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Virgin Australia : 315 Million Loss - How long can they survive?

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Virgin Australia : 315 Million Loss - How long can they survive?

Old 16th Sep 2019, 06:28
  #261 (permalink)  
 
Join Date: Aug 2018
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Originally Posted by wheels_down View Post
The affinity thing was all just like one of those pay day loans. They needed the cash to pay bonds, and are now paying it back at what 50% interest.

Its like maxing out out all off your credit cards and bank account with a bill due before the next pay check.

Was an act of desperation. Cost them 350 million.
calculated over 5.5 years it痴 actually closer to 16% annual compound interest. Not ideal but as said previously they needed cash. When they池e probably paying 5-8% normally it痴 hardly doomsday.
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Old 16th Sep 2019, 06:44
  #262 (permalink)  
 
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The balance sheet looks like it can take it.

There is 1.74 Billion AUD sitting as cash and equivalents on the balance sheet as of 30 June 2019.

Another tranche of USD issued bonds matures Nov 19. Coupon rate of 8.5% Sure, unsecured and a Moody's rating of B3. Speculative (junk) grade.
But if your an investor willing to take a risk in the current low interest environment, you're probably going to take a punt. If you put it in the bank, you'll be paying them to keep your money soon with interest rates projecting to go negative. 8.5% is fairly attractive for the given risk.

So according to the financial report 30 June 19, there is $568.9 million AUD in bond liabilities coming due, the last USD issued bonds. VAH are now issuing bonds in AUD, bit smarter as they earn in AUD and the FX rate is going to have less of an effect. There's actually $771.9 million AUD in total liabilities coming due on the balance sheet.

So with $1.74 billion AUD in cash, that leave just over $1 billion AUD in the kitty. They will no doubt re-issue the current maturing USD bonds into AUD bonds Nov 19 and get some of the cash back. and use that to purchase Velocity.

They'll re-buy Velocity, sure at double what they sold it for. $700 million AUD. But VAH will own it outright.

On the last report, for the year, a 65% stake of Velocity brought VAH $383.8 million AUD. So 100% ownership should bring in roughly $590 million AUD. They would have paid $700 million to bring in an extra $200 million AUD into the balance sheet per year. The purchase will pay for itself in 3.5-4 years, add resilience and diversification to revenue streams, which Scarrah said he want to do.

$700 million which will be re-issued as bonds, paying roughly $60 million in interest per year, to bring in an additional $200 million into the balance sheet. Not a bad deal. And it should still leave VAH with around $1 billion in cash on the balance sheet.

A waaay better purchase than a certain Western Australian FIFO ATR72 regional operation.....



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Old 16th Sep 2019, 07:17
  #263 (permalink)  
ebt
 
Join Date: Feb 2006
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Originally Posted by Gate_15L View Post
The balance sheet looks like it can take it.

There is 1.74 Billion AUD sitting as cash and equivalents on the balance sheet as of 30 June 2019.

Another tranche of USD issued bonds matures Nov 19. Coupon rate of 8.5% Sure, unsecured and a Moody's rating of B3. Speculative (junk) grade.
But if your an investor willing to take a risk in the current low interest environment, you're probably going to take a punt. If you put it in the bank, you'll be paying them to keep your money soon with interest rates projecting to go negative. 8.5% is fairly attractive for the given risk.

So according to the financial report 30 June 19, there is $568.9 million AUD in bond liabilities coming due, the last USD issued bonds. VAH are now issuing bonds in AUD, bit smarter as they earn in AUD and the FX rate is going to have less of an effect. There's actually $771.9 million AUD in total liabilities coming due on the balance sheet.

So with $1.74 billion AUD in cash, that leave just over $1 billion AUD in the kitty. They will no doubt re-issue the current maturing USD bonds into AUD bonds Nov 19 and get some of the cash back. and use that to purchase Velocity.

They'll re-buy Velocity, sure at double what they sold it for. $700 million AUD. But VAH will own it outright.

On the last report, for the year, a 65% stake of Velocity brought VAH $383.8 million AUD. So 100% ownership should bring in roughly $590 million AUD. They would have paid $700 million to bring in an extra $200 million AUD into the balance sheet per year. The purchase will pay for itself in 3.5-4 years, add resilience and diversification to revenue streams, which Scarrah said he want to do.

$700 million which will be re-issued as bonds, paying roughly $60 million in interest per year, to bring in an additional $200 million into the balance sheet. Not a bad deal. And it should still leave VAH with around $1 billion in cash on the balance sheet.

A waaay better purchase than a certain Western Australian FIFO ATR72 regional operation.....
I'm nominating this one for post of the year. S&P have said that the balance sheet can handle it, even with around A$1.1bn in debt due over the 2020 fiscal year. Yes, VA are paying a pretty penny to bring Velocity completely back in-house, but loyalty programs are more lucrative than the airlines attached to the side of them, so the board will see this as a big win. Selling points to banks raises cash and is highly profitable, especially when you control the redemption conditions. This will help add to their cash flow and gives them a lot more flexibility to run the program how they see fit in the future.

And that certain WA operator...yeah they screwed themselves for years and years with that one after they got hoodwinked into paying exorbitant leases on the ATRs that are sitting in storage in Nelson. Mind you, they seem to have done their best to gut what was left of the operator in the meantime, so much so it became better to cosy up with Alliance. But hey, hindsight is 20/20, right?
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Old 16th Sep 2019, 09:24
  #264 (permalink)  
 
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Most of the losses are solely due to buying all the tech crew RM Williams boots
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Old 16th Sep 2019, 09:57
  #265 (permalink)  
 
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Originally Posted by mattyj View Post
Most of the losses are solely due to buying all the tech crew RM Williams boots
Yet all the inane comments you make come from the years of you inhaling fumes as a refueller and the fact Virgin rejected your application mattyj
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Old 16th Sep 2019, 11:38
  #266 (permalink)  
 
Join Date: Feb 1999
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Originally Posted by mattyj View Post
Most of the losses are solely due to buying all the tech crew RM Williams boots
when you look at how long those puppies last on foot... they are worth every cent.
Not everyone took up the offer however.
😬
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Old 17th Sep 2019, 00:27
  #267 (permalink)  
 
Join Date: Jul 2009
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Originally Posted by Beer Baron View Post
Virgin sold the stake in Velocity to Affinity in 2014 for $335 million, now they are buying it back for $700 million.

Great business for Affinity, not so slick for VA.
Meanwhile, Affinity are hearing the words of a departed Australian businessman... "You only get one VA in your lifetime" (I was going to write virgin but that might have sent a different message, unintended).
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Old 17th Sep 2019, 00:54
  #268 (permalink)  
 
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Originally Posted by ebt View Post
I'm nominating this one for post of the year. S&P have said that the balance sheet can handle it, even with around A$1.1bn in debt due over the 2020 fiscal year. Yes, VA are paying a pretty penny to bring Velocity completely back in-house, but loyalty programs are more lucrative than the airlines attached to the side of them, so the board will see this as a big win. Selling points to banks raises cash and is highly profitable, especially when you control the redemption conditions. This will help add to their cash flow and gives them a lot more flexibility to run the program how they see fit in the future.

And that certain WA operator...yeah they screwed themselves for years and years with that one after they got hoodwinked into paying exorbitant leases on the ATRs that are sitting in storage in Nelson. Mind you, they seem to have done their best to gut what was left of the operator in the meantime, so much so it became better to cosy up with Alliance. But hey, hindsight is 20/20, right?
Agreed, great post. Some of the arm chair expert comments on here are unbelievable. Why do pilots think they understand how to run or manage a mulit-million dollar business any more than they think executives known how to fly a multi-million dollar aircraft? Most pilots can barely make basic investments without losing money yet for some reason we see comments on these forums over and over and over like there is an intrinsic understanding of the complexities of business. Reading a lot of these comments is as laughable as watching a bunch of 4 year olds discuss how to they're going to manage a 4 hour simulator session. Stick to what you know, admit when things are beyond your understanding and if you can't do that, read up on the Dunning-Kruger effect!
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Old 17th Sep 2019, 01:13
  #269 (permalink)  
 
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If bringing it back in house is such a great idea because they are so profitable, why did the business geniuses sell it in the first place?

Seems to me Dragun that these experts don't have a clue as much as the four year olds you mention.
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Old 17th Sep 2019, 01:59
  #270 (permalink)  
 
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yet for some reason we see comments on these forums over and over and over like there is an intrinsic understanding of the complexities of business. Reading a lot of these comments is as laughable as watching a bunch of 4 year olds discuss how to they're going to manage a 4 hour simulator session. Stick to what you know, admit when things are beyond your understanding and if you can't do that, read up on the Dunning-Kruger effect!
Or to put that another way (a phrase another non-professional pilot is fond of using) if you don't like what professional pilots talk about don't read their posts on what is mainly a forum for professional pilots to talk about what professional pilots talk about. Its not always flying stuff. If this was an executives and middle management BB you would have a valid complaint. As its not, you don't.
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Old 17th Sep 2019, 02:37
  #271 (permalink)  
 
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Originally Posted by Dragun View Post
Agreed, great post. Some of the arm chair expert comments on here are unbelievable. Why do pilots think they understand how to run or manage a mulit-million dollar business any more than they think executives known how to fly a multi-million dollar aircraft? Most pilots can barely make basic investments without losing money yet for some reason we see comments on these forums over and over and over like there is an intrinsic understanding of the complexities of business. Reading a lot of these comments is as laughable as watching a bunch of 4 year olds discuss how to they're going to manage a 4 hour simulator session. Stick to what you know, admit when things are beyond your understanding and if you can't do that, read up on the Dunning-Kruger effect!
On that point, would you say that the guy that ran it for 7 years without making any money had an understanding of the complexities of business?

I don't see any issue in anyone stating their opinion, and it's up to the person reading the post whether or not they deem the post factual or just an opinion. In my opinion...
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Old 17th Sep 2019, 06:49
  #272 (permalink)  
 
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https://www.airlineratings.com/news/...-tokyo-haneda/

If VA get these slots how will that effect fleet planning?

The announcement seems to indicate doing the flights with the current fleet. This will indicate pulling back from HK?

With the cost of used 330s rock bottom surely a few more second hand leased 330s would be viable would it not?
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Old 17th Sep 2019, 07:03
  #273 (permalink)  
 
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Originally Posted by 777Nine View Post
On that point, would you say that the guy that ran it for 7 years without making any money had an understanding of the complexities of business?

I don't see any issue in anyone stating their opinion, and it's up to the person reading the post whether or not they deem the post factual or just an opinion. In my opinion...
Of course he understands it. Does that mean he got every decision right? Probably not. Does it mean he got it all wrong? Probably not. In any case, my point doesn't relate to whether or not he or any other exec or CEO does or did a good job or not, it relates to people giving opinions on things they fundamentally don't understand in the same way someone who's never flown an aircraft would give an opinion on a pilot's performance by observing a simulator session. They might think they can assess what's happening based on whether or not the landing was smooth, but the reality is they neither have the knowledge or ability to assess the performance of the crew in pretty much any capacity. As professional flight crew we find would find that laughable so why are we generally so arrogant to think the same doesn't apply in reverse?

I'm amazed how many pilots I hear passing judgement on Virgin's or Qantas' business performance yet don't understand the difference between a statutory loss (profit) and and underlying loss (profit), just as a very basic example. Or how a given company continually losing money can still continue to increase in value over time. I'm not saying we shouldn't have opinions or that people aren't entitled to one, but the next time you listen to someone rant in a bar over the performance of any company (or for anyone reading this and has done it themselves), genuinely ask yourself, do they really understand how to interpret financial results, read a balance sheet, assess investments, understand bonds or long term business strategy? How much experience do they genuinely have to make that assessment? Or are they just doing what we, as pilots, tend to do very well...think that because we're professionals at flying mulit-million dollar aircraft around the sky it also makes us knowledgeable and professional in everything else? A few basic probing questions usually and very quickly highlight this in my experience.

All it takes sometimes is a bit of humility and accepting that we don't have to understand everything all the time.

...but that's just my opinion

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Old 17th Sep 2019, 07:10
  #274 (permalink)  
 
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Originally Posted by Lookleft View Post
Or to put that another way (a phrase another non-professional pilot is fond of using) if you don't like what professional pilots talk about don't read their posts on what is mainly a forum for professional pilots to talk about what professional pilots talk about. Its not always flying stuff. If this was an executives and middle management BB you would have a valid complaint. As its not, you don't.
As a non-management professional pilot flying for a major Australian airline, I'd say I'm well able and entitled to be here. I'm simply providing an objective view point without the normal group think we all learn about in CRM/NTS and that often dominates threads like these.
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Old 17th Sep 2019, 07:13
  #275 (permalink)  
 
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Originally Posted by pilotchute View Post
If bringing it back in house is such a great idea because they are so profitable, why did the business geniuses sell it in the first place?

Seems to me Dragun that these experts don't have a clue as much as the four year olds you mention.
What makes you think I'm any more qualified to provide that assessment than you? I wouldn't have a clue! And as I've said all along, that is my point!
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Old 17th Sep 2019, 08:33
  #276 (permalink)  
 
Join Date: Sep 2017
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You don稚 have to be a business guru to read any number of the reports written in response to virgins financial performance. You also don稚 need any special skills to recognise that the VAH share price is bouncing up and down off its lowest ever price.
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Old 17th Sep 2019, 10:50
  #277 (permalink)  
 
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Originally Posted by Phil Errup View Post
You don稚 have to be a business guru to read any number of the reports written in response to virgins financial performance. You also don稚 need any special skills to recognise that the VAH share price is bouncing up and down off its lowest ever price.
and pray tell, please enlighten us all on how the share price affects the operation of VAH? Is VAH continued operation dependant on it痴 share price?

Please also enlighten us on how many free float VAH shares are available on the market too while your at it?



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