Virgin Australia bidder Cyrus favours full-service but only B737s

[MelbourneFlyer]

So while Bain wants Virgin Australia to be more like Virgin Blue, outsider Cyrus says it wants Virgin Australia to remain full-service, but with an all-B737 domestic fleet, no international flights for a while and when international flights resume they'd be on Boeing 787s instead of A330s and B777s.

https://www.smh.com.au/business/companies/virgin-bidder-cyrus-plans-to-keep-airline-as-full-service-qantas-competitor-20200526-p54wnl.html

[Ragnor]

Brilliant another Virgin thread.

[Buster Hyman]

Brilliant another Virgin thread.
We haven't reached the peak yet...

[Fatguyinalittlecoat]

It has the word Virgin in the thread title. I’d assume if your sick of virgin threads, you’d be smart enough to just pass it by.

[wheels_down]

The big unknown is who picks the winner.

Its fairly clear it’s on PS watch, and this dialogue is what he is after. So these guys will be the winners on his watch.

Bain and Indigo have their own agenda (which would be better for Virgin in terms of wiping out the Management).

[Icarus2001]

The big unknown is who picks the winner. That would be the creditors.

https://www.mackaygoodwin.com.au/faqs.php?gclid=CjwKCAjw_LL2BRAkEiwAv2Y3SV0koOY9tQA7AbPLrllK0 shr9w7hiLn8kVG9vKojkrE-CKvpNvSsuhoCJ94QAvD_BwE&gclsrc=aw.ds

https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/creditors-deed-of-company-arrangement/

There is little mystery to the process, only the outcome in each case.

[Anti Skid On]

Their short-haul international, e.g. within the proposed trans-Tasman bubble, will that be the 738's currently used?

[SecretAngel]

Brilliant another Virgin thread.
It's almost like there's something pretty major going on, around Virgin lately...

[MickG0105]

Cyrus currently has just $4 billion in assets under management. Resurrecting Virgin 'to remain roughly the same size it was before going into voluntary administration in April' will be a $5 billion cash and debt deal. So, there's that.

Branson is underwater on Virgin Atlantic and just watched Virgin Orbit drop a $12 million two-stage rocket into the Pacific Ocean (for those unfamiliar with the project, the rocket was meant to head in the opposite direction). And then there's Virgin Voyages - probably not tracking to the FY20 business plan and not likely to be hitting its FY21 numbers either with a further two 110,000 tonne cruise ships on order. So, in the grand scheme of things I wouldn't think that he's necessarily flush with cash just at the moment.

Cyrus are likely just trying to play up their non-financial credentials to the unions ahead of Friday's short-short-listing.

[Double_Clutch]

I would have thought that the administrations would be making the decision who takes the cake.....?

[normanton]

I would have thought that the administrations would be making the decision who takes the cake.....?
Not at all. The creditors do.

[Section28- BE]

Ex- 'a' preceding post (and shall NOT identify, 'IT'- as, am carrying a veritable tranche/posse/plethora of Parasites/Lower-Level Dwellers/and Folk that, have Not done 'Much'.....!!!!!!).

Extract here:
Branson is underwater on Virgin Atlantic and just watched Virgin Orbit drop a $12 million two-stage rocket into the Pacific Ocean (for those unfamiliar with the project, the rocket was meant to head in the opposite direction).

ABC News- link here: https://www.abc.net.au/news/2020-05-26/failure-of-virgin-orbits-maiden-rocket-drop-launch/12286216

Rgds all/be well
Section28- BE

[galdian]

Cyrus currently has just $4 billion in assets under management. Resurrecting Virgin 'to remain roughly the same size it was before going into voluntary administration in April' will be a $5 billion cash and debt deal. So, there's that.

Branson is underwater on Virgin Atlantic and just watched Virgin Orbit drop a $12 million two-stage rocket into the Pacific Ocean (for those unfamiliar with the project, the rocket was meant to head in the opposite direction). And then there's Virgin Voyages - probably not tracking to the FY20 businsss plan and not likely to be hitting its FY21 numbers either with a further two 110,000 tonne cruise ships on order. So, in the grand scheme of things I wouldn't think that he's necessarily flush with cash just at the moment.

Cyrus are likely just trying to play up their non-financial credentials to the unions ahead of Friday's short-short-listing.

No secret I think Micks posts are as informative as any, more so than most so would encourage more seriously read....and ponder.

The CREDITORS and ONLY the creditors will decide what happens to VA - it is not, and never will be, the administrator.

It is up to the administration to try to convince the creditors that it's to their benefit to cut their losses and accept xxx% o the dollar.
It is up to the administration to try to convince any serious buyer to throw in xxx billions (totally dead money) to tell the creditors to piss off.
THEN the buyer has to have the $$ to keep the operation going, revamp, renew....whatever buzzwords you want to employ.

Mick I think is suggesting Cyrus don't have the financial power required to accomplish the above.

Does anyone - apart from (maybe) someone who sees assets to be stripped?

Apologies Mick If I've misunderstood or misquoted you, from what I see what you say is just fair common sense, well imparted with no malice intended to anyone.

Time will tell.
Cheers

[MickG0105]

Mick I think is suggesting Cyrus don't have the financial power required to accomplish the above.

Does anyone - apart from (maybe) someone who sees assets to be stripped?

Apologies Mick If I've misunderstood or misquoted you, from what I see what you say is just fair common sense, well imparted with no malice intended to anyone.

Spot on, that is what I'm suggesting. Cyrus are not a big player.

Back of the napkin, it's going to take $5 billion give or take a few hundred million to resurrect VA as a Qantas Mini-Me (full service domestic + international + LCC). If that's Cyrus's plan they will need a deep pocketed partner.

Same same with Indigo, they're about the same size as Cyrus. That said, Indigo wouldn't be buying into the Qantas Mini-Me delusion - Bill Franke hasn't been successful in the industry for 35 years for no good reason. They would have their eyes on something like a $2.5 - 3 billion cash and debt deal with fleet of about 50 narrow bodies and half the current workforce flying domestic and trans-Tasman. That's not going to get a tick from the unions though.

Bain and BGH/AusSuper/Temasek are the only ones currently in the race that can fund the Qantas Mini-Me delusion. Bain would know that that model won't make money for a couple of years, at best, and their preference will be for something leaner and meaner. Enter the unions. Lean and mean is a hard sell to them hence Bain's 'let's make flying fun again' - that was a pitch to the employees, not the customers.

BGH might just be dumb enough to try the Delusion but as they'll need to turn to AusSuper for probably half the funding I think they'll struggle to make a bankable investment case. Who knows though, stranger things have happened when super funds want to get creative.

The further complicating factor is that everything has to happen at the speed of heat because Deloitte probably only has 30 days of runway left.

Although the real rub in these proceedings is that you've got VA's management and the unions being confronted by real airline/business people for the first time in over a decade, possibly ever. It's classical clash of cultures stuff - on one side a bunch who've repeatedly rewarded failing to succeed, people who believe that they were just one tweak of the business away from being great and on the other you've got a bunch with a totally antithetical approach; failing is never acceptable and they've got a suitcase of wire brushes of various grades that they're not afraid to use in order to avoid it. And the interactions between the two are being forced to play out in a contrived manner over a very compressed time frame.

[galdian]

Spot on, that is what I'm suggesting. Cyrus are not a big player.

Back of the napkin, it's going to take $5 billion give or take a few hundred million to resurrect VA as a Qantas Mini-Me (full service domestic + international + LCC). If that's Cyrus's plan they will need a deep pocketed partner.

Same same with Indigo, they're about the same size as Cyrus. That said, Indigo wouldn't be buying into the Qantas Mini-Me delusion - Bill Franke hasn't been successful in the industry for 35 years for no good reason. They would have their eyes on something like a $2.5 - 3 billion cash and debt deal with fleet of about 50 narrow bodies and half the current workforce flying domestic and trans-Tasman. That's not going to get a tick from the unions though.

Bain and BGH/AusSuper/Temasek are the only ones currently in the race that can fund the Qantas Mini-Me delusion. Bain would know that that model won't make money for a couple of years, at best, and their preference will be for something leaner and meaner. Enter the unions. Lean and mean is a hard sell to them hence Bain's 'let's make flying fun again' - that was a pitch to the employees, not the customers.

BGH might just be dumb enough to try the Delusion but as they'll need to turn to AusSuper for probably half the funding I think they'll struggle to make a bankable investment case. Who knows though, stranger things have happened when super funds want to get creative.

The further complicating factor is that everything has to happen at the speed of heat because Deloitte probably only has 30 days of runway left.

Although the real rub in these proceedings is that you've got VA's management and the unions being confronted by real airline/business people for the first time in over a decade, possibly ever. It's classical clash of cultures stuff - on one side a bunch who've repeatedly rewarded failing to succeed, people who believe that they were just one tweak of the business away from being great and on the other you've got a bunch with a totally antithetical approach; failing is never acceptable and they've got a suitcase of wire brushes of various grades that they're not afraid to use in order to avoid it. And the interactions between the two are being forced to play out in a contrived manner over a very compressed time frame.

:D:D:D

Anyone want to argue with the fundemtals as described?
Seriously?? :p

Cheers

[Phileas Fogg]

B737's? ... Yep that is truly sensible one type to go for, the travelling public just love B737's in recent times, the type hasn't received any bad publicity whatsoever!

[Rashid Bacon]

Keeps coming back to the point where it has to go into receivership and rise from the ashes after that. The huge problem in that scenario is the AOC is effectively lost and a new one will need to be obtained.

That will take months.

[Ragnor]

Keeps coming back to the point where it has to go into receivership and rise from the ashes after that. The huge problem in that scenario is the AOC is effectively lost and a new one will need to be obtained.

That will take months.

That might work out alright really. Aviation is not going to be busy until next yr the individual governments are dragging their heals soon no one will have money to travel. New VA in 12 months might work out better because QF and JQ will be in that position this time next yr.

[lucille]

Bacon, Rasher ..”That will take months”.... True, but surely not unreasonable to assume that work on it has already been commenced by the interested parties. Also, an accelerated and expedient process both technically and politically would be more than likely - possibly even a new land speed record for box ticking by CASA.

MickGO105, ... spot on. Self evidently, uppermost in the minds of the bidders will be assuming the least possible percentage of debt followed by minimising operating costs. Both of which will make for unhappy creditors and unions. Despite which, I can’t see either of them considering the nuclear option. Hobson’s choice.

[Buster Hyman]

Keeps coming back to the point where it has to go into receivership and rise from the ashes after that. The huge problem in that scenario is the AOC is effectively lost and a new one will need to be obtained.

That will take months.
I clearly don't know the rules around this but, with that scenario in mind, could a new owner buy the TT AOC & set up, then VA goes into receivership?

[didrechambers77]

Which kinda needs to happen. Why keep the problem? Why keep the same people who made it so complicated, now tasked to simplify things. Righto, that's a recipe for success isn't it....

The same people who sponsored and wasted millions on failed checkin systems
The same people who failed two crew management systems
The same people who introduced 170/190 fleet then removed it, copy paste for ATR & 330.

The systemtic issue with the Business is, its being run by the snag club who have no corporate experience (or tertiary education) and only know how to run a 737 or simple business. So when the complexities came, the vendors came with products, they quickly accepted the inflated price of services they were offering. I feel sorry for the FltDeck if anything. You're the ones who have spent decades and money getting to where you are today, only to find it being truly underestimated by the boys club who only know what they want to know.

[On eyre]

I clearly don't know the rules around this but, with that scenario in mind, could a new owner buy the TT AOC & set up, then VA goes into receivership?

You can’t just buy an AOC but you can buy an organisation (read company) holding an AOC but you then have to deal with the Administrators of the company.

[Buster Hyman]

You can’t just buy an AOC but you can buy an organisation (read company) holding an AOC but you then have to deal with the Administrators of the company.
So, if they were going to sell off TT (AOC), it would've had to have been done prior to Administration?

[Transition Layer]

That might work out alright really. Aviation is not going to be busy until next yr the individual governments are dragging their heals soon no one will have money to travel. New VA in 12 months might work out better because QF and JQ will be in that position this time next yr.
What position is that?

[neville_nobody]

So, if they were going to sell off TT (AOC), it would've had to have been done prior to Administration?

No it could be sold tomorrow if the Administrator so desired. They won't because the last thing they need is more competition.

[DanV2]

No it could be sold tomorrow if the Administrator so desired. They won't because the last thing they need is more competition.

They'd also be buying TT's 'debts', liabilities and balance sheet with the AOC.

Considering that TT was operating as a separate structure under VAH, the debts that were accumulated in the books under TT will be transferred to the 'new owner' of TT's AOC if an interested party was to 'buy' the TT AOC.

[Checklist Charlie]

Buying Tiger complete with all its debts and liabilities might just be the simplest and cheapest way to get a ready made airline complete with approved' personnel. crews, infrastructure, aircraft and an exsisting route network.

It would certainly be cheaper and less traumatic than buying Virgin and trying to resurrect and reconfigure what is basically a hollow carcass.

CC

[Icarus2001]

Buying Tiger complete with all its debts and liabilities might just be the simplest and cheapest way to get a ready made airline complete with approved' personnel. crews, infrastructure, aircraft There is only one small problem, they made 220 Tiger pilots redundant back in April. I guess they can re-employ them. Then do they use A320 or B737? Which sim centre do they use for re validations etc

[wishiwasupthere]

There is only one small problem, they made 220 Tiger pilots redundant back in April. I guess they can re-employ them. Then do they use A320 or B737? Which sim centre do they use for re validations etc

If Indigo was involved, which given their previous involvement with setting up Tiger Singapore and penchant for low cost carriers, isn’t beyond the realms of possibility, their 600+ NEOs on order would make that decision a no brainer.

[2020Balance]

There is only one small problem, they made 220 Tiger pilots redundant back in April. I guess they can re-employ them. Then do they use A320 or B737? Which sim centre do they use for re validations etc

Suprise Suprise. They conveniently got through the new single AOC just before they made the “Difficult Decision” to drop the TT and Vainz guys under the bus. The union guys who are all senior VA were happy to sit back and watch while preserving their own asses

[Buster Hyman]

No it could be sold tomorrow if the Administrator so desired. They won't because the last thing they need is more competition.
Thanks. I was trying to understand if they could siphon off TT for a quick sale, regardless of what that would mean long time. Unlikely for sure, but just getting my head around the process.

Suprise Suprise. They conveniently got through the new single AOC just before they made the “Difficult Decision” to drop the TT and Vainz guys under the bus. The union guys who are all senior VA were happy to sit back and watch while preserving their own asses
So, it's all moot? The TT AOC was merged was it? (Am I reading that right?)

[2020Balance]

Thanks. I was trying to understand if they could siphon off TT for a quick sale, regardless of what that would mean long time. Unlikely for sure, but just getting my head around the process.


So, it's all moot? The TT AOC was merged was it? (Am I reading that right?)

Yep. Vaa pilots will now crew any future TT and Vainz flying after Pauly, Stewie and Timmy Vapour threw the guys under the bus

[On eyre]

Suprise Suprise. They conveniently got through the new single AOC just before they made the “Difficult Decision” to drop the TT and Vainz guys under the bus. The union guys who are all senior VA were happy to sit back and watch while preserving their own asses

Strangely however there is still an AOC for Tiger Airways Australia Pty Limited shown on the CASA website current until 2022 so maybe your surprise might have been premature.

[2020Balance]

Yes. However Vaa crew can now operate former TT and Vai flying if and when they ever operate again. Primarily the reason why they were all made redundant. Good luck to the few at the top of the GDOJ at the end of the bargain basement process.

[On eyre]

Yes. However Vaa crew can now operate former TT and Vai flying if and when they ever operate again. Primarily the reason why they were all made redundant. Good luck to the few at the top of the GDOJ at the end of the bargain basement process.

So the AOC’s weren’t merged as you suggested. And if the Tiger Airlines Australia Pty Limited was sold off separately by the administrator, the new owners of that company would probably not be compelled to employ any former TT or VA crew.

[Pundit]

If TT was sold off and the TT crew were employed, would transmission of business apply?

[Tubman601]

It is a moot point, there is no way they would sell off TT and associated AOC as it would then make Virgin totally worthless. The new company would start with far less debt so why would anyone then want to purchase VA.

[VH DSJ]

Out of interest, how much would TT's AOC be worth? Are we talking millions of dollars worth?

[Climb150]

Out of interest, how much would TT's AOC be worth? Are we talking millions of dollars worth?

I think Virgin picked it up for $1. Must only be worth 50 cents now.

[MickG0105]

I think Virgin picked it up for $1. Must only be worth 50 cents now.
They paid a total of $35,000,001 for Tigerair; $35 million for 60 percent back in 2013 and then $1 for the balance the following year.

[Tubman601]

It’s not that expensive to do an AOC from scratch, just the time it takes to either do the manual suit yourself or get one of the many companies that do it for a living to do it.
Get the appropriate people in place and submit it to CASA, then wait. If you’ve got all your ducks in a row it should go through without too much back and forth which is where the time wasting is. Otherwise it’s up to CASA and how many people they put on it.
CASA give you a cost estimate when you submit the package.

[onehitwonder]

When was the last time you put in for an AOC.

$100K + to write HC manuals and some $200K in CASA fees

[MelbourneFlyer]

Now being reported that Bain Capital has been confirmed by Deloitte as the winner, no big surprise there after Cyrus upped stumps!

https://www.executivetraveller.com/news/bain-wins-control-of-virgin-australia

[ozbiggles]

You think it might be Cyrus chucked their toys out of the cot because they knew what was coming?

[Green.Dot]

When was the last time you put in for an AOC.

$100K + to write HC manuals and some $200K in CASA fees

Ha, is that a lot of money in the airline world is it?