2F12&id=Pc0151100&ext=.jpg&ts=20200611161543Virgin Australia is not giving up its domestic market share without a fight, stacking on capacity to match larger rival Qantas as travel restrictions ease.

Despite a precarious financial position as the airline navigates administration, Virgin Australia will increase services to 320 a week by early July, from just 76 currently.

It’s understood management is hopeful the flights will generate much needed revenue, with existing cash reserves not expected to last past August.

Virgin Australian entered administration on April 21 with debts of $6.8bn, and was left with about $100m in May.

Group chief commercial officer John MacLeod said more services and frequencies were being added in response to returning demand for air travel.

“By early July, we will have gradually added approximately 30,000 seats across 320 flights per week to our schedule — more than doubling our capacity and providing more flexibility for guests,” Mr MacLeod said.

“It’s early days, but these services will be a welcomed boost to Australia’s tourism industry and help the nation’s economy and aviation sector to rebuild.”

He said the services would also allow the airline to bring back to work some of the 8200 employees currently stood down.

Virgin’s announcement came as credit ratings agency Moody’s forecast Qantas’s earnings and credit metrics would recover from the COVID-19 crisis before other global carriers.

Moody’s cited a number of reasons for its optimism, including Qantas’s strong balance sheet prior to the pandemic and the fact Qantas’ main competitor was in administration.

“As Qantas ramps up capacity from July, we expect ongoing uncertainty related to Virgin to benefit Qantas, improving cash flow and profitability,” said the Moody’s report by vice-president and senior credit officer Ian Chitterer and associate analyst David Xu. Other factors included Australia and NZ’s success in controlling the coronavirus outbreak and the strength of Qantas’s domestic business and loyalty program, accounting for up to 80 per cent of earnings.

The report said the re-emergence of trans-Tasman travel in September also provided significant opportunity for Qantas to increase yields, in the absence of capacity and competition.

“There is uncertainty as to if and when Virgin Australia will resume flights and to what extent it will participate in trans-Tasman routes,” it said. “All of this should be supportive of yields at least until the end of the key December-January holiday season.”

The ramp-up of domestic flying by Qantas and Virgin will coincide with a range of new measures designed to enhance passenger safety and wellbeing, before, during and after flights.

From Friday, passengers should expect more sanitiser stations at airports, and the provision of masks and antibacterial wipes on board aircraft.

Virgin Australia will ask passengers to fill out a health questionnaire at check-in, to ensure they are fit to fly, and to help with contact tracing.

Both airlines have stressed that the risk of viral transmission on aircraft is very low due to the hospital-grade air filters and high seat backs. While Qantas will not exercise social distancing in the cabin, Virgin’s group medical officer Dr Sara Souter said it would try to space passengers out as much as possible.

Business Review
Cash-strapped airline to lift domestic flights

[Lookleft]

Reminds me of the moment the lawn mower is just about to run out of petrol.

[ECAMACTIONSCOMPLETE]

What about tiger?

standby for JQs $19 airfares

[PoppaJo]

Tiger is over. Should have happened 10 years ago. Everyone got the sack except 737 Melbourne Cabin Crew.

[Buster Hyman]

Tiger is over.
And yet, if done right, Tiger would be better suited for a restart than the legacy that is VA!

[PoppaJo]

Very true but 10 CEOs later I would say nobody is clearly capable so just shelve it.

They need to cut it loose from the Village people for it to work. De Virginise it.

[Buster Hyman]

Very true but 10 CEOs later I would say nobody is clearly capable so just shelve it.

They need to cut it loose from the Village people for it to work. De Virginise it.
I qualified it all with "if done right"...:ok: But yes, totally agree.

Small start up, small HQ with minimal numbers...if the Admins wanted a quick return for creditors, that was it...IMHO.

[didrechambers77]

Looks like things are getting pretty bad,
Inflight VA Meals, now $2 a piece.... bargain.

https://www.ozbargain.com.au/node/544372

Fancy a taste of flight from your living room?

[Section28- BE]

Referenced/Article link here: https://www.afr.com/chanticleer/brighter-skies-as-virgin-sale-nears-20200612-p5523t

Extract here:

- ChanticleerBrighter skies as Virgin sale nearsGood news in the domestic aviation industry is not necessarily being shared equally between the two players - Qantas and Virgin. But there is optimism Australians will soon start flying for leisure again.

Jun 13, 2020 – 12.00am

As the clock ticks towards the June 22 deadline for final bids for the purchase of the insolvent Virgin Australia (https://www.afr.com/chanticleer/five-lessons-from-virgin-s-collapse-20200420-p54lj6), there is quite a lot of good news emerging in the aviation sector.

Friday marked the end of federal government underwriting of flights on major domestic routes and the return of Qantas and Virgin operating under normal commercial terms.

The government support will switch to other, more marginal routes, that the two airlines won't fly because travel demand is not at levels that make them viable.

Qantas chief executive Alan Joyce travelled on a flight from Melbourne to Sydney on Friday. He says some fares could be as low as $19 when travel resumes.

Australians thinking about busting out of the lockdown and travelling by plane to a domestic holiday destination are likely to be inundated with offers of cheap seats.

To get an idea of what is coming down the pipeline, Jetstar said this week it would resume domestic flying in New Zealand on July 1, with fares available from $21 each.

The resumption of New Zealand services (https://www.afr.com/companies/tourism/sunshine-state-moves-to-lock-in-nz-tourists-first-20200611-p551jb) will see Jetstar flying 75 return flights per week to five destinations, returning to about 60 per cent of its normal domestic schedule. Customers with bookings on the remaining 40 per cent of flights have been contacted and offered a range of options.

New Zealand is ahead of the curve on most things related to coronavirus. Its aviation activity is expected to return to half the normal level by the end of this month.

In Australia, Qantas this week returned to 15 per cent of its pre-COVID capacity on the Sydney-Melbourne route, or about three times its previous level of services.

Strong signal

Qantas chief executive Alan Joyce sent a strong signal to potential travellers on Friday when he was photographed sitting in the middle seat on a flight from Melbourne to Sydney (https://www.afr.com/link/follow-20180101-p55221).

Joyce, who was wearing a face mask, has talked about $19 fares once the market opens up in Australia. This should encourage people to get back in the air.

Matt Ryan, an analyst at investment bank UBS, expects a strong domestic rebound in leisure travel in coming months as Australians start spending the extra $30 billion saved during the coronavirus pandemic.

He said in a note to clients on Friday the big swing factor would be the opening of state borders. Queensland alone accounts for 28 per cent of interstate overnight stays.

With a domestic aviation profit pool of about $1.1 billion, there is clearly scope for Virgin to make money if it can cut its costs and return to the market share it had before COVID-19 arrived.

Ryan said that over the past five years Qantas had captured 88 per cent of the profit pool while only carrying 61 per cent of the passengers.

"Given the uncertainty around the second carrier, we believe Qantas is currently seeing a significant increase in booking market share," he said.

Analysts at UBS and Morgan Stanley are the two most optimistic when it comes to the prospects for Qantas. Their share price targets are $5.50 and $5.20 respectively, compared with Friday's close of $4.49.

The key questions being asked by everyone in aviation and tourism circles are: How is the Virgin sales process travelling? When will it be back up and flying? And can it come out the other side of its collapse without government assistance?

Virgin's administrator, Vaughan Strawbridge, of Deloitte, remains immensely confident he can get a deal done with either Bain Capital or Cyrus Capital Partners in the next 10 days.

Observers of the sale process, however, were given cause for concern when Strawbridge wrote a letter to Prime Minister Scott Morrison (https://www.afr.com/companies/transport/virgin-sale-in-doubt-without-government-support-deloitte-20200610-p5513x) and senior cabinet members saying the bidders still needed more clarity on government support measures or they may pull out.

The letter suggested that unless those indications of support were given, it would hamper the ability for final bids to be submitted.

Also, Deloitte asked the government to consider guaranteeing future ticket sales to encourage people to book with the airline.

The letter put a fresh complexion on Strawbridge's decision to reject a deal from BGH Capital (https://www.afr.com/chanticleer/bgh-rejected-exclusive-virgin-rescue-20200505-p54q32) quite early in the insolvency to buy the business. Chanticleer understands BGH wanted exclusivity to give it more negotiating power with the unions, aircraft lessors and bondholders.

If Strawbridge had gone for the rapid-fire BGH deal, a sale would probably have been consummated about a week ago.

With BGH out of the official sales process, Virgin's future looks to be increasingly in the hands of the bondholders who tipped in about $2 billion in unsecured funds late last year to pay for the balance of the Velocity Frequent Flyer business not owned by the airline.

It is believed the BGH deal would have seen the bondholders get about 1¢ in the dollar. But the bonds have been trading between 12¢ and 25¢ in the dollar.

Disproportionate amount of power

Investors have been buying the bonds in the expectation of making a profit. They have been doing so in the knowledge that the bonds could carry a disproportionate amount of power when creditors vote to approve the sale in August.

It is believed the adviser to the bondholders, Faraday, has legal advice that the 6000 investors who own the bonds, mainly self-managed super funds, can vote as individuals rather than in a block.

The 9000 employees of Virgin each get a vote. But approval of the sale requires a majority by both volume and value.

It is possible to build a scenario where the bondholders come away from the creditors' meeting with debt converted into equity and some level of rollover debt.

The bondholders agitated quite hard to get access to the Virgin data room (https://www.afr.com/companies/transport/virgin-to-add-more-flights-but-will-trail-qantas-20200611-p551n8). They succeeded in doing so, but this immediately precluded them from talking to the two parties buying the business.

Related

Bondholders find way into Virgin data room (https://www.afr.com/companies/transport/virgin-to-add-more-flights-but-will-trail-qantas-20200611-p551n8)

It is not clear why the bondholders needed to understand the profit drivers of the business when the future business model is within the walls of Bain and Cyrus.

A lot is riding on the successful completion of the Virgin sales process. A failure to complete the sale could lead to liquidation and leave the government holding a $450 million liability for employee benefits.

Also, the two bidders would lose all the money spent getting to this point. It is believed it has cost them more than $15 million.

Tony Boyd (https://www.afr.com/by/tony-boyd-j67sj) is the Chanticleer columnist. He has more than 35 years' experience as a finance journalist. Connect with Tony on Twitter (https://twitter.com/@TonyBoydAFR?lang=en). Email Tony at [email protected]

So, circa 6,000 bondholders in the Wild, carrying 2x $B- in a 'number and value' sense......

Rgds all
S28- BE

[Ragnor]

A different spin in today’s Australian

What the Virgin bidders really fighting over
TERRY McCRANN
The funniest — sick — joke going around at the moment is the idea that we have two groups in an auction to buy Virgin; to take their chances on running a weak second airline against the dominant, financially strong and superbly structured and focused Qantas, into the challenges and monumental uncertainties facing airlines in the post-virus world. In fact, the only thing they are “bidding” to buy is the right to get a range of other parties to donate their money to ensure that one of these Wall Street vultures can extract the greatest profit with the least risk and indeed the smallest financial contribution from the Virgin carcass. The latest group who they want to put their hands in their pockets to ensure higher profits for them is you — the taxpayer. They want the government to give them — either Bain Capital or Cyrus — another $180m or so by exclusively extending JobKeeper for Virgin Two. To have the taxpayer effectively pay the airline’s salary bill for the first six months of its life under its new owner. The best way to understand what is going on in the auction behind closed doors is by way of this example: consider two people bidding to buy a house worth around, say $2m. The one offering, say, $2.01m ends up winning over the other bid of, say, $2m flat. The $2.01m is paid; they own the house free and clear. In the Virgin case the $2m “house” comes with a, say, $4m linked mortgage. It also comes with an order to spend $1m in mandatory repairs. Clearly no one in their right mind would happily pay the $2m for the house, only to also pick up an immediate $5m liability. They’d in effect be paying $7m for a $2m asset. That is to say, the house is really worthless unless and until those liabilities can be separated or cancelled. That is exactly the same with Virgin, except we are talking in billions, not millions. The “cleanest” way to resolve the Virgin situation would be to put it into liquidation; cashing in the assets (essentially, half the planes; in liquidation, the other assets would all but evaporate); and paying varying cents in the dollar (down to zero) to the various liability tiers. This worst-case “doomsday” outcome provides the opportunity for main-chancers like Bain and Cyrus to make two and two add up to not just five but at least six, as the “better” alternative. They do this by creating a dynamic where those creditors will be offered variously more cents in the dollar (with some very small crumbs for shareholders, who would otherwise get zip) than would be likely to happen under the “doomsday” alternative. Now some of the “maths magic” is real: those assets which have value in a continuing Virgin but which would go to zero in a liquidation — its airport slots, it’s broad IP, its software, its ticketing, its global partnerships, indeed the sunk costs in its staff, and so on. Then there’s the 60 or so owned planes — their value in a continuing revenue-generating business as opposed to what you could sell them for, at a time when there is going to a be a lot, and I mean a lot, of planes for sale. But that aviation reality introduces a huge and I mean huge risk on the other side of these valuation scenarios: that you could buy cheap but end up losing money and losing buckets of it from the new get-go . To go back to my housing example; it would be great to get the $2m house for, say, $1.5m upfront and without any of those $7m in liabilities. But not so good if you locked yourself into $200,000 a year of maintenance and repairs; you’d quickly chew away your $500,000 upfront profit. That’s the key point to understand about the so-called bidders for Virgin. What they are really bidding to buy is that upfront profit. It is the (reasonable and risk-adjusted ) value of the “new” Virgin entity less the equity they have to put in and could lose. The winner will be the one of the two prepared to “bid” the lower comparative upfront profit — a profit that is going to come out of the pockets of the various parties owed the bits of the $7bn of Virgin liabilities. All these creditors have to not only lose some percentages of the money owed them (in aggregate, the difference between Virgin’s assets and liabilities), they also have to contribute to the winning bidder’s upfront profit. The offsetting lure is that in doing so they still get a higher figure than would theoretically otherwise be the case. Three components are critical for the winning “bidder” . To minimise the amount of capital they put up and is at risk. The less the capital, the smaller the dollar upfront profit they need to be gifted by the creditors to get the same rate of profit return. They have to optimise the Virgin Two operating structure and dynamics: how many aircraft, staff numbers, IP, ticketing, relationships. The post-virus uncertainties present both huge challenges and even greater opportunities precisely because of the financial engineering in and around the “offer” process. The more money you can get third parties to contribute directly or indirectly the better. It not only does the obvious — put more money into the pot — but allows more financial engineering and leverage. Like with JobKeeper, the extra $180m coming from the taxpayer might be able to be leveraged into, say, a $360m additional benefit to the buyer. Win-win . But it all hangs on getting to first base. We are yet to see whether there is a “there” there for a future Virgin. This is not like 9/11, which was ultimately if indirectly airline-friendly . Just as the post-virus world more generally won’t be like the post-GFC one.

[Turnleft080]

Terry McCrann in the past 20 years has never ever written one good thing about Virgin. He has a major conflict of interest (has QF shares fly's in the pointy end of the rat).
A carcass, a funny sick joke how nice of you when I'm trying to feed the family. If I ever meet him in person and after a very irate conversation I would conclude you are a crab.

[The Bullwinkle]

Terry McCrann in the past 20 years has never ever written one good thing about Virgin. He has a major conflict of interest (has QF shares fly's in the pointy end of the rat).
A carcass, a funny sick joke how nice of you when I'm trying to feed the family. If I ever meet him in person and after a very irate conversation I would conclude you are a crab.
I certainly wouldn't get my financial advice from Terry!

[KRUSTY 34]

I certainly wouldn't get my financial advice from Terry!

Well, he nailed the real motives of Fox and Lew while 17,000 desperate Ansett employees clung to the BS they were spinning.

[Led Zeppelin]

Terry might actually be closer to the “outcome guessing” game than other pundits.

[slice]

the dominant, financially strong and superbly structured and focused Qantas

....mmmm, someone is enjoying their Chairman’s Lounge membership🤔

His ‘House’ analogy doesn’t really make a lot of sense. In addition his understanding of Airline operating economics appears to be, shall we say, ‘limited’. For a start the current shareholders are getting zip, that’s a given. The judgement for the unsecured creditors is wether they think they can extract more value out of a total liquidation or, ultimately get more with some small % of their bonds and/or some sort of debt for equity arrangement if the operation continues. Another question given the current environment, is wether the so called ‘secured creditors’ have their exposure covered given that trying to liquidate 40 or so 737NGs may be problematic.

[34R]

Well, he nailed the real motives of Fox and Lew while 17,000 desperate Ansett employees clung to the BS they were spinning.

Correct

It's just an opinion piece.... Most people that are able to view the whole Virgin thing dispassionately would probably not find too much to argue about in that article.

[flamingmoe]

The analogy Terry used actually sums up fairly well how private equity works, they are 100% focused on financial outcomes.

[wheels_down]

Which is why Indigo would have been a good investor, most certainly long term.

Canberra needs to remain firm on not lining these equity mobs with cash. He will lose my vote next election if he backs down on his strong stance against not funding Virgin and it’s problems. Read deep into the world of equity and where governments have been caught out dragged along in the mud. The fear articles have started to surface already. All orchestrated from Wall St.

[Des Dimona]

Whatever you think of Terry's opinion, I believe he has nailed the "modus operandi" of private equity organisations - rip cash out of a very high cash flow business then re-float and sell.

[Sunfish]

You all seem to understand. The VC community always considers their EXIT strategy before they even think of investing. So that is the bit of their “business plan” that is already tightly scripted and organised in detail before anything else. What then happens is they look to constructing a “front end” that allows them to do their exit strategy. It’s all ass backwards compared to normal business planning.

We don’t know the exit strategy and neither does Deloittes. The VCs may already have buyers/investors lined up and will “flip” the airline in three to six months, making 500 million in the process and also making Deloittes look like idiots as well as sending bond holders suicidal. The request for government cash/ guarantees or special treatment is also common. The risk for government in doing that is the VCs walk away with half a billion when they execute their exit plan, leaving the taxpayer on the hook for billions.

Dont think for a moment that the VC’s won’t sell their grandmothers to do deals like this and will use every trick, dirty or not, to get what they want. I still have the scars, 20 years later, from having to deal with these creatures.

[machtuk]

Anyone who picks up the rotting carcass that is VA isn't doing it to make people happy they are doing it to strip what flesh is left off the carcasses bones using whatever tactics they can dream up, the trick is to get everyone to think the opposite!
Big business only succeeds in being cunning!
I feel for the employees, they are pawns in this mess!