VA pilots worried about employment 2021
I have long been a supporter of VA, fantastic staff, great crew and an excellent product. Had It been majority Australian owned I’d be all in favour of supporting it. Sadly 90% or so of it is under foreign ownership. That $1.4 billion effectively goes to Prop up the investments of the foreign owners and not the staff and that part sticks in my throat.
There is a slightly positive side to this, another airline will start up in the future to fill the vacuum (should it ever come to that), experienced airline staff will be able to find work again. Australia cannot exist with just one airline.
There is a slightly positive side to this, another airline will start up in the future to fill the vacuum (should it ever come to that), experienced airline staff will be able to find work again. Australia cannot exist with just one airline.
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The way the Air NZ loan was structured was firstly about $ 300 million in cash, which was partially used to pay Ansett I think $ 150 or $ 180 million - I forget the exact amount. This was then converted into preference shares. The other $585 million from the NZ government was an outright share purchase. The net result is the NZ government has over 80% of the issued scrip.
Bear in mind this was the national carrier and the NZ government was never going to let it go. So they really had no other option than to take it over.
VAH is a very different situation and it will be challenging for the Australian government to find a way through this one.
Whichever way it goes, sadly jobs will disappear yet again.
Bear in mind this was the national carrier and the NZ government was never going to let it go. So they really had no other option than to take it over.
VAH is a very different situation and it will be challenging for the Australian government to find a way through this one.
Whichever way it goes, sadly jobs will disappear yet again.
Apologies...I can’t have been clear about the loan...I was meaning the most recent loan about a week ago.
The CEO:Foran said it was expected the airline would need to begin drawing on that within months because its outgoings were so high - monthly labour costs alone were $110m.
"Every dollar we use from this loan facility comes with interest (more than double current interest rates for a household mortgage) and must be re-paid."
Not a mates rates loan!
The CEO:Foran said it was expected the airline would need to begin drawing on that within months because its outgoings were so high - monthly labour costs alone were $110m.
"Every dollar we use from this loan facility comes with interest (more than double current interest rates for a household mortgage) and must be re-paid."
Not a mates rates loan!
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It has been many years since the Government entertained the idea of privatising or invested in an Airline company the size of VA, Having been through the AN issue almost 20 years ago there will be a lot of rumors about the Govt or a white Knight to save them. It didn't happen for AN so hopefully something happens for VA. Having been through it I feel for the Pilots a lot of who I know as it is not a good time. As for the Govt I can't see them doing it but you never know. Strange times.
There is a slightly positive side to this, another airline will start up in the future to fill the vacuum (should it ever come to that), experienced airline staff will be able to find work again. Australia cannot exist with just one airline.
Last edited by non_state_actor; 31st Mar 2020 at 09:13.
T-Vasis. I hope you are ok. You have been very quiet the past few weeks. I could see VA were walking on a tightrope. I am not confident they can survive. There has to be massive changes with a new name without losing the tax loses. This will get rid of Branson and his annual ransom.
Evertonian
So...no examples then. The duopoly was 'enacted' to maintain a viable commercial aviation industry. Deregulation occurred when it was obvious it wasn't necessary AND, to remove the 'Licence' to print money. (Both put in place by Politicians...and stop making me look like I'm defending them!)
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Bamboo Airlines will soon probably announce its Australian launch with 200 Neos and a
100 777-9s. They will fly from every capital direct to the big apple and drop Neos all over domestic. Alan better watch out. Vietnam invasion coming soon.
100 777-9s. They will fly from every capital direct to the big apple and drop Neos all over domestic. Alan better watch out. Vietnam invasion coming soon.
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It won't be a popular opinion but I think as it stands when QF gets back to flying there will be job losses and will likely come back a smaller airline, now assuming most here still believe in free markets and true capitalism then VA and QF should be left on their own.
If as most here have figured out VA goes under due to chronic long term miss-management then like in the Ansett days QF would have to pick up the slack, which means it will not only employ all of its staff but in addition a lot of VA ex employees.
At some stage of the game another airline will be born and new jobs created and a new cycle will begin once again. This is what free markets and true capitalism is all about. I would argue the same for any industry else we might just as well just give up and go all in on communism, Where kinda half way there anyway!
If as most here have figured out VA goes under due to chronic long term miss-management then like in the Ansett days QF would have to pick up the slack, which means it will not only employ all of its staff but in addition a lot of VA ex employees.
At some stage of the game another airline will be born and new jobs created and a new cycle will begin once again. This is what free markets and true capitalism is all about. I would argue the same for any industry else we might just as well just give up and go all in on communism, Where kinda half way there anyway!
Government likely to reject Virgin bailout plea
Government set to reject Virgin's $1.4b opening gambit
Lucas Baird and Jemima Whyte
Updated Mar 31, 2020 – 6.18pm,first published at 9.43am
The federal government looks set to reject Virgin Australia's initial request for a $1.4 billion bailout loan, as Qantas pressures its debt-laden rival by insisting any government assistance be proportional and tensions between the two airlines reach new heights.
Virgin has asked for a $1.4 billion loan to help it survive the coronavirus crisis. Bloomberg
Finance Minister Mathias Cormann said the government is committed to having two competitive domestic airlines, but didn't outline what any additional industry wide financial support might involve.
"It is not our plan to take a stake in an airline," Mr Cormann told the ABC. "But let me also say that on the other side of all of this, we are committed to ensuring that through our policy settings and the like that on the other side, that we have two competitive airlines."
The latest battle between the airlines on the form government assistance should take comes a week after Virgin complained to the competition regulator tnat Qantas was spreading misinformation designed to undermine the smaller airline during the turmoil.
"At a time of crisis when so many companies are working to get things working for Australia, keep Australia afloat if you like, to have comments about 'survival of the fittest' and implications publicly made to allow Virgin to go under, I just think that's unhelpful," Mr Sims said at the time.
He declined to comment on Tuesday.
"I don't want to be seen as sending any messages, one way or the other," he said.
Qantas chief executive Alan Joyce has previously said: "If the government is helping, it should help an industry, not a particular company. Governments are not there to pick winners and losers".
The push for proportional funding at would equate to about $4.2 billion if Qantas were to receive similar funding to Virgin's requested $1.4 billion, based on revenue numbers.
Both airlines are likely to need further assistance, depending on how long their planes aren't flying due to COVID-19, but Virgin will need financial help sooner.
"Virgin has a massive liquidity issue," Air Intelligence and Research boss and former Qantas chief economist Tony Webber said. "They have had a run of losses, particularly in the international business, and it will need a quicker and faster bailout than any other airline in Australia."
Virgin has about $900 million left in the bank. However, ratings agency group Fitch said it expects this will come under pressure faster than it had previously anticipated during the crisis.
Citi analysts estimate that Qantas can survive 11 months of grounded planes, after it raised $1.05 billion in debt funding of up to ten years last week.
The federal government has already announced a $715 million support package for the aviation industry, and close to $300 million more in assistance for regional airlines.
Qantas and Virgin have between them stood down around 28,000 pilots, cabin crew and other workers in an attempt to cut costs while most of their aircraft are grounded.
Across the Tasman, Air New Zealand has cut 3500 jobs in response to the crisis.
"Particularly given Virgin's ownership structure — not to say Qantas and Rex do not have significant foreign shareholders, but they are not as significant as Virgin’s — you can bet Qantas and Rex will have their hands out too," he said.
Under Virgin's plan for a loan facility, taxpayers would lend the airline $1.4 billion for a term of two or three years. If Virgin was unable to meet its obligations, the cash would be converted into an equity stake.
This condition would have likely further complicate Virgin Australia's shareholding structure, only 10 per cent of which is a free-float. The other 90 per cent is held in varying levels by Singapore Airlines, Etihad, Nanshan, HNA and Richard Branson's Virgin group.
Virgin Australia has so far ruled out approaching any of its shareholders for a capital injection.
And sources close to Singapore Airlines, which recently raised $S19 billion ($21.6 billion), laughed off suggestion it would inject its new cash into or takeover Virgin as it is still managing its own response to the pandemic.
Tourism Australia chairman Bob East declined to comment on government assistance but said two competitive airlines were crucial to a successful tourism industry. Mr East sits on the Tourism Australia board with both Virgin chief executive Paul Scurrah and Qantas' Alan Joyce.
"We really do need a sustainable, competitive aviation sector....that fuels tourism. It's really the backbone of the proposition a nation has to offer," he said. He noted that travel around Australia relied on competitive domestic carriers, adding that 70 per cent of international visitors to Cairns arrived on a domestic flight.
Lucas Baird and Jemima Whyte
Updated Mar 31, 2020 – 6.18pm,first published at 9.43am
The federal government looks set to reject Virgin Australia's initial request for a $1.4 billion bailout loan, as Qantas pressures its debt-laden rival by insisting any government assistance be proportional and tensions between the two airlines reach new heights.
Virgin has asked for a $1.4 billion loan to help it survive the coronavirus crisis. Bloomberg
Finance Minister Mathias Cormann said the government is committed to having two competitive domestic airlines, but didn't outline what any additional industry wide financial support might involve.
"It is not our plan to take a stake in an airline," Mr Cormann told the ABC. "But let me also say that on the other side of all of this, we are committed to ensuring that through our policy settings and the like that on the other side, that we have two competitive airlines."
The latest battle between the airlines on the form government assistance should take comes a week after Virgin complained to the competition regulator tnat Qantas was spreading misinformation designed to undermine the smaller airline during the turmoil.
"At a time of crisis when so many companies are working to get things working for Australia, keep Australia afloat if you like, to have comments about 'survival of the fittest' and implications publicly made to allow Virgin to go under, I just think that's unhelpful," Mr Sims said at the time.
He declined to comment on Tuesday.
"I don't want to be seen as sending any messages, one way or the other," he said.
Qantas chief executive Alan Joyce has previously said: "If the government is helping, it should help an industry, not a particular company. Governments are not there to pick winners and losers".
The push for proportional funding at would equate to about $4.2 billion if Qantas were to receive similar funding to Virgin's requested $1.4 billion, based on revenue numbers.
Both airlines are likely to need further assistance, depending on how long their planes aren't flying due to COVID-19, but Virgin will need financial help sooner.
"Virgin has a massive liquidity issue," Air Intelligence and Research boss and former Qantas chief economist Tony Webber said. "They have had a run of losses, particularly in the international business, and it will need a quicker and faster bailout than any other airline in Australia."
Virgin has about $900 million left in the bank. However, ratings agency group Fitch said it expects this will come under pressure faster than it had previously anticipated during the crisis.
Citi analysts estimate that Qantas can survive 11 months of grounded planes, after it raised $1.05 billion in debt funding of up to ten years last week.
The federal government has already announced a $715 million support package for the aviation industry, and close to $300 million more in assistance for regional airlines.
Qantas and Virgin have between them stood down around 28,000 pilots, cabin crew and other workers in an attempt to cut costs while most of their aircraft are grounded.
Across the Tasman, Air New Zealand has cut 3500 jobs in response to the crisis.
Qantas, Rex would seek similar funding deals
Mr Webber said the government would have to prepare itself for similar requests from Qantas and Regional Express if it granted Virgin the loan."Particularly given Virgin's ownership structure — not to say Qantas and Rex do not have significant foreign shareholders, but they are not as significant as Virgin’s — you can bet Qantas and Rex will have their hands out too," he said.
Under Virgin's plan for a loan facility, taxpayers would lend the airline $1.4 billion for a term of two or three years. If Virgin was unable to meet its obligations, the cash would be converted into an equity stake.
This condition would have likely further complicate Virgin Australia's shareholding structure, only 10 per cent of which is a free-float. The other 90 per cent is held in varying levels by Singapore Airlines, Etihad, Nanshan, HNA and Richard Branson's Virgin group.
Virgin Australia has so far ruled out approaching any of its shareholders for a capital injection.
And sources close to Singapore Airlines, which recently raised $S19 billion ($21.6 billion), laughed off suggestion it would inject its new cash into or takeover Virgin as it is still managing its own response to the pandemic.
Why a Virgin bailout call is trickier than $130b in wages
Mr Webber agreed. "I suspect their owners ... believe they have put enough into Virgin Australia, have their own problems due to the virus and don't want to put in any more cash," he said.Tourism Australia chairman Bob East declined to comment on government assistance but said two competitive airlines were crucial to a successful tourism industry. Mr East sits on the Tourism Australia board with both Virgin chief executive Paul Scurrah and Qantas' Alan Joyce.
"We really do need a sustainable, competitive aviation sector....that fuels tourism. It's really the backbone of the proposition a nation has to offer," he said. He noted that travel around Australia relied on competitive domestic carriers, adding that 70 per cent of international visitors to Cairns arrived on a domestic flight.
Last edited by John Citizen; 31st Mar 2020 at 11:27.
that will give Alan a true competitor. Join Date: Jun 2001
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-41..I think this is the fairest scenario. Let market forces dictate the outcome. If the banks wont lend more and nor will the shareholders, surely does that not speak to past business decisions? These are the stakeholders who should wear the pain.
As for the employees, there will be a new airline, coming soon, rising like a phoenix from the ashes.
Of course VA staff will need to accept much lower $$, but in return they will go back to being part of a competitive, successful airline.
If you want to know what happens when the second major airline collapses, just look back 19 years. Competition returned, LCC’s grew, fares came down, employment increased.
The Government should not pump air into a flat tire, rather let market forces replace it.
As for the employees, there will be a new airline, coming soon, rising like a phoenix from the ashes.
Of course VA staff will need to accept much lower $$, but in return they will go back to being part of a competitive, successful airline.
If you want to know what happens when the second major airline collapses, just look back 19 years. Competition returned, LCC’s grew, fares came down, employment increased.
The Government should not pump air into a flat tire, rather let market forces replace it.
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Virgin notes (ASX: VAHHA) are trading at less than 50% with a market capitalisation of < $ 500 million. There is no capacity to generate enough income to trade out of this while COVID is around.
VAH investors are looking to shore up their own core companies and so far, have failed to come to the table, and it seems unlikely the Australian government will fund a commercial bail out.
Isn't it time to preserve the remaining cash for staff payouts rather than throw good money after bad?
There will be a better airline that will rise from this.
VAH investors are looking to shore up their own core companies and so far, have failed to come to the table, and it seems unlikely the Australian government will fund a commercial bail out.
Isn't it time to preserve the remaining cash for staff payouts rather than throw good money after bad?
There will be a better airline that will rise from this.
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As a QF driver, I really do hope Virgin get through this and it must be a very difficult time.
If the government hadn’t let every Tom, Dick and Harry government funded airline fly 20 A380’s a day into Australia,Virgin international would have had a chance to prosper and not drain so much capital from the rest of the business.
Good luck guys hope we both make it to the other side !
If the government hadn’t let every Tom, Dick and Harry government funded airline fly 20 A380’s a day into Australia,Virgin international would have had a chance to prosper and not drain so much capital from the rest of the business.
Good luck guys hope we both make it to the other side !
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I agree - this country really needs 2 airlines for healthy competition - even if the current iteration of VAH folds, there is sure to be a much leaner Virgin Australia to follow on the other side.
It appears VAH are looking to raise funds by selling their unencumbered B777-300ERs. Based on what Etihad received for their B777-300ERs the best VAH could expect in the current climate is just USD30M per pop. Sad days to be even sadder later in the year. With both Airbus and Boeing suspending production of new aircraft until further notice this in theory will help support the used aircraft market.
Whatever airline(s) rises from a VAH bankruptcy may be called something else instead of 'Virgin Australia'.
surely does that not speak to past business decisions?
It's the business going foward that needs to be considered, not past mis management.
My speculation as an outsider is that a new VA will closer resemble the original company anyway.
I think it's nothing more than childish for AJ saying Qantas should get $4B+ if virgin get thier $1.4B. Some of the populous get goverment handouts that I dont because they NEED them. Just because my neighbour gets a dole payment doesnt mean I need to (yet)
