Government Loan to Virgin Australia
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Yes VA are shaky. Basically because of its debt and the close to zero turnover. Not here to bash any other operators, but ALL airlines are in trouble if this thing goes on, no one is immune. All that airlines can do is sell assets or refinance airframes in the hope that will see them through. The only difference between VA QF and JQ is how long it will take before the administrators will walk in. Stick together everyone, no point ripping into you comrades when the enemy is over the fence.
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Exactly Voz1. I want both airlines to survive.
It would be interesting if VA's big shareholders decided to chip in a few billion between them (as unlikely as that may be) the shoe would definitely be on the other foot in the "war of attrition" some seem to promote.
It would be interesting if VA's big shareholders decided to chip in a few billion between them (as unlikely as that may be) the shoe would definitely be on the other foot in the "war of attrition" some seem to promote.
I have a lot of good mates in VAH, many ex AN who really don’t deserve this twice....
But.. I’ll call a spade a spade. It was DJ that, along with Impulse started the pilot race to the bottom in this country. Bit rich to suggest they are now the buttress against low pay...
But.. I’ll call a spade a spade. It was DJ that, along with Impulse started the pilot race to the bottom in this country. Bit rich to suggest they are now the buttress against low pay...
I'm not sure of a bail-out of a business failing anyways? I''m flabbergasted at the cost to government and we are really just past the beginning and will now face further unknowns that may resonate towards national security.
Will nations on our doorstep fail? What will China do in the region? Will the disaster unfolding affect the US military budget? Forcing nations to have to pay more for their own security?
We are going to need a plan as a nation coming out of this pandemic and there will be expensive considerations including health care and national security- along with targeted stimulus. How can government prop up failing business that were going to fail anyways?
Indonesia is a little more complex than that historically. Not an unlikely scenario; though far more unsavoury domestic issues and medium term security issues likely to arise. PNG could require expensive assistance and most smaller island nations too ( devastated in 1917 flu ). You'd like to think China would help without strategic motive though their move into the region another scenario commanding government funds for security.
Australians need to back up Australians in the future more so than in anytime in recent generations. Not wishing ill on Virgin employees. I hope some logical and less painful outcome can emerge. I recall a shrunken Ansett operation with A320's in administration and Fox-Lew consortium seeking government guarantees. It was a bit of a con though something along these lines will no doubt be considered by the current government.
Australians need to back up Australians in the future more so than in anytime in recent generations. Not wishing ill on Virgin employees. I hope some logical and less painful outcome can emerge. I recall a shrunken Ansett operation with A320's in administration and Fox-Lew consortium seeking government guarantees. It was a bit of a con though something along these lines will no doubt be considered by the current government.
You'd like to think China would help without strategic motive
I don’t think China does anything these days without Strategic motive. Particularly in the territories surrounding Australia.
I hope some logical and less painful outcome can emerge. I recall a shrunken Ansett operation with A320's in administration and Fox-Lew consortium seeking government guarantees.
Do you think any country helps another without a strategic motive?
I do wonder what a 50% cut to the VA operation would look like. Can leased aircraft be returned without too much penalty? Or simply sell the owned airframes? The idea is to reduce the cash burn rate and be ready to increase domestic capacity when demand is allowed to rise. Whether that is enough to stave off administration who knows.
I do wonder what a 50% cut to the VA operation would look like. Can leased aircraft be returned without too much penalty? Or simply sell the owned airframes? The idea is to reduce the cash burn rate and be ready to increase domestic capacity when demand is allowed to rise. Whether that is enough to stave off administration who knows.
On a related note: VAi has 4x owned 777-300ERs (registed to Virgin Blue Leaseco (VB Leasco Pty Ltd)), those 777ws will eventually have to be sold off (with the returns sent to creditors) as it will be likely that VAi as a whole will be folded up and dissolved if the "mk II" post-administration operation is basically a domestic-only replacement for VA.
Do you think any country helps another without a strategic motive?
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Led Zeppelin, VA 737 domestic op's are profitable under normal circumstances. These are not however normal circumstances. QF will be bleeding much faster than VA, but they can sustain that bleeding for longer. There's a reason QF had to immediately pull the 1.4 billion injection card.
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PBA - The problem is that Virgin is bleeding cash with fixed overheads, and according to the last downgrade:
a default or distressed exchange appears increasingly likely over the next 12 months, absent timely government or other support and/or a swift reversal of the COVID-19 outbreak
Last edited by Arctaurus; 7th Apr 2020 at 08:40.
Evertonian
So, if they do go into Administration & a VA Mk II is on offer, beware who you sign on with.
From the Ansett Mk II experience, the employees would've worked for Ttesna & the assets would've been owned by a company called Queenscross. Sydney Airport Corp. were the only ones who baulked at that arrangement & it fell over like a house of cards. People will still try & take advantage of you!
From the Ansett Mk II experience, the employees would've worked for Ttesna & the assets would've been owned by a company called Queenscross. Sydney Airport Corp. were the only ones who baulked at that arrangement & it fell over like a house of cards. People will still try & take advantage of you!
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A low cost VA mark II would still be more preferable than the existing debt ridden company. It would be a formidable competitor to Jetstar. The Virgin name would probably disappear though.
Unfortunately, comparisons are unavoidable with the last days of Ansett.
Structural problems within the companies being brought to a head by a major world event, though this time it's far more serious.
Both were losing money however Ansett were more encumbered by unions and high staff rates of pay.
Calls for government bailouts, though this time QF are included.
If history repeats, then the next step would be to restructure into a smaller operation with reduced aircraft types, numbers and routes. Even then the consortium trying to rescue Ansett wanted government guarantees of profitability, when these weren't forthcoming they pulled the plug.
However Virgin is a much leaner operation than Ansett and the problems aren't as deep routed, given that the government will want to maintain a competitor to QF they will probably back a reduced sized and heavily restructured operation limited to B737 domestic flying. Done correctly this could be profitable, and a convincing argument made for a rescue package on the basis of sweeping changes leading to profitability in the medium term.
All previous projections are now out the window and any forecasts will need to be made based on the basis of a vastly changed operating environment in the short to medium term.
One factor heavily in favour of Virgin is that if things reach the stage where Qantas has to be nationalised, the government would want a counter balance to any demands from the QF unions for excessive pay increases from what would be an all powerful monopoly airline, capable of bringing Australia to a stand still if its demands weren't met . Divide and rule.
Structural problems within the companies being brought to a head by a major world event, though this time it's far more serious.
Both were losing money however Ansett were more encumbered by unions and high staff rates of pay.
Calls for government bailouts, though this time QF are included.
If history repeats, then the next step would be to restructure into a smaller operation with reduced aircraft types, numbers and routes. Even then the consortium trying to rescue Ansett wanted government guarantees of profitability, when these weren't forthcoming they pulled the plug.
However Virgin is a much leaner operation than Ansett and the problems aren't as deep routed, given that the government will want to maintain a competitor to QF they will probably back a reduced sized and heavily restructured operation limited to B737 domestic flying. Done correctly this could be profitable, and a convincing argument made for a rescue package on the basis of sweeping changes leading to profitability in the medium term.
All previous projections are now out the window and any forecasts will need to be made based on the basis of a vastly changed operating environment in the short to medium term.
One factor heavily in favour of Virgin is that if things reach the stage where Qantas has to be nationalised, the government would want a counter balance to any demands from the QF unions for excessive pay increases from what would be an all powerful monopoly airline, capable of bringing Australia to a stand still if its demands weren't met . Divide and rule.
Last edited by krismiler; 7th Apr 2020 at 11:19.
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It will be interesting to see what the Government does but it would be a surprise if they bail them out. If the shareholders won't do it then I can't see the Government being levered into doing it to keep the air fare. Next will be Airports, Travel Agents, Cruise Ship companies and other businesses that consider themselves essential services and critical to the economy. Post Ansett it took about 12 months for there to be a reasonable presence from VB at the time but at no stage did they provide any real competition to QF particularly in Business Class.
In regards to not being like Ansett lets see they have:
In regards to not being like Ansett lets see they have:
- A complicated and mixed up fleet which evolved for VB out of a single type - Tick
- Shareholders that don't want to foot the bill - Tick
- I think if you do a comparison on the Pilots pays they will be very similar although the AN Pilots were far more flexible on work rules than the VA ones are. - Tick
- And lastly they both put out stories on why they should keep going once they lost the customers confidence. AN through the 767 Fiasco and VA through putting in the media that they need $1.4 B to survive- Tick
- Both had trigger events to complete the fall. AN had 9/11 and VA has COVID-19 - Double Tick
I asked earlier on if Qantas employees or beneficiaries would declare their position in this thread about Virgin Australia, and choked on my wheeties at the suggestion they all would by a known Qantas pilot
So after seeing you conitnually sling mud at VA, I ask you Ken Borough, you wouldn't happen to have a stake in Qantas would you..?
Last edited by TimmyTee; 7th Apr 2020 at 22:08.