Virgin capital raising
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Virgin capital raising
I feel this spells big big problems for Qantas. The major shareholders in Virgin have very deep pockets, Qantas by all accounts and looking at load factors is losing money at the moment hand over fist and this is the best six months of the financial year. Rumour has it that Etihad want to put another ten A330s into Virgin domestic plus a number of 777s internationally to pick up the European rights from Australia that Qantas either have stopped using or don't use. Very dark clouds on the horizon.
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You could also look at it the other way, and that is, this is the second Capital raising in 5 years totalling $600m. Virgin has been bleeding red ink for years. JB's game change hasn't actually changed anything yet, VAH is still losing tons of money. His saving grace is that he has shareholders with deep pockets, and he only has to keep 3 of them happy, all of whom have a vested interest in VA's survival.
Q was surviving with it's appalling number of destinations internationally as it was (albeit propped up by domestic). Now that it has access to the best international feed on the planet through EK, I doubt that AJ is too concerned about cash injections to VAH, in fact I bet he's laughing his tits off.
JB made the statement last year that he reckoned V had more free cash than Q and could sustain a fare war longer. Not sure how that has worked out.
The only positive for V is that the big shareholders now need Virgin to stay around because they will not be getting much traffic from the Qantas domestic feed, so SQ EY in particular will be happy to fund reasonable losses for some time to ensure they get access to the V domestic traffic. At the end of the day it is now about the bottom line of EY, SQ and NZ. VAH's profit is largely irrelevant, and i suggest we are unlikely to ever see one going forward as any significant surpluses are likely to be shifted offshore to more tax friendly environments.
Q was surviving with it's appalling number of destinations internationally as it was (albeit propped up by domestic). Now that it has access to the best international feed on the planet through EK, I doubt that AJ is too concerned about cash injections to VAH, in fact I bet he's laughing his tits off.
JB made the statement last year that he reckoned V had more free cash than Q and could sustain a fare war longer. Not sure how that has worked out.
The only positive for V is that the big shareholders now need Virgin to stay around because they will not be getting much traffic from the Qantas domestic feed, so SQ EY in particular will be happy to fund reasonable losses for some time to ensure they get access to the V domestic traffic. At the end of the day it is now about the bottom line of EY, SQ and NZ. VAH's profit is largely irrelevant, and i suggest we are unlikely to ever see one going forward as any significant surpluses are likely to be shifted offshore to more tax friendly environments.
Last edited by 6100; 15th Nov 2013 at 03:54.
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Virgin takeover not on says Air NZ - Business - NZ Herald News
In the world of Corporate speak, this would almost make it a certainty wouldn't it?
In the world of Corporate speak, this would almost make it a certainty wouldn't it?
The international/regional side of Virgin is certainly in need of some injection of equipment especially when half the longhaul 777 fleet is out of action.
Might be a bit suspect for foreign airlines to pump capital into Virgin's International business.
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Virgin Australia Gets Samoa, Etihad Debt to Fight Qantas - Bloomberg
It's a Sept 2013 article. Virgin has the third highest debt ratio of airlines globally.
It's a Sept 2013 article. Virgin has the third highest debt ratio of airlines globally.
The international/regional side of Virgin is certainly in need of some injection of equipment especially when half the longhaul 777 fleet is out of action.
They have no need for more frames as the owners do the majority of that flying.
Etihad buys another 50 A350s, 36 A320s and an A330F | Plane Talking
They will always have a presence but it's never going to be a big one. It would have been interesting if V Atlantic got involved.
Etihad buys another 50 A350s, 36 A320s and an A330F | Plane Talking
They will always have a presence but it's never going to be a big one. It would have been interesting if V Atlantic got involved.
Last edited by Berealgetreal; 17th Nov 2013 at 18:20.
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Virgin Atlantic are effectively involved with Virgin Australia via its owners.
Virgin Atlantic was 51% Virgin Group (Branson) and 49% Singapore. Singapore recently sold to Delta for US$360m.
Whether or not Virgin Aus Intl is making money or not it is tiny compared to the domestic ops. If Virgin Aus is losing cash (which it seems it has been for years), then it makes it so much harder for Qantas to make a return on its domestic operations, which have seemingly (depending on who you belive) been subsidising international.
Given the supposed 'separation' of Virgin Aus Intl (although where are the separate financial statements, board or management), I think it is more complicated for the money to filter down that way.
Virgin Atlantic was 51% Virgin Group (Branson) and 49% Singapore. Singapore recently sold to Delta for US$360m.
Whether or not Virgin Aus Intl is making money or not it is tiny compared to the domestic ops. If Virgin Aus is losing cash (which it seems it has been for years), then it makes it so much harder for Qantas to make a return on its domestic operations, which have seemingly (depending on who you belive) been subsidising international.
Given the supposed 'separation' of Virgin Aus Intl (although where are the separate financial statements, board or management), I think it is more complicated for the money to filter down that way.
