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Government Loan to Virgin Australia

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Government Loan to Virgin Australia

Old 1st May 2020, 00:14
  #1141 (permalink)  
 
Join Date: Dec 2006
Location: Whanganui, NZ
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Originally Posted by VH-ABC View Post
Trans Tasman is the best we can hope for?
Yes, until there's a vaccine: so until March - June 2021
Maybe some of the Pacific Islands might come in - Cooks Is, Tonga, Western Samoa, possibly Fiji
:-(
kiwi grey is offline  
Old 1st May 2020, 07:12
  #1142 (permalink)  
 
Join Date: Jul 2013
Location: Hong Kong
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There is another way to look at it. Air NZ was offered a rather large loan recently, to help with their immediate cashflow needs and 'keep the show on the road'. What may not be advertised is the interest rate - well over 8% I was told by an Air NZ mate.....!!! So if the Australian Govt. was fairly confident that VA will survive post Covid-19, this would be an opportunity for them to make money (borrow for 3-4%, or less....lend out at 8%+) and give an important lifeline too.
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Old 1st May 2020, 09:04
  #1143 (permalink)  
 
Join Date: Jun 2010
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Originally Posted by Mendi Matt View Post
There is another way to look at it. Air NZ was offered a rather large loan recently, to help with their immediate cashflow needs and 'keep the show on the road'. What may not be advertised is the interest rate - well over 8% I was told by an Air NZ mate.....!!! So if the Australian Govt. was fairly confident that VA will survive post Covid-19, this would be an opportunity for them to make money (borrow for 3-4%, or less....lend out at 8%+) and give an important lifeline too.
Which loan do they pay back first? The Australian government loan, or the $7b they owe to creditors already?

Any money to bailout Virgin is equivalent to pissing into the wind.
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Old 1st May 2020, 11:10
  #1144 (permalink)  
 
Join Date: Jul 2007
Location: BAO
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Stuff-It, shall have a crack here...................

Anybody, got a post COVID-19 market quote on 'what' a slightly used B738 maybe 'worth', at book value/at this time................., $100m/per head x 70 odd of 'em........... that, 'do-able' ....????

Ta/Rgds
S28- BE
Section28- BE is offline  
Old 1st May 2020, 14:07
  #1145 (permalink)  
 
Join Date: Aug 2006
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Originally Posted by Mendi Matt View Post
There is another way to look at it. Air NZ was offered a rather large loan recently, to help with their immediate cashflow needs and 'keep the show on the road'. What may not be advertised is the interest rate - well over 8% I was told by an Air NZ mate.....!!! So if the Australian Govt. was fairly confident that VA will survive post Covid-19, this would be an opportunity for them to make money (borrow for 3-4%, or less....lend out at 8%+) and give an important lifeline too.
In the current climate that’s actually very reasonable.

VAH’s last bond raising in 2019 was at about 8.5%. In the early days of COVID-19 it was trading at a yield of around 20%. I’d imagine a bond raising for any airline on the open market now would be well north of that.

If ANZ secured a loan at around 8% from the government then the airline got a steal and the taxpayer got a very questionable investment.
That being said, Air New Zealand is a net importer of foreign tourist dollars and subsidizing their operation is to the taxpayers’ advantage. It’s questionable whether either VA or QF fly as many tourist dollars into Australia as they fly out.
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Old 1st May 2020, 20:21
  #1146 (permalink)  
 
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Originally Posted by Section28- BE View Post
Stuff-It, shall have a crack here...................

Anybody, got a post COVID-19 market quote on 'what' a slightly used B738 maybe 'worth', at book value/at this time................., $100m/per head x 70 odd of 'em........... that, 'do-able' ....????

Ta/Rgds
S28- BE
Suspect a lot less than that. Eitihad sold 38 planes for 1billion 22 A330 and 16 777's which they immediately leased back. the a330's weren't worth much but the 777's still have life.

Also the a 737 purchased from southwest for conversion to fire bombers were 20-25 million each
rattman is online now  
Old 1st May 2020, 21:42
  #1147 (permalink)  
 
Join Date: Jan 2019
Location: Australia
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Second hand 737s would be almost worthless at the moment. Given the clear surplus of aircraft around the world even after COVID19, and the 100s of Max aircraft sitting on the ground - who is going to be buying up these old 73s?

It is the one thing in VAs favour when dealing with the leasing companies - if those companies want to see any cash, they are going to have to come to the table with a good deal. It may be the saving grace for the A330 too - the moronic leases on those aircraft may come back to be something far more reasonable.
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Old 1st May 2020, 22:06
  #1148 (permalink)  
 
Join Date: Jun 2019
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Originally Posted by Colonel_Klink View Post
Second hand 737s would be almost worthless at the moment. Given the clear surplus of aircraft around the world even after COVID19, and the 100s of Max aircraft sitting on the ground - who is going to be buying up these old 73s?

It is the one thing in VAs favour when dealing with the leasing companies - if those companies want to see any cash, they are going to have to come to the table with a good deal. It may be the saving grace for the A330 too - the moronic leases on those aircraft may come back to be something far more reasonable.
Everyone seems to say the leasing companies will bow down to what ever VA want to pay in cost and if they don't well come take your AC back, if it were that simple wouldn't more companies go into administration more often to clear their debt to a manageable level?.

If by a miracle Virgin actually survive would any further growth be inhibited by leasing companies telling them to jump as they owe them millions for the last failed venture then possibly have to stump up cash for AC which they wouldn't be able to?

Leasing companies won't just give them deals to not have them sitting in their backyard. I'm sure they would rather them sitting in their backyard then companies using them and always late or never paying up.

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Old 1st May 2020, 23:24
  #1149 (permalink)  
 
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ABC News overview article 30/04/20: https://www.abc.net.au/news/2020-04-...ation/12198130

Extract here:

"On April 23, Deloitte listed the carrier's debts as including:
  • Twenty-six secured lenders who are owed about $2.3 billion
  • Unsecured bondholders owed about $2 billion
  • Fifty aircraft lessors owed about $1.9 billion
  • More than 9,000 employees owed $451 million
  • More than 1,000 trade creditors owed about $167 million
  • Eighty-one landlords owed about $71 million
Virgin has about 144 aircraft and about half of them are under lease. These are mostly 737-800s, but also includes their A330s and ATR72s.

Deloitte has asked lessors for waivers over lease payments while it works through the voluntary administration process."
It would 'seem' (with what is reported via news outlets) that, the whole show (circa $7B) would need to be swung-off what value can be leveraged out of 70 odd B738's and the 'residual' value of the 'Business/Network'........???

As far as, the options that shall be presented at the 2nd Creditors Mtg of the 'process'- e.g. Liquidation vrs x/cents in the dollar..........

Rgds
S28- BE
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Old 2nd May 2020, 04:35
  #1150 (permalink)  
 
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Lots of talk here about the aircraft lease costs being reduced, because leasing companies have nowhere else for the aircraft to go.

What about pilot terms and conditions? Where else can pilots go at this time?
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Old 2nd May 2020, 04:38
  #1151 (permalink)  
 
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Originally Posted by Ichiban View Post
Lots of talk here about the aircraft lease costs being reduced, because leasing companies have nowhere else for the aircraft to go.

What about pilot terms and conditions? Where else can pilots go at this time?
I don’t know too many pilots that aren’t considering that - and the harsh reality is that pilots will need to take a pay cut, especially if there is hope to avoid/reduce any further pilot redundancies.

I know I would certainly take a pay hit to secure my own, and my fellow colleagues, futures.
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Old 2nd May 2020, 05:13
  #1152 (permalink)  
 
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Originally Posted by Colonel_Klink View Post
I don’t know too many pilots that aren’t considering that - and the harsh reality is that pilots will need to take a pay cut, especially if there is hope to avoid/reduce any further pilot redundancies.

I know I would certainly take a pay hit to secure my own, and my fellow colleagues, futures.
Very noble Colonel Klink, and probably what will be required, and more.

Unfortunately if there is a VA Mk2 at all, there will be a significant number of pilots who will be “Surplus to requirements”, as a smiling HR type told me just prior to my retrenchment some years ago! It’s even probable that the entire current pilot group will have to compete for what positions there are. If that happens it will literally be every one for themselves.

It won’t be pretty.
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Old 2nd May 2020, 06:15
  #1153 (permalink)  
-41
 
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At least Rex and so on won’t be inconvenienced with another pilot shortage that requires 457 imports.
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Old 2nd May 2020, 07:37
  #1154 (permalink)  
 
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Pilot EBA's at least, according to Deloitte, will be honoured. I guess thats only in the interim whilst they're at the helm; Once they vacate it will be up to the new owners. In all reality, pilot wages may come down. I'm tipping the 330's will go, 777's may stay for the interim and they will be given back to boeing for a 787 fleet at some stage in the future. Massive discounts to be had for a buyer in the market. There'd be no better time (in recent history) than now to purchase an aircraft or 10.
piston broke again is offline  
Old 2nd May 2020, 12:19
  #1155 (permalink)  
 
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Ragnor I think your thoughts on leasing maybe so last month.
in a normal world one company might go into admin....not all of them at once.
There is no market for 2nd hand aircraft or even first hand aircraft. I don’t know how it will play out....other than bad for everyone.
ozbiggles is offline  
Old 2nd May 2020, 16:39
  #1156 (permalink)  
 
Join Date: Jul 2010
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What about pilot terms and conditions? Where else can pilots go at this time?
Contracts will be drawn up by the new owners and posted out, if you want to work for the new entity you sign the contract and post it back, simple as that. It will be a few years before the unions will be in a position to engage in enterprise bargaining. Any pilot going back to work within the next two months on 80% or more of their previous package will be envied. It's going to be a long climb back for most of us, QF and a select few may be able to maintain their current T&Cs but the rest of are going to lose out at least in the short term.
krismiler is online now  
Old 2nd May 2020, 20:56
  #1157 (permalink)  
 
Join Date: Jun 2019
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How will that pan out for JQ crew, still an expired EBA. I wonder how that first meeting will go when it happens in the distant future.
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Old 2nd May 2020, 22:36
  #1158 (permalink)  
 
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Originally Posted by Ragnor View Post
How will that pan out for JQ crew, still an expired EBA. I wonder how that first meeting will go when it happens in the distant future.
Well I'm sure AFAP will be agreeing with the 3% group policy now.
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Old 2nd May 2020, 23:24
  #1159 (permalink)  
 
Join Date: Aug 2018
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Well, the ‘why are JQ pilots getting paid less than Tiger’ argument has gone out the window.
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Old 3rd May 2020, 01:32
  #1160 (permalink)  
 
Join Date: Jan 2019
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Originally Posted by krismiler View Post
Contracts will be drawn up by the new owners and posted out, if you want to work for the new entity you sign the contract and post it back, simple as that. It will be a few years before the unions will be in a position to engage in enterprise bargaining. Any pilot going back to work within the next two months on 80% or more of their previous package will be envied. It's going to be a long climb back for most of us, QF and a select few may be able to maintain their current T&Cs but the rest of are going to lose out at least in the short term.
If the employment entity remains the same - the EA remains in force. I’m pretty sure what you have suggested is contrary to the Fair Work Act.

However, I am not sure if renegotiating an EA can form part of the DOCA? Can anyone shed any light?

I would be expecting my union to do all it can to keep as many pilots employed as possible - and if that means a reduction in Ts and Cs, then so be it.
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