Virgin Australia : 315 Million Loss - How long can they survive?
but airlines are now owned by pension funds
Singapore Airlines 20%
Etihad 21%
HNA Group 13 %
Nanshan Group 23%
Virgin Group 10%
Shares at market ~11%
Give or take a few percent.
That’s correct, if a little linear.
and who owns them? Private equity, sovereign wealth funds and shareholders who have expectations. My point remains, it’s no longer a hands on owner, making decisions over a scotch at 10am.
Shareholders mean graphs,data, presentations, forecasts and a lot of ancillary office work that is connected to reporting on investments and returns, rather than hitting FL360 or swinging spanners.
is it a waste of time, yes, very probably. Can you do away with it and fund an airline in the modern age? Probably not, And I’ll bet the ones that miss the cull are the excel ninjas that do the financial reporting.
and who owns them? Private equity, sovereign wealth funds and shareholders who have expectations. My point remains, it’s no longer a hands on owner, making decisions over a scotch at 10am.
Shareholders mean graphs,data, presentations, forecasts and a lot of ancillary office work that is connected to reporting on investments and returns, rather than hitting FL360 or swinging spanners.
is it a waste of time, yes, very probably. Can you do away with it and fund an airline in the modern age? Probably not, And I’ll bet the ones that miss the cull are the excel ninjas that do the financial reporting.
I don’t think the notion of anybody losing their job wouldn’t be sad regardless of their role. I’m pretty sure virtually none the 750 are directly responsible for the current financial situation (maybe one or two had a hand at best).
It would be great to see some questions asked of the very top end of town as to how all of this came
about. Perhaps a few forensic accountants could have a bit a poke around so to speak. Quite a bit of money involved really. I guess that’s just the corporate world for you, no matter where you live.
Jethro_27’s post really struck a chord with me. Pretty human side to someone losing a job, it’s a serious business no matter where you sit.
I recall hearing that when Ansett went under that some took their lives, so I’d caution anyone using words like “oxygen thieves” or wishing that a third of pilots were part of the number.
It was good to see and hear how much the CEO and HR manager talked of their plan to try and find employment for those affected. A lot of places just turf you out. I’ve been turfed, it’s tough going.
Anyway, most pilots aren’t concerned with feedback on reports and care little of staff travel. They’ve been around long enough and are probably too flogged to take any interest. There will always be the 3% that type away about this issue and that meal the rest simply could not be bothered.
It’s great hearing about how aviation has evolved, but at the end of the day most of us just want to get from a to b safely without getting into any trouble.
Fingers crossed the new leadership can undo the tangle and that the recession that the media excitedly promise us every second day, holds off for a few more years. If not we will all be packing our bags!
It would be great to see some questions asked of the very top end of town as to how all of this came
about. Perhaps a few forensic accountants could have a bit a poke around so to speak. Quite a bit of money involved really. I guess that’s just the corporate world for you, no matter where you live.
Jethro_27’s post really struck a chord with me. Pretty human side to someone losing a job, it’s a serious business no matter where you sit.
I recall hearing that when Ansett went under that some took their lives, so I’d caution anyone using words like “oxygen thieves” or wishing that a third of pilots were part of the number.
It was good to see and hear how much the CEO and HR manager talked of their plan to try and find employment for those affected. A lot of places just turf you out. I’ve been turfed, it’s tough going.
Anyway, most pilots aren’t concerned with feedback on reports and care little of staff travel. They’ve been around long enough and are probably too flogged to take any interest. There will always be the 3% that type away about this issue and that meal the rest simply could not be bothered.
It’s great hearing about how aviation has evolved, but at the end of the day most of us just want to get from a to b safely without getting into any trouble.
Fingers crossed the new leadership can undo the tangle and that the recession that the media excitedly promise us every second day, holds off for a few more years. If not we will all be packing our bags!
Last edited by Berealgetreal; 7th Sep 2019 at 20:30.
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If you like your airlines thin on staff, go work for a LCC like Wow, Whizz or Ryanair.... watch your salary drop, start buying your own uniform/lunch and pay for your own ratings; they share your opinion on managers and staff. If you don't like that plan, you're working for an airline that needs to stand out from the crowd.and has to offer all the extra guff which requires people to manage the aforementioned extra guff, like FFP, customer service, catering, lounges etc etc.
Never have I said that the airline should be thin on staff. It should have the correct number of staff in the necessary positions and those staff should be the best available.
And I absolutely believe that the new CEO has evaluated the situation quite accurately and determined where the business needs to focus its attention in order not only to survive but to prosper.
And I’m well aware that the airline needs managers and again, the new CEO is putting some excellent people into the necessary positions, the permanent appointment of the new COO being a perfect example.
The previous CEO brought all his talentless mates from QANTAS and paid them ridiculous salaries and all they did was feather their own nests, to the detriment of the company.
Obviously it’s unfortunate when anybody loses their jobs and I’m sure the new CEO did not take this decision lightly. Quite the opposite in fact.
But something had to be done to repair the damage done by his predecessor and I believe that he is making decisions with the company’s best interests at heart.
Unwinding the Borghetti experiment at Virgin
"Right-sizing", "strategic review" and "organisational change". Translate the corporate speak, and it means there's an enormous clean-up job underway at the country's second airline group.
Scurrah is unwinding many of his predecessor's decisions as he seeks to make the airline profitable. Janie Barrett
Less than six months into his new role at Virgin Airways, Paul Scurrah won't say it, but everyone else is: he's effectively reversing the strategy so carefully crafted over nine years by his predecessor, John Borghetti.
And Scurrah has barely started. Cutting 750 head office roles; delaying large aircraft orders; chopping routes and overhauling his management team is just the beginning.
He's even unwinding some of Borghetti's demands for formality, relaxing cabin crew dress codes - glossy red lipstick is no longer compulsory.
Staff can now make their own choice about what to wear when flying Virgin on their holidays, rather than relying on a rule book and being monitored by ground staff.
Everything is up for grabs. And what the market really wants to know is, will Scurrah take Virgin back to its low-cost roots, and what does that mean for its budget brand Tiger, and the international division?
Borghetti was mainly praised for developing the airline from a low-cost carrier to a multi-brand carrier. Louie Douvis
Scurrah won't provide more detail on the future strategy of the group, because he hasn't gone through a complete review yet.
But questions include: has the country's second airline really been doing it that tough? Was Scurrah truly handed such a mess? Or is this a standard new CEO re-set, masquerading as something more serious?
"It just feels like Paul needs to make an early statement ... I've never seen a new CEO come in and not do that," says a person who has worked at Virgin.
Borghetti, whose own early changes included introducing pilot uniforms and insisting on senior executives wearing ties, announced his departure in June last year.
He was mainly praised for developing the airline from a low-cost carrier to a multi-brand carrier, and building the airline's frequent flyer program - expected to be floated, as 35 per cent shareholder Affinity looks to exit its investment - to 9 million members.
Over the years, the expensive strategy had attracted some criticism, most notably from then shareholder Air New Zealand in 2016, which sold in part because losses weren't being stemmed fast enough.
In a breathtaking display of other-world airline-speak, Borghetti himself declared the job done in June last year. "The company is in great shape, and it's a good starting point. The transformation has been done," Borghetti said, while at the same time acknowledging the airline industry was always subject to external hits, mainly in the form of economic swings, fuel prices and foreign exchange fluctuations.
But how can a company that is now cutting 750 jobs in its head office and just posted a $75.6 million annual loss have been in great shape a year ago?
Australia cabin crew no longer have to wear red lipstick. Graham Denholm
Borghetti, now a non-executive director at soft drink group Coca-Cola Amatil, doesn't want to weigh back in. "After 46 years I am no longer involved in the industry. I am doing other things," he texted in quick response to a request for an interview.
Scurrah says the environment has got worse far more quickly than anticipated, and his overhaul is about preparing the airline to weather tougher economic conditions.
(His counterpart at Qantas, Alan Joyce, isn't quite as bearish, preferring to characterise domestic demand as "mixed", while acknowledging headwinds of higher fuel costs and a lower Australian dollar.)
In a conversation about the organisation's culture, Scurrah wants to make sure he's not seen to be drawing comparisons with his predecessor. He wants the changes he is implementing at Virgin to be simply seen as his way of doing business.
"I've been an ex-CEO of other companies as well. You can't understand the previous circumstances in which decisions were done," he says. Scurrah has previously run DP World and Queensland Rail.
That's perhaps even more true at Virgin than other companies. Some 90 per cent of its shares are owned by five airlines: the financially struggling Etihad, Nanshan Group, Singapore Airlines, HNA Group and Virgin Group.
Originally, the idea was that airline shareholders would help support Virgin's expansion and networks. In practice, perhaps unsurprisingly, each airlines' own issues have tended to dictate their approach to Virgin, which may have confused the strategy.
Right now, the airline, chaired by Elizabeth Bryan since 2015, would seem to be on a clearer course: return to profitability and, in Scurrah's words, "honour the investments that have been made to get where we are today".
In response to a question, Scurrah says he is aware the board and shareholder base are often considered dysfunctional. But he's found "the alignment and unity really pleasing. All of us want to be a successful airline".
But to blame the airline's shareholders for Virgin's strategy under its previous chief executive misses the point, say others.
"Under Borghetti, the airline went upmarket without profit," says one aviation analyst. "He undermined their natural advantage on costs, gave it away. And now they are in no-man's land."
He traces this back to when Qantas grounded its planes and Borghetti gave his pilots a pay rise. It's one of the biggest criticisms of the Borghetti era: that the man passed over for the Qantas top job spent his time at Virgin creating a mini-Qantas rather than a profitable airline.
The analyst points out that as a low-cost airline, in calendar year 2007, Virgin delivered profits of $348.1 million.
"The opportunity for Scurrah is big," says the aviation analyst. "Stop the bleeding, bring some stability into the earnings profile, sharpen the cost base and become a more effective competitor to Qantas."
It's not a new idea: Borghetti talked in various ways about the path back to profitability, at one point calling it "fourth phase" of the airline - sustainable earnings growth, after years of investment, a capacity war with Qantas and recapitalising.
Scurrah, who usually splits his time between Brisbane and Sydney, has spent the past week in meetings with staff around the country to discuss the job cuts. He says individuals are "concerned" but "there's been an acceptance that it is necessary for us, given the headwinds we see coming".
Scurrah says keeping a company's staff happy - at least most of the time - is a crucial part of balancing the three stakeholder groups: employees, customers and shareholders. But he's aware that they can't all be happy.
"If you say yes all of the time to one of the groups, it will weigh on the other two ... if we provide everything customers want - and in an airline, that's cheap airfares - shareholders don't get the returns they want. You have to get the balance right," he says.
Defining the existing Virgin culture and what Scurrah wants to ensure stays is harder. But Scurrah says "command and control" has never been his style. Rather, he wants to ensure a positive, vibrant and high-trust culture where people's opinions are respected, even as he's presiding over job cuts.
So he's introduced a "safety share" and "people share" as the first agenda item at each management meeting, of which there are dozens a week.
"People share is about recognition and gratitude. It's where we invite the group in that meeting to bring to our attention something of excellence that would not otherwise get the attention of senior management," he says.
Emails are sent to acknowledge the excellence, though not always with "safety shares", which can be more sensitive.
Scurrah's favourite to date? During the Sydney storms, a customer who lived two hours from the city couldn't get home because there weren't any taxis, Ubers or Olas (Virgin's partner) available. The solution? A staff member drove the customer home.
As for the few shareholders left on the register that aren't airlines, his largest institutional shareholder is Wilson Asset Management.
Geoff Wilson, a vocal advocate of privatising in the airline, says he's looking forward to sitting down with Scurrah to understand the strategy.
"Unfortunately, we haven't had the opportunity to meet him yet," he says. As well as pushing for a privatisation, Wilson has also got another idea.
"Assuming Velocity is floated, with Virgin keeping a majority position and potentially selling down, I think it's a fantastic opportunity for the Virgin board to reward Virgin shareholders and give them an entitlement."
"Right-sizing", "strategic review" and "organisational change". Translate the corporate speak, and it means there's an enormous clean-up job underway at the country's second airline group.
Scurrah is unwinding many of his predecessor's decisions as he seeks to make the airline profitable. Janie Barrett
Less than six months into his new role at Virgin Airways, Paul Scurrah won't say it, but everyone else is: he's effectively reversing the strategy so carefully crafted over nine years by his predecessor, John Borghetti.
And Scurrah has barely started. Cutting 750 head office roles; delaying large aircraft orders; chopping routes and overhauling his management team is just the beginning.
He's even unwinding some of Borghetti's demands for formality, relaxing cabin crew dress codes - glossy red lipstick is no longer compulsory.
Staff can now make their own choice about what to wear when flying Virgin on their holidays, rather than relying on a rule book and being monitored by ground staff.
Everything is up for grabs. And what the market really wants to know is, will Scurrah take Virgin back to its low-cost roots, and what does that mean for its budget brand Tiger, and the international division?
Borghetti was mainly praised for developing the airline from a low-cost carrier to a multi-brand carrier. Louie Douvis
Scurrah won't provide more detail on the future strategy of the group, because he hasn't gone through a complete review yet.
But questions include: has the country's second airline really been doing it that tough? Was Scurrah truly handed such a mess? Or is this a standard new CEO re-set, masquerading as something more serious?
"It just feels like Paul needs to make an early statement ... I've never seen a new CEO come in and not do that," says a person who has worked at Virgin.
Borghetti, whose own early changes included introducing pilot uniforms and insisting on senior executives wearing ties, announced his departure in June last year.
He was mainly praised for developing the airline from a low-cost carrier to a multi-brand carrier, and building the airline's frequent flyer program - expected to be floated, as 35 per cent shareholder Affinity looks to exit its investment - to 9 million members.
Over the years, the expensive strategy had attracted some criticism, most notably from then shareholder Air New Zealand in 2016, which sold in part because losses weren't being stemmed fast enough.
In a breathtaking display of other-world airline-speak, Borghetti himself declared the job done in June last year. "The company is in great shape, and it's a good starting point. The transformation has been done," Borghetti said, while at the same time acknowledging the airline industry was always subject to external hits, mainly in the form of economic swings, fuel prices and foreign exchange fluctuations.
But how can a company that is now cutting 750 jobs in its head office and just posted a $75.6 million annual loss have been in great shape a year ago?
Australia cabin crew no longer have to wear red lipstick. Graham Denholm
Borghetti, now a non-executive director at soft drink group Coca-Cola Amatil, doesn't want to weigh back in. "After 46 years I am no longer involved in the industry. I am doing other things," he texted in quick response to a request for an interview.
Scurrah says the environment has got worse far more quickly than anticipated, and his overhaul is about preparing the airline to weather tougher economic conditions.
(His counterpart at Qantas, Alan Joyce, isn't quite as bearish, preferring to characterise domestic demand as "mixed", while acknowledging headwinds of higher fuel costs and a lower Australian dollar.)
In a conversation about the organisation's culture, Scurrah wants to make sure he's not seen to be drawing comparisons with his predecessor. He wants the changes he is implementing at Virgin to be simply seen as his way of doing business.
"I've been an ex-CEO of other companies as well. You can't understand the previous circumstances in which decisions were done," he says. Scurrah has previously run DP World and Queensland Rail.
That's perhaps even more true at Virgin than other companies. Some 90 per cent of its shares are owned by five airlines: the financially struggling Etihad, Nanshan Group, Singapore Airlines, HNA Group and Virgin Group.
Originally, the idea was that airline shareholders would help support Virgin's expansion and networks. In practice, perhaps unsurprisingly, each airlines' own issues have tended to dictate their approach to Virgin, which may have confused the strategy.
Right now, the airline, chaired by Elizabeth Bryan since 2015, would seem to be on a clearer course: return to profitability and, in Scurrah's words, "honour the investments that have been made to get where we are today".
In response to a question, Scurrah says he is aware the board and shareholder base are often considered dysfunctional. But he's found "the alignment and unity really pleasing. All of us want to be a successful airline".
But to blame the airline's shareholders for Virgin's strategy under its previous chief executive misses the point, say others.
"Under Borghetti, the airline went upmarket without profit," says one aviation analyst. "He undermined their natural advantage on costs, gave it away. And now they are in no-man's land."
He traces this back to when Qantas grounded its planes and Borghetti gave his pilots a pay rise. It's one of the biggest criticisms of the Borghetti era: that the man passed over for the Qantas top job spent his time at Virgin creating a mini-Qantas rather than a profitable airline.
The analyst points out that as a low-cost airline, in calendar year 2007, Virgin delivered profits of $348.1 million.
"The opportunity for Scurrah is big," says the aviation analyst. "Stop the bleeding, bring some stability into the earnings profile, sharpen the cost base and become a more effective competitor to Qantas."
It's not a new idea: Borghetti talked in various ways about the path back to profitability, at one point calling it "fourth phase" of the airline - sustainable earnings growth, after years of investment, a capacity war with Qantas and recapitalising.
Scurrah, who usually splits his time between Brisbane and Sydney, has spent the past week in meetings with staff around the country to discuss the job cuts. He says individuals are "concerned" but "there's been an acceptance that it is necessary for us, given the headwinds we see coming".
Scurrah says keeping a company's staff happy - at least most of the time - is a crucial part of balancing the three stakeholder groups: employees, customers and shareholders. But he's aware that they can't all be happy.
"If you say yes all of the time to one of the groups, it will weigh on the other two ... if we provide everything customers want - and in an airline, that's cheap airfares - shareholders don't get the returns they want. You have to get the balance right," he says.
Defining the existing Virgin culture and what Scurrah wants to ensure stays is harder. But Scurrah says "command and control" has never been his style. Rather, he wants to ensure a positive, vibrant and high-trust culture where people's opinions are respected, even as he's presiding over job cuts.
So he's introduced a "safety share" and "people share" as the first agenda item at each management meeting, of which there are dozens a week.
"People share is about recognition and gratitude. It's where we invite the group in that meeting to bring to our attention something of excellence that would not otherwise get the attention of senior management," he says.
Emails are sent to acknowledge the excellence, though not always with "safety shares", which can be more sensitive.
Scurrah's favourite to date? During the Sydney storms, a customer who lived two hours from the city couldn't get home because there weren't any taxis, Ubers or Olas (Virgin's partner) available. The solution? A staff member drove the customer home.
As for the few shareholders left on the register that aren't airlines, his largest institutional shareholder is Wilson Asset Management.
Geoff Wilson, a vocal advocate of privatising in the airline, says he's looking forward to sitting down with Scurrah to understand the strategy.
"Unfortunately, we haven't had the opportunity to meet him yet," he says. As well as pushing for a privatisation, Wilson has also got another idea.
"Assuming Velocity is floated, with Virgin keeping a majority position and potentially selling down, I think it's a fantastic opportunity for the Virgin board to reward Virgin shareholders and give them an entitlement."
Last edited by John Citizen; 9th Sep 2019 at 07:05.
Evertonian
says a person who has worked at Virgin.
"The new colours are a disaster" says a person who Virgin flew over recently.
In theory she stays around until the end of the year to "assist with the transition" to the new CCO and the new EGM of Tiger, but likely she'll be on gardening leave for large part of it.
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Tigerair CEO Merren McArthur’s top packing hacks (Tip #1: don’t forget your undies)
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[QUOTE]VA has training managers for every fleet. It has standards managers for every fleet. It has a manager who oversees the training managers and standards managers. It has a fleet manager for every fleet. It has a manager who oversees all the fleet managers. It has base managers in every base. It has a manager to oversee the base managers. It has a manager to oversee all the EBAs. And it finally has a GMFO who oversees all the managers who oversee the managers. (Confused yet?). When a Standards Manager of a fleet of 5 or 6 aeroplanes is on Check Captain pay plus 20% (give or take) one has to wonder if those roles are safe in this right sizing[QUOTE]
Funny how the person who put this expanded Flight Ops structure in place, is now the permanent COO charged with restructuring, mmm
Funny how the person who put this expanded Flight Ops structure in place, is now the permanent COO charged with restructuring, mmm
Looks like another headwind in about 12 months with the events in Saudi overnight. Would have been a good time to be making some cash a few years ago cause this might hurt a little.
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Bullwinkle,..........
........If you like your airlines thin on staff, go work for a LCC like Wow, Whizz or Ryanair.... watch your salary drop, start buying your own uniform/lunch and pay for your own ratings; they share your opinion on managers and staff. If you don't like that plan, you're working for an airline that needs to stand out from the crowd.and has to offer all the extra guff which requires people to manage the aforementioned extra guff, like FFP, customer service, catering, lounges etc etc.
........
........If you like your airlines thin on staff, go work for a LCC like Wow, Whizz or Ryanair.... watch your salary drop, start buying your own uniform/lunch and pay for your own ratings; they share your opinion on managers and staff. If you don't like that plan, you're working for an airline that needs to stand out from the crowd.and has to offer all the extra guff which requires people to manage the aforementioned extra guff, like FFP, customer service, catering, lounges etc etc.
........
Tiger, where you get NO meals, meal breaks or meal pay, no bidding system, you buy your own uniforms (oh,now they take weeks to get it to you, EBA from June 2019), VARA doing Tiger rosters and they are SH*THouse! Useless safety dept, no accountability for managment and 11hr planned duties are the norm! (eg SY BN AD BN SY and SY BN ML BN SY).
Yes, come on over, you wont regret it VA peeps lol.... you'll hate it in about T minus 3 seconds.
Hey, they have that in the Virgin group...... its called Tigerair! Except the muppet show in HQ in Melb has like hundreds of staff for the same amount of a/c TT was running 8 years ago!!!!! LOL .... morons!
Tiger, where you get NO meals, meal breaks or meal pay, no bidding system, you buy your own uniforms (oh,now they take weeks to get it to you, EBA from June 2019), VARA doing Tiger rosters and they are SH*THouse! Useless safety dept, no accountability for managment and 11hr planned duties are the norm! (eg SY BN AD BN SY and SY BN ML BN SY).
Yes, come on over, you wont regret it VA peeps lol.... you'll hate it in about T minus 3 seconds.
Tiger, where you get NO meals, meal breaks or meal pay, no bidding system, you buy your own uniforms (oh,now they take weeks to get it to you, EBA from June 2019), VARA doing Tiger rosters and they are SH*THouse! Useless safety dept, no accountability for managment and 11hr planned duties are the norm! (eg SY BN AD BN SY and SY BN ML BN SY).
Yes, come on over, you wont regret it VA peeps lol.... you'll hate it in about T minus 3 seconds.
In regards to meals, I couldn’t think of anything worse than eating the onboard crap all the time. Much happier taking my own meals, and much healthier.
Sounds like you didn’t do your homework about what it’s like to work there burned_out. So quit whinging.
https://www.smh.com.au/business/comp...16-p52rqa.html
So where are cash strapped VA going to get $700 million to buy back Velocity? Good idea in the long term given how profitable it is however, can’t help but think how ridiculous this is with the current finances.
More debt
So where are cash strapped VA going to get $700 million to buy back Velocity? Good idea in the long term given how profitable it is however, can’t help but think how ridiculous this is with the current finances.
More debt
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.
Great business for Affinity, not so slick for VA.
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Hey, they have that in the Virgin group...... its called Tigerair! Except the muppet show in HQ in Melb has like hundreds of staff for the same amount of a/c TT was running 8 years ago!!!!! LOL .... morons!
Tiger, where you get NO meals, meal breaks or meal pay, no bidding system, you buy your own uniforms (oh,now they take weeks to get it to you, EBA from June 2019), VARA doing Tiger rosters and they are SH*THouse! Useless safety dept, no accountability for managment and 11hr planned duties are the norm! (eg SY BN AD BN SY and SY BN ML BN SY).
Yes, come on over, you wont regret it VA peeps lol.... you'll hate it in about T minus 3 seconds.
Tiger, where you get NO meals, meal breaks or meal pay, no bidding system, you buy your own uniforms (oh,now they take weeks to get it to you, EBA from June 2019), VARA doing Tiger rosters and they are SH*THouse! Useless safety dept, no accountability for managment and 11hr planned duties are the norm! (eg SY BN AD BN SY and SY BN ML BN SY).
Yes, come on over, you wont regret it VA peeps lol.... you'll hate it in about T minus 3 seconds.
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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.
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.
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.
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.
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.....
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.....