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Government Loan to Virgin Australia

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Government Loan to Virgin Australia

Old 25th May 2020, 12:06
  #1261 (permalink)  
 
Join Date: Dec 2000
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To me it would make more sense to run this through receivership as this will mean asset pricing lower than any deal brokered by Deloittes under administration.

The other big attraction is that the debt will be quarantined to the current entity in this scenario.

The other point claimed is that the staff may be able to veto any deal made under administration. I don’t know whether that is factually correct. If it is, that may further complicate an already messy situation.

Whatever happens, there will be a new airline at the end of it.
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Old 25th May 2020, 12:37
  #1262 (permalink)  
 
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Receivership would mean the loss of the AOC which would render the whole exercise futile.
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Old 25th May 2020, 12:50
  #1263 (permalink)  
 
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Originally Posted by galdian View Post
Mick

Thanks, clear info and stuff to think about, appreciated.

Q: probably pertains to "ownership" but when AN went down everyones FF points disappeared, no longer any value.

If there's no VA2 do all the velocity points disappear??
Suppose simply the Q is difference between AN Frequent Flyers and VA Velocity, why there'd be a difference.

Pass! on the VA2 question. Disappointing but a measured response.

Cheers
Back in the AN days the whole frequent flyer/loyalty thing was nowhere near as sophisticated as it is today. As such I am pretty sure that there was no separate business entity back then for the FF business. The points were issued as a form of unearned revenue and held on the AN balance sheet. And if I recall correctly while you could earn points by other than flying (payments using Diners Card for instance) you could only redeem the points for flights back then.

Velocity is a business in its own right with multiple revenue streams (loyalty partners who buy points to award to their customers) and a range of opportunities to expend points (Velocity shop) that is not exclusively restricted to the airline. That said, Velocity's fate is likely closely intertwined with VA. I'm struggling to picture how it might survive as a stand alone business if VA went down the gurgler but I'd need to see what percentage of points earned and redeemed involved VA. I guess that it could ensconce itself with whatever emerges from the ashes as a turn key FF partner.

On the VA Mk.II question, I think that the only bidder that is interested in keeping the Virgin brand and retaining as much of the pre-administration business as possible is BGH and only because of the union tie up with AustralianSuper and the Temasek connection. I don't think that they'll be able to make the numbers work though. Neither Cyrus, Indigo or Bain would have even a passing interest in the Qantas Mini-Me model being hawked by Scurrah and Strawbridge although I'm sure that they're happy to feign same to stay engaged and get further and better information.

Realistically, without a deep pocketed partner, neither Cyrus nor Indigo could afford to buy into anything other than a very lean mean core route domestic machine and even that would stretch their balance sheets. Bain could write the requisite cheque for something grander but I suspect that they will have already frightened the unions (hence the 'let's make flying fun' soft sell - that's not for customers, that's an attempt at assuaging the unions).

And apart from those permutations and combinations of the bidders and their preferences, there's that rapidly unravelling thread attached to the sword that is the sales process - Deloitte are fast running out of money. It's not often that you see a sales process go belly-up because the auctioneer had to fold his tent. And that puts the parties who think that they'd rather pick over a liquidation in the box seat. It wouldn't be hard to simply run the clock down.

For all of those reasons I think that it's currently just too hard to say yea or nay.

Last edited by MickG0105; 25th May 2020 at 12:52. Reason: Tidy up
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Old 25th May 2020, 13:01
  #1264 (permalink)  
 
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Well there are some interesting dates to note at this point in time,

1. June 11th -Government subsidies ceases.
2. June 12th -Binding bids.
3. June 16th -Administrators become liable for Aircraft leases.
4. June 30th- Administrators close sale, liquidate or have received further funding to operate.
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Old 25th May 2020, 20:37
  #1265 (permalink)  
 
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Receivership would mean the loss of the AOC which would render the whole exercise futile.
If that's indeed correct (anyone who can accurately comment on this ???), then any new entity won't be up and running before 2021. This may not be a bad thing as the domestic market will be much closer to "normal" by then and a new entrant will have some traction.

The above dates would imply that the 16th June would be the real date the administrators will have to pull the pin if the bidding complexity delays the outcome. Why would they waste 2 weeks (to 30th June) of aircraft lease payments when creditors could get their hands on those funds based on a known outcome as at the 16th June.
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Old 26th May 2020, 00:17
  #1266 (permalink)  
 
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Originally Posted by Blackout View Post
Well there are some interesting dates to note at this point in time,

1. June 11th -Government subsidies ceases.
2. June 12th -Binding bids.
3. June 16th -Administrators become liable for Aircraft leases.
4. June 30th- Administrators close sale, liquidate or have received further funding to operate.
There is probably one more you can add to that:

3.5 June 23rd - Administrators run out of cash

Last edited by MickG0105; 26th May 2020 at 01:39. Reason: Grammar
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Old 26th May 2020, 01:33
  #1267 (permalink)  

Evertonian
 
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Originally Posted by MickG0105 View Post
There probably one more you can add to that:

3.5 June 23rd - Administrators run out of cash
And...

5. July 1st - PPRuNe hits peak VA Admin threads...

Last edited by Buster Hyman; 26th May 2020 at 02:39.
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Old 26th May 2020, 02:19
  #1268 (permalink)  
 
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July 2nd. Stewie and co are knocking on Rex’s door sprucking how they can set up 10 737’s and make a profit within the first year.
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Old 3rd Jun 2020, 03:19
  #1269 (permalink)  
 
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You have no idea what your saying! Of course it will change silly
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Old 3rd Jun 2020, 03:22
  #1270 (permalink)  
 
Join Date: Jun 2020
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Well said, now cut 50% of cabin crew and you’ll be on the money
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Old 4th Jun 2020, 00:24
  #1271 (permalink)  
 
Join Date: May 2020
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Originally Posted by MickG0105 View Post
There is probably one more you can add to that:

3.5 June 23rd - Administrators run out of cash
And you're surprised the Administrator delayed it for binding bids. quelle surprise.
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Old 5th Jun 2020, 03:11
  #1272 (permalink)  
 
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Regardless of the outcome there will be tears this month.
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Old 5th Jun 2020, 05:02
  #1273 (permalink)  
 
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Originally Posted by B772 View Post
Regardless of the outcome there will be tears this month.
Some articles are stating at least 2000 staff will go. I will probably be one of them. Yes there will be tears, we will lose our house.
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Old 5th Jun 2020, 05:33
  #1274 (permalink)  
34R
 
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Servo I sincerely hope it doesn't pan out that way.

Look out for each other people.... things for all airlines here about to get very real for those without the benefit of many years of service.
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Old 5th Jun 2020, 07:49
  #1275 (permalink)  
 
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things for all airlines here about to get very real for those without the benefit of many years of service
Some with up to 15 years service have already been made redundant.
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Old 5th Jun 2020, 08:33
  #1276 (permalink)  
 
Join Date: Feb 2011
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Took Tiger 8 months to get a AOC for 3 Aircraft. Proving flight was the night before operational launch. They are the only operator who got it first go. They had a Singapore operation to walk the Safety body through which helped build confidence with Canberra. Any new operator might not have that luxury and will face a 12-18 month start.
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Old 6th Jun 2020, 00:08
  #1277 (permalink)  
 
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I remember a news report in which CASA stated that for a start up airline with all it's infrastructure in place, the issue of an AOC would take a minimum of nine months. During that time you are burning through cash, it's all outgoings nothing incoming. Those FOIs don't come cheap either while they're sifting through all the manuals looking for spelling mistakes.
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Old 15th Jun 2020, 21:34
  #1278 (permalink)  
 
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Originally Posted by Blackout View Post
Well there are some interesting dates to note at this point in time,

1. June 11th -Government subsidies ceases.
2. June 12th -Binding bids.
3. June 16th -Administrators become liable for Aircraft leases.
4. June 30th- Administrators close sale, liquidate or have received further funding to operate.
It will be interesting to see if the Administrators continue operating with leased aircraft from today. VARA’s A320s a case in point.
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Old 15th Jun 2020, 21:40
  #1279 (permalink)  
 
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Taken in isolation, VARA's cash flow might just support the A320 lease payments.
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Old 15th Jun 2020, 22:06
  #1280 (permalink)  
 
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On Flightradar, VARA flights out of Perth this morning, including A320 VH-YUD, are operating
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