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Government Loan to Virgin Australia

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Government Loan to Virgin Australia

Old 3rd Apr 2020, 07:24
  #61 (permalink)  
 
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Originally Posted by DanV2 View Post
Been there done that for SQ, re Tiger Airways. SQ failed dismally and ended up selling their 50% stake to VA for $1.

SQ were also offered AN for $1 before AN filed administration and they declined. Likely will be same scenario if SQ were offered VA for $1 (5B debt and all).

Edit: Also, if SQ couldn't make their three attempts at the Australian market work (Strike 1: Air New Zealand/Ansett, Strike 2: Tiger Airways and Strike 3: Virgin Australia), especially when SQ had full management control of Tiger Australia, what makes people think SQ could make a 4th attempt work?

SQ are not much better than EY when it comes to investments. Mediocre at best, when compared to EY which are largely failures.
SQ never had full control of Tiger Oz, same in Singapore. The Poms did. They gave full rein to RyanAir and co. Who remembers Tony Davis? Tim Berry....Mr Dugan. It was quite odd, a booming middle class market and the hand balled the entire concept to a group of British and had nothing to do with it.

When things continued to go backward and SQ decided to take control, well they didnít in Oz, they just Ďsoldí or told Virgin your taking it.

What is the point in kickstarting Tiger again with half a dozen 737s. Clearly the leisure market will take a year to build once this is over, just cede it and let the other guys in T4 do the job.
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Old 3rd Apr 2020, 07:37
  #62 (permalink)  
 
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It's wishful thinking that VA will be saved. No one with any sense will invest in a loss making venture. I feel for the guys and gals but sometimes you have to eat a sh!t sandwich and it's not their fault. People are kidding themselves if they think everything will return to normal in 12 or 18 months. Those lower down the rung...forget about it. There is going to be an abundance of VERY qualified crew out there to fill VERY limited positions.

Last edited by Dookie on Drums; 3rd Apr 2020 at 08:01.
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Old 3rd Apr 2020, 07:49
  #63 (permalink)  
 
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Originally Posted by Gnadenburg View Post
Having gone through the Ansett demise and......................................................Eve n as an employee of AN, at the time, I did not feel it right AN was propped up by taxpayers funds. Those funds would soon be far better spent on our War of Terror throughout the Middle East.
What a sad comment; The War on Terror? More innocent people killed in a war that never had to happen and is still ongoing today. Evidence manufactured for a gnome of President to go to war for his ego, how can anyone be happy with the outcome of Iraq and Afghanistan.
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Old 3rd Apr 2020, 08:01
  #64 (permalink)  
 
Join Date: Nov 2017
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Originally Posted by TBM-Legend View Post
Correct observation. Study the Branson business model and you will find a trail of V branded failures "after" RB has cashed out and kept minimum exposure. Remember Virgin Atlantic went ti%ts up big time once before and was bailed by SQ.

He runs like the Dali Lama with followers ogling his life style [no disrespect to His Highness]...
Yes, just like a lot of IPOs; pigs with lipstick and an endorsement from a financial house that is gunna get a nice fat commission and then 2-5 yrs down the track it goes to the abattoir.
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Old 3rd Apr 2020, 08:40
  #65 (permalink)  
 
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Is anyone giving any thought to the fact that under normal business conditions with a functioning economy, yes, there would probably be another carrier from any number of places that could come in to pick up where VA left off as is being discussed above....but every carrier everywhere in the world will be nursing a balance sheet too weak to do anything but pick up their own pieces, or have been bailed out by their own respective government that would severely restrict investments in markets anywhere, let alone here, prior to those debts being paid or conditions satisfied?

Why is no one understanding that this is just simply not going to happen any time in the next 2-3 years given the unique circumstances surrounding the ultimate reason that Virgin will fail if there's no bail out?

This is 100% different to a normal business failing in a free market.

All the post above just seem to ignore this one simple fact - that VA has had its operations shut down by the government (indirectly not their fault) which, regardless of its balance sheet prior to this crisis, stopped any chance it had of getting back into the black. Most importantly, this is not unique - every airline in the world is in the same boat. Qantas itself will likely need a bail out if this continues, at the very least for its international segment.

Why are people focusing so heavily on the past and ignoring the likely outcome, that no one is coming and a monopoly will exist?

You can point fingers at poor management and bad balance sheets and the fact they deserve to fail, not arguing about that, but the rife speculation of some other carrier coming to pick up the pieces shows a delusion beyond reason at what is actually happening on a broader level here. Please have a think about that fact before speculating on who, what, where and when the next carrier will come from. It's naive at best.

The country needs to prepare itself for a monopoly for a very long time, at least in the premium market, if Virgin goes to the wall. Those are the objective facts.

Time will tell.
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Old 3rd Apr 2020, 08:58
  #66 (permalink)  
 
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Your wise words don't fit the general agenda here, mate, that's why......
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Old 3rd Apr 2020, 09:02
  #67 (permalink)  
 
Join Date: May 2019
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[QUOTE=Gnadenburg;10736457]Having gone through the Ansett demise and a period of unemployment, the government did a good job with helping ensure the payment of owed wages and benefits. The tax liability was small and I ended up with far more cash in hand than expected.

If I recall correctly, you guys got your "owed wages and benefits' as as an enforced levy on air tickets from a blackmailed flying public, a disgraceful sham.
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Old 3rd Apr 2020, 09:22
  #68 (permalink)  
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Originally Posted by Dragun View Post
Is anyone giving any thought to the fact that under normal business conditions with a functioning economy, yes, there would probably be another carrier from any number of places that could come in to pick up where VA left off as is being discussed above....but every carrier everywhere in the world will be nursing a balance sheet too weak to do anything but pick up their own pieces, or have been bailed out by their own respective government that would severely restrict investments in markets anywhere, let alone here, prior to those debts being paid or conditions satisfied?

Why is no one understanding that this is just simply not going to happen any time in the next 2-3 years given the unique circumstances surrounding the ultimate reason that Virgin will fail if there's no bail out?

This is 100% different to a normal business failing in a free market.

All the post above just seem to ignore this one simple fact - that VA has had its operations shut down by the government (indirectly not their fault) which, regardless of its balance sheet prior to this crisis, stopped any chance it had of getting back into the black. Most importantly, this is not unique - every airline in the world is in the same boat. Qantas itself will likely need a bail out if this continues, at the very least for its international segment.

Why are people focusing so heavily on the past and ignoring the likely outcome, that no one is coming and a monopoly will exist?

You can point fingers at poor management and bad balance sheets and the fact they deserve to fail, not arguing about that, but the rife speculation of some other carrier coming to pick up the pieces shows a delusion beyond reason at what is actually happening on a broader level here. Please have a think about that fact before speculating on who, what, where and when the next carrier will come from. It's naive at best.

The country needs to prepare itself for a monopoly for a very long time, at least in the premium market, if Virgin goes to the wall. Those are the objective facts.

Time will tell.
Agree completely. Also in their defense, analysts predicted a break even point for just after July this year, due to the cost reduction restructure (remember, there's a difference between statutory and underlying). Virgin Australia was expected to slowly make it through without COVID-19. At this stage however, I don't think a direct "bailout" from the Government will occur.

The Financial Review is owned by Channel 9 and both have reported numerous time loudly and proudly the Government will not bailout Virgin Australia. Other articles quote the Financial Review and Channel 9. Once again, I personally don't think it will happen in the form the CEO wants, but the battle is not over just yet. Once again, this evening the Financial Review has just posted another article yet again against Virgin Australia, rebuking Virgin Australia's monopoly theory. I thought they'd wait at least one day before writing another article against the airline.

https://www.afr.com/companies/transp...0200403-p54gp2

Last edited by ABP; 3rd Apr 2020 at 09:40.
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Old 3rd Apr 2020, 09:26
  #69 (permalink)  
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[QUOTE=deja vu;10737875]
Originally Posted by Gnadenburg View Post
Having gone through the Ansett demise and a period of unemployment, the government did a good job with helping ensure the payment of owed wages and benefits. The tax liability was small and I ended up with far more cash in hand than expected.

If I recall correctly, you guys got your "owed wages and benefits' as as an enforced levy on air tickets from a blackmailed flying public, a disgraceful sham.
You remember correctly. It was the Air Passenger Ticket Levy (Imposition) Bill 2001. It was $10 a ticket, which is $16 in today's market.
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Old 3rd Apr 2020, 09:53
  #70 (permalink)  
 
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Originally Posted by Dragun View Post
Is anyone giving any thought to the fact that under normal business conditions with a functioning economy, yes, there would probably be another carrier from any number of places that could come in to pick up where VA left off as is being discussed above....but every carrier everywhere in the world will be nursing a balance sheet too weak to do anything but pick up their own pieces, or have been bailed out by their own respective government that would severely restrict investments in markets anywhere, let alone here, prior to those debts being paid or conditions satisfied?

Why is no one understanding that this is just simply not going to happen any time in the next 2-3 years given the unique circumstances surrounding the ultimate reason that Virgin will fail if there's no bail out?

This is 100% different to a normal business failing in a free market.

All the post above just seem to ignore this one simple fact - that VA has had its operations shut down by the government (indirectly not their fault) which, regardless of its balance sheet prior to this crisis, stopped any chance it had of getting back into the black. Most importantly, this is not unique - every airline in the world is in the same boat. Qantas itself will likely need a bail out if this continues, at the very least for its international segment.

Why are people focusing so heavily on the past and ignoring the likely outcome, that no one is coming and a monopoly will exist?

You can point fingers at poor management and bad balance sheets and the fact they deserve to fail, not arguing about that, but the rife speculation of some other carrier coming to pick up the pieces shows a delusion beyond reason at what is actually happening on a broader level here. Please have a think about that fact before speculating on who, what, where and when the next carrier will come from. It's naive at best.

The country needs to prepare itself for a monopoly for a very long time, at least in the premium market, if Virgin goes to the wall. Those are the objective facts.

Time will tell.
Totally agree that VA have been thrown into this COVID crisis through no fault of their own. It's not their fault. But so have every other business in Australia. And i think that's the point the Government is making. They can't bail out VA without bailing out every other business that has been neutered by this. They can only supply assistance to an industry. VA are stuck. They have to make it work with what they have.
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Old 3rd Apr 2020, 09:54
  #71 (permalink)  
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Originally Posted by Fatguyinalittlecoat View Post
Totally agree that VA have been thrown into this COVID crisis through no fault of their own. It's not their fault. But so have every other business in Australia. And i think that's the point the Government is making. They can't bail out VA without bailing out every other business that has been neutered by this. They can only supply assistance to an industry. VA are stuck. They have to make it work with what they have.
So everyday Aussies should make it work with what they have too? We've all been given a 'bailout'!
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Old 3rd Apr 2020, 09:55
  #72 (permalink)  
 
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Yep, we have. That's it.

Funds will only flow to an industry, not a company.
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Old 3rd Apr 2020, 09:57
  #73 (permalink)  
 
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We've all been given a 'bailout'!
Don't worry you will be paying it back to the government soon enough through a higher GST and other taxes. Think of it as a loan...
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Old 3rd Apr 2020, 10:06
  #74 (permalink)  
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Originally Posted by Fatguyinalittlecoat View Post
Yep, we have. That's it.

Funds will only flow to an industry, not a company.
Given the vast majority of erudite comments that reflect a knowledge of the history of VA and its various owners and iterations one could only think that:
"THE VIRGIN IS NO LONGER A VIRGIN"
Should it be rescued it should be renamed one of the following choices: "VIRGIN MARY" , "IMMACULATE CONCEPTION" or "JOSEPH AIRLINES"

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Old 3rd Apr 2020, 10:13
  #75 (permalink)  
 
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Originally Posted by Fatguyinalittlecoat View Post
Totally agree that VA have been thrown into this COVID crisis through no fault of their own. It's not their fault. But so have every other business in Australia. And i think that's the point the Government is making. They can't bail out VA without bailing out every other business that has been neutered by this. They can only supply assistance to an industry. VA are stuck. They have to make it work with what they have.
Yes it's a reasonable point that has been around the media with the unfortunate difference in this case that Virgin forms part of critical infrastructure whether the government and public like it or not. In addition it contributes around $11 billion p.a. directly to the Australian economy and much more indirectly. I'm not saying other big business won't come to this either, but this is the first and it's a much bigger enterprise to let go than a collection of smaller and generic SMEs. I know that sounds harsh, and it's not meant to, but just highlighting the reality of the current predicament for government.
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Old 3rd Apr 2020, 10:18
  #76 (permalink)  
 
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Originally Posted by Fatguyinalittlecoat View Post
Yep, we have. That's it.

Funds will only flow to an industry, not a company.
This does appear to be the angle even PS is going for now. He even went as far as to essentially ask for $5 billion to include Qantas suggesting a collective overdraft facility during interviews this morning. It's a smart play because although Virgin's need is immediate, Qantas would well be advised to consider their medium term position and the likely prospect of having to do the same in 12 months if international demand is still non-existent. It will be a tough ask for them to go to the government asking for money at that point if they advocated the failure of Virgin 6 months prior and got their way. For now, they are saying they can make it through, but as it has been shown already, the nature of this beast is unpredictable and very different.

Perhaps a joint approach by both airlines will be the smarter play, gain the traction they are looking for with public support and not favour any one carrier as the government has stated.

Again, time will tell.
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Old 3rd Apr 2020, 10:50
  #77 (permalink)  
 
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Originally Posted by chance View Post
Given the vast majority of erudite comments that reflect a knowledge of the history of VA and its various owners and iterations one could only think that:
"THE VIRGIN IS NO LONGER A VIRGIN"
Should it be rescued it should be renamed one of the following choices: "VIRGIN MARY" , "IMMACULATE CONCEPTION" or "JOSEPH AIRLINES"
whatís another name for someone who trades money for love?😉
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Old 3rd Apr 2020, 11:17
  #78 (permalink)  
 
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fatlittleguyjnacoat, my post discussed it but not as well written as yours

How is any airline supposed to survive in this environment? As stated above if it goes long enough QF will need help as well. Itís simply not possibleto have hundreds of airplanes sitting idle for months or years and just expect them to crank up as per normal on the other side. Maybe they assume itís like the government where he money is endless.

The reality is that every Tom Dick and Harry has been sitting at the airlineís table eating Xmas dinner for years and years. Dare say itís time for some of that money to be to be redistributed back.

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Old 3rd Apr 2020, 12:17
  #79 (permalink)  
 
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The major difference is that Qantas is well run and profitable in normal times whereas Virgin have lost an average of $215 million a year for the last ten years. Any bailout without a significant restructuring is likely to see the losses continue. When Ansett folded, Virgin Blue was in a position to step into the gap and prevent QF from having a monopoly, this time there is no potential replacement waiting in the wings and given the current financial situation, no one will be wanting to try.

A possible compromise would be a bail out of both airlines, but only to prevent a monopoly which would be unacceptable to the ACCC. The conditions on Virgin might be a cessation of wide body operations, a removal of premium class and a restructuring of the company back to its low cost roots.

A 70/30 market split in favour of QF, who would fly the long haul routes and carry the higher yielding pax, leaving the lower yielding pax to Virgin who would become a Ryanair/Easyjet low cost carrier. Whilst not a perfect solution, jobs would be retained and a monopoly avoided. Losses at Virgin could be brought down to a much more manageable level, there would be choice and some degree of competition in the market.

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Old 3rd Apr 2020, 12:21
  #80 (permalink)  
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Originally Posted by Dookie on Drums View Post
It's wishful thinking that VA will be saved. No one with any sense will invest in a loss making venture. I feel for the guys and gals but sometimes you have to eat a sh!t sandwich and it's not their fault. People are kidding themselves if they think everything will return to normal in 12 or 18 months. Those lower down the rung...forget about it. There is going to be an abundance of VERY qualified crew out there to fill VERY limited positions.
great news then!

No more pilot shortage, problem solved with the China virus.
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