Government Loan to Virgin Australia
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ANZ have already demonstrated an interest in this particular market. The reality won't be revealed for a while yet. They smart enough to say nothing, do nothing, until if and when VA dissolves. The debt is not tasty.
You'll simply be handed another contract for your employment with the "new entity" airline which your old one becomes
I dont think merely closing a solvent airline and making your employees redundant in order to re birth itself as doing the same thing with reduced T&Cs is that easy in this part of the world.
If it was Qantas would have already jumped at the opportunity during its 'terminal decline', or Air NZ after they went under following Ansett/9-11
ANZ have already demonstrated an interest in this particular market. The reality won't be revealed for a while yet. They smart enough to say nothing, do nothing, until if and when VA dissolves.
I would rather see VA continue and return as a simpler version of itself, which is where I think they were trying to head under thier new leadership.
Due to large oversupply of flight crew for the rest of this decade, Air Asia and Lion would be able to get away with paying Right Seat 80k and Left Seat 150k. Those numbers are being generous also. They contract the entire ground crew, and the cabin crew to third party operators. They already have the large scale low priced Jet orders coming.
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You must be pretty confident the situation will resolve pretty shortly. What if it drags out and starts eating away at the QF reserves.
The government had all the information to close the borders and fumbled there way to where we are today.
You’re happy with the actions of the government?
What I can’t get my head around is front line QF staff wishing the failure of friends and former colleagues.
The government had all the information to close the borders and fumbled there way to where we are today.
You’re happy with the actions of the government?
What I can’t get my head around is front line QF staff wishing the failure of friends and former colleagues.
The logical option in such a scenario is do what NZ did to Ansett and wash the taxpayers hands of the debt laden entity, while restructuring the major airline.
Then there’s the issue of supporting the tourism industry. The domestic tourism industry produces no income, it simply transfers money from one region to another. So Victorians stop surfing in Queensland. And Queenslanders stop seeing the fairy penguins. What eventually happens is people spend less money by staying in their own backyard and saving, which is eventually what the most personally indebted people on planet earth were going to have to do one day.
And that’s being kind. By paying the fuel suppliers, aircraft makers, etc a lot of money leaves Australia’s shores to support a domestic tourism sector.
As for international tourism, it’s debatable whether Australia is a net importer or exporter of the tourism dollar. Most first world countries export tourism while third world countries import dollars from it. The exception being NZ which definitely imports more tourist dollars than it exports, hence the NZ government’s constant support of its national carrier.
They have demonstrated an interest three times in as many decades, and each failed. They are smart enough to say nothing, do nothing and leave it that. They have just been bailed out again are making redundancies. Any desire for a fourth attempt will be tempered by the means to do so.
How about the government stops pretending it knows the outcome or knows better on everything. Their arrogance is incredible.
The beauty of being an island is that we had the answers to the test before it started yet, they still pretended they didn’t. Breathtaking arrogance. Anyone watch four corners coronavirus episode? It shows Lewis Hamilton talking in a press conference for the Formula 1 in Melbourne where he says something along the lines of “I just can’t believe we are still sitting here doing this”. Or even better, the comments from the non government doctors interviewed.
Regardless of which uniform you wear, your government didn’t perform and have now left all of us with our arses hanging out when it could have been so different.
Government and business has been more than happy to have its snout in the aviation trough for decades, maybe the wheel can turn for a year or so while Airlines get through the period.
Italy, after a terrible start have locked down 60 million people and it’s showing some early results. Having said that, there is already talk of relaxing the measures as the citizens are growing tired of the restrictions. I hope it doesn’t lead to round two for them. I also noted yesterday, the Chinese leaders wearing face masks despite saying its all fixed. Yeah right.
The sad truth is that it only takes one infected person to enter a country that has “solved” the problem to start it all over again. Times have changed, until there is a vaccine. Even with a vaccine it takes time to distribute it and then there is the issue of either Antivax or inability or lack of carefactor to access the vax. I think International travel could be the ultimate victim of the virus.
What isn’t widely known is that in some cases a recovery isn’t really a recovery. Patients live but are left with scarring and reduced lung function for life. That’s one has been kept quiet along with the percentages of young in ICU.
The beauty of being an island is that we had the answers to the test before it started yet, they still pretended they didn’t. Breathtaking arrogance. Anyone watch four corners coronavirus episode? It shows Lewis Hamilton talking in a press conference for the Formula 1 in Melbourne where he says something along the lines of “I just can’t believe we are still sitting here doing this”. Or even better, the comments from the non government doctors interviewed.
Regardless of which uniform you wear, your government didn’t perform and have now left all of us with our arses hanging out when it could have been so different.
Government and business has been more than happy to have its snout in the aviation trough for decades, maybe the wheel can turn for a year or so while Airlines get through the period.
Italy, after a terrible start have locked down 60 million people and it’s showing some early results. Having said that, there is already talk of relaxing the measures as the citizens are growing tired of the restrictions. I hope it doesn’t lead to round two for them. I also noted yesterday, the Chinese leaders wearing face masks despite saying its all fixed. Yeah right.
The sad truth is that it only takes one infected person to enter a country that has “solved” the problem to start it all over again. Times have changed, until there is a vaccine. Even with a vaccine it takes time to distribute it and then there is the issue of either Antivax or inability or lack of carefactor to access the vax. I think International travel could be the ultimate victim of the virus.
What isn’t widely known is that in some cases a recovery isn’t really a recovery. Patients live but are left with scarring and reduced lung function for life. That’s one has been kept quiet along with the percentages of young in ICU.
Last edited by Berealgetreal; 5th Apr 2020 at 22:53.
https://asic.gov.au/for-business/sma...enix-activity/
See half way down that page.
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I don't know why people are talking about the government nationalising VA. They have asked for a loan. You're blind if you can see the game QF are playing. It's exactly the same one British Airways are playing. Talk up the fact you don't need a govt loan. After all, the government can't pick winners and losers in this can they? Let your competition fold. Then go cap in hand to the govt for a bailout. They're now the only major airline left in the country. You think the govt won't then have to help them financially? And just like that, they've played the govt to pick a winner and a loser.
I fully agree that the way VA has been managed in the past (by JB et al) is utterly atrocious. However I really do feel like PS was taking the airline down the path it needed to travel to turn things around. The situation should be judged on how things are now, not the past. Otherwise we should refuse recently unemployed people the dole if they have made poor choices in their past lives, regardless of what changes they have since made. "Sorry madam. I know you've been working hard to pay off the debts you accumulated during your previous relationship with your abusive partner. We understand that you have become unemployed due to covid-19, through no fault of your own. But your ex built the debt in your name so why should the govt help you out? Best you file for bankruptcy..."
As for people moaning about govt bailout money being sent overseas to the foreign airline owners of VA. Well bearing in mind for the last however many years a load of foreign airline money has been invested in VA which has then flowed in to 10,000 Australian taxpayers and countless other suppliers to VA, hotels, car hire companies etc etc, all for no return to them, I don't think that argument holds much water.
The govt should offer VA a loan, with the option to take a stake in the company if not repaid as required.
I fully agree that the way VA has been managed in the past (by JB et al) is utterly atrocious. However I really do feel like PS was taking the airline down the path it needed to travel to turn things around. The situation should be judged on how things are now, not the past. Otherwise we should refuse recently unemployed people the dole if they have made poor choices in their past lives, regardless of what changes they have since made. "Sorry madam. I know you've been working hard to pay off the debts you accumulated during your previous relationship with your abusive partner. We understand that you have become unemployed due to covid-19, through no fault of your own. But your ex built the debt in your name so why should the govt help you out? Best you file for bankruptcy..."
As for people moaning about govt bailout money being sent overseas to the foreign airline owners of VA. Well bearing in mind for the last however many years a load of foreign airline money has been invested in VA which has then flowed in to 10,000 Australian taxpayers and countless other suppliers to VA, hotels, car hire companies etc etc, all for no return to them, I don't think that argument holds much water.
The govt should offer VA a loan, with the option to take a stake in the company if not repaid as required.
Whilst I'm definitely not an expert on company insolvency, once an administrator is appointed all debts are put on hold and a creditors committee is formed. Those who are owed money get to decide if the company is wound up or if they will accept settlement of their accounts at X cents on the dollar and the business continues, usually in a restructured form. If the financial difficulties were the result of a one off event and the company is otherwise viable this might be acceptable to all concerned especially if future business would be important eg Boeing, whilst not in administration have their suppliers working with them as they simply can't afford an important customer to go broke. If there is little chance of the business returning to profitability then it gets wound up and creditors are paid out usually at a loss, from the proceeds of asset sales and anything in the bank.
Virgin have stopped the transfer of Velocity frequent flyer points to Singapore Airlines Kris miles and limited their use for purchase of gift cards to one per day. Those with longer memories might recall that Ansett Golden Wing members lost points worth around $700 million when the airline collapsed. It's similar to the foreign exchange market when traders get out of what they perceive as risky currencies and go for safe havens. Kris miles give access to the entire Star Alliance network and SIA are in receipt of a government bail out.
https://www.executivetraveller.com/n...ines-suspended
Virgin Australia has slammed on the brakes for Velocity Frequent Flyer members trying to transfer their points into the KrisFlyer scheme of partner Singapore Airlines.
Until earlier today, the partnership between Virgin and the Singaporean flag-carrier allowed the frequent flyer points of one airline to be converted into those of another, under an innovative arrangement launched in 2014.
However, the Points Transfer page on the Velocity website now carries a notice at "Velocity Frequent Flyer and Singapore KrisFlyer are temporarily suspending conversion of Points and Miles between the two programs. We're looking forward to providing you with this program feature once flight schedules return to normal."
The transfer facility opened the door for Virgin customers to obtain points-based award bookings and flight upgrades not only with Singapore Airlines but right across the Star Alliance with premium partners such as ANA, Lufthansa, Swiss and Thai Airways.
However, recent speculation on the fate of Virgin should the coronavirus crisis extend beyond six months may have sparked a rush to convert the airline's Velocity points to the perceived safer haven of Singapore Airlines.
The gift cards sell for between 3,000 and 35,000 Velocity points, with a redemption value of between $10 and $200 across some two dozen partners including Apple, David Jones, Dymocks, Endota Spa, JB Hi-Fi, The Iconic, Rebel Sports, Ticketmaster and Westfield shopping centres.
While gift cards don't represent the best value for Velocity points, they retain their value for upwards of a year and can be used to purchase goods on sale, which can increase the effective overall value of the Velocity points used to buy the card.
The airline is said to have sufficient cash at hand to weather up to six months in the current COVID-19 lockdown scenario, which has gutted the travel market, with Virgin Australia CEO Paul Scurrah saying the airline was asking for "temporary support, not a handout."
"We want to work with government on how best to design this but it will be a repayable loan," he told ABC Radio. It's reported that if the airline was unable to repay the loan in full within two to three years, the government would take an equity stake in the company.
However, Deputy Prime Minister and Transport Minister Michael McCormack maintains Virgin Australia will not receive any special treatment.
"Whatever we do for Virgin we are going to have to do for other companies as well. We can’t just pick and select individuals and winners out of this," McCormack said, adding that Virgin should consider raising capital from its existing shareholders, which includes Singapore Airlines and Etihad Airways.
Virgin have stopped the transfer of Velocity frequent flyer points to Singapore Airlines Kris miles and limited their use for purchase of gift cards to one per day. Those with longer memories might recall that Ansett Golden Wing members lost points worth around $700 million when the airline collapsed. It's similar to the foreign exchange market when traders get out of what they perceive as risky currencies and go for safe havens. Kris miles give access to the entire Star Alliance network and SIA are in receipt of a government bail out.
https://www.executivetraveller.com/n...ines-suspended
Virgin Australia has slammed on the brakes for Velocity Frequent Flyer members trying to transfer their points into the KrisFlyer scheme of partner Singapore Airlines.
Until earlier today, the partnership between Virgin and the Singaporean flag-carrier allowed the frequent flyer points of one airline to be converted into those of another, under an innovative arrangement launched in 2014.
However, the Points Transfer page on the Velocity website now carries a notice at "Velocity Frequent Flyer and Singapore KrisFlyer are temporarily suspending conversion of Points and Miles between the two programs. We're looking forward to providing you with this program feature once flight schedules return to normal."
The transfer facility opened the door for Virgin customers to obtain points-based award bookings and flight upgrades not only with Singapore Airlines but right across the Star Alliance with premium partners such as ANA, Lufthansa, Swiss and Thai Airways.
However, recent speculation on the fate of Virgin should the coronavirus crisis extend beyond six months may have sparked a rush to convert the airline's Velocity points to the perceived safer haven of Singapore Airlines.
Gift card transfers also limited
Less than 24 hours ago, Virgin clamped down on using Velocity points to purchase a gift card valid at major retail outlets, imposing a limit of one gift card per day.The gift cards sell for between 3,000 and 35,000 Velocity points, with a redemption value of between $10 and $200 across some two dozen partners including Apple, David Jones, Dymocks, Endota Spa, JB Hi-Fi, The Iconic, Rebel Sports, Ticketmaster and Westfield shopping centres.
While gift cards don't represent the best value for Velocity points, they retain their value for upwards of a year and can be used to purchase goods on sale, which can increase the effective overall value of the Velocity points used to buy the card.
A six-month deadline?
Earlier this week, Virgin Australia confirmed it has approached the Federal Government for a $1.4 billion bailout in order to survive a prolonged coronavirus grounding.The airline is said to have sufficient cash at hand to weather up to six months in the current COVID-19 lockdown scenario, which has gutted the travel market, with Virgin Australia CEO Paul Scurrah saying the airline was asking for "temporary support, not a handout."
"We want to work with government on how best to design this but it will be a repayable loan," he told ABC Radio. It's reported that if the airline was unable to repay the loan in full within two to three years, the government would take an equity stake in the company.
However, Deputy Prime Minister and Transport Minister Michael McCormack maintains Virgin Australia will not receive any special treatment.
"Whatever we do for Virgin we are going to have to do for other companies as well. We can’t just pick and select individuals and winners out of this," McCormack said, adding that Virgin should consider raising capital from its existing shareholders, which includes Singapore Airlines and Etihad Airways.
Last edited by krismiler; 6th Apr 2020 at 02:20.
I would say that post Carona there will be no need for the capacity from pre Carona from even one airline.
QF will have way more aeroplanes than the market needs.
Other people’s money;
Creditors (please help, national interest, keeping the air fair- twenty years old now)
Tax payers (that would be Airnav charges)
Staff (leave without pay, that would be yours)
Playing would be the newspaper ads.
Finally do VA have the money to last for how long?
QF will have way more aeroplanes than the market needs.
Other people’s money;
Creditors (please help, national interest, keeping the air fair- twenty years old now)
Tax payers (that would be Airnav charges)
Staff (leave without pay, that would be yours)
Playing would be the newspaper ads.
Finally do VA have the money to last for how long?
I'd like to make another point for those reading and citing Virgin's losses over X amount of years as a reason not to bail them out. For essentially any business to grow, it's very hard not to operate at a loss during this growth - it's common, almost necessary and well accepted. This is why loss making businesses have value and why people continue to invest in loss making businesses (contrary to those asking why would anyone do it). This is because provided revenue is increasing, the business will reach a point where it transitions. This was happening at VA right before this mess and here are the numbers to demonstrate why:
1. Qantas - since 2008 on a total revenue of $168b, with a profit of $2.1b The dominant market player, over the twice the size of VA). Revenue since 2008 has increased by 15%
2. In the same period, VA has grown revenue by 135%.
The reality is that QF has barely grown while VA has had massive growth and I can tell you first hand that growth of a business costs money, and lots of it! Successfully managing the transition from growth to stabilization (breaking even then turning a profit) is where the management comes in and what PS was well on his way to doing this. Once again, very normal and generally part of a plan. Has VA perfectly managed the situation and made all the right moves and decisions? Probably not! However for anyone reading their balance sheets watching the cash balance steadily increase and observing the statutory vs underlying figures, it was reasonably clear on why the shareholders were not kicking up a big fuss.
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This was happening at VA right before this mess and here are the numbers to demonstrate why:
1. Qantas - since 2008 on a total revenue of $168b, with a profit of $2.1b The dominant market player, over the twice the size of VA). Revenue since 2008 has increased by 15%
2. In the same period, VA has grown revenue by 135%.
The reality is that QF has barely grown while VA has had massive growth and I can tell you first hand that growth of a business costs money, and lots of it! Successfully managing the transition from growth to stabilization (breaking even then turning a profit) is where the management comes in and what PS was well on his way to doing this. Once again, very normal and generally part of a plan. Has VA perfectly managed the situation and made all the right moves and decisions? Probably not! However for anyone reading their balance sheets watching the cash balance steadily increase and observing the statutory vs underlying figures, it was reasonably clear on why the shareholders were not kicking up a big fuss.
1. Qantas - since 2008 on a total revenue of $168b, with a profit of $2.1b The dominant market player, over the twice the size of VA). Revenue since 2008 has increased by 15%
2. In the same period, VA has grown revenue by 135%.
The reality is that QF has barely grown while VA has had massive growth and I can tell you first hand that growth of a business costs money, and lots of it! Successfully managing the transition from growth to stabilization (breaking even then turning a profit) is where the management comes in and what PS was well on his way to doing this. Once again, very normal and generally part of a plan. Has VA perfectly managed the situation and made all the right moves and decisions? Probably not! However for anyone reading their balance sheets watching the cash balance steadily increase and observing the statutory vs underlying figures, it was reasonably clear on why the shareholders were not kicking up a big fuss.
VA, initially under BG and then accelerated under JB, has bought market share. Yes, you are correct, it costs a lot of money to buy market share.
Meanwhile, whilst VAH were booking massive losses as they bought market share (especially premium / corporate), QF were still maintaining profitability (FY13 excepted).
Clearly this strategy has failed.
Why should the Australian taxpayer fund VA’s failure?
I see this from a quite different perspective.
VA, initially under BG and then accelerated under JB, has bought market share. Yes, you are correct, it costs a lot of money to buy market share.
Meanwhile, whilst VAH were booking massive losses as they bought market share (especially premium / corporate), QF were still maintaining profitability (FY13 excepted).
Clearly this strategy has failed.
Why should the Australian taxpayer fund VA’s failure?
VA, initially under BG and then accelerated under JB, has bought market share. Yes, you are correct, it costs a lot of money to buy market share.
Meanwhile, whilst VAH were booking massive losses as they bought market share (especially premium / corporate), QF were still maintaining profitability (FY13 excepted).
Clearly this strategy has failed.
Why should the Australian taxpayer fund VA’s failure?
The past is in past, and I believe their future prospects were comparatively bright before the the goverment enforced lockdowns.
Why should the taxpayer fund a bailout? Because they will benefit more than it will cost (individual opinions will vary).
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Anyway, I think we're on a roundabout with this now. No hard feelings either way from me and there's been some good input and some questionable input, but at the end of the day it's out of any of our hands. There are lot of jobs at stake and the whole country is hurting right now. Whichever way it goes, let's hope the outcome is as positive as possible.
Cheers guys.
Cheers guys.