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Private equity take-over for Virgin Australia?

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Private equity take-over for Virgin Australia?

Old 21st Apr 2020, 09:45
  #81 (permalink)  
 
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So- since 9/11, unprecedented Stability/Market go-forward/Run- HOW the fcuk, can 'All' this be 'SO'..............., 3x weeks In- NIL Brass....????

Alan- was in AN, a given/un-contestable fact (network- &/or some-such...., ask Geoff???), but- over 'That' elapsed time- WHAT the freek, 'have' you folk all Been Doing....????

Good Luck ALL
Rgds
S28- BE
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Old 21st Apr 2020, 09:55
  #82 (permalink)  
 
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I don't understand why so many are jumping to conclusions when the fat lady hasn't even sung yet? Getting your hopes up only to possibly have them crushed will hit you doubly hard.

Expect the worst, hope for the best.
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Old 21st Apr 2020, 10:36
  #83 (permalink)  
 
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S28- BE,

Mate, thanks for writing out the YSSY ATIS again, letís set up for 16L, flaps 30, wind correction 5 and auto brake 2!

😉
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Old 21st Apr 2020, 10:38
  #84 (permalink)  
 
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Hoss- Not a Drama mate............. Rock-On Brother!!!!
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Old 21st Apr 2020, 10:48
  #85 (permalink)  
 
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Is that code for Ďthereís a C-206 job going at Ayers Rockí?

🙂
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Old 21st Apr 2020, 10:56
  #86 (permalink)  
 
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Yup- Ring Betoota Airlines, 'they' shall sort you............., all good.
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Old 21st Apr 2020, 11:10
  #87 (permalink)  
 
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The problem with voluntary Administration Ollie is that the board (ie the major share holders) have to agree to it. By agreeing to it you are essentially agreeing to reducing your equity value in the business to zero. So by agreeing to enter voluntary administration Etihad, Singapore, HNA, Nanshan and Branson have effectively agreed to walk away with nothing after pumping in excess of 6 Billion into the business over the years. So I doubt they’d agree that it’s such a great option! But they just don’t have the money Virgin needs as they’re all dealing with their own problems right now.

The reason it might work out well for Virgin right now is that the entire Aviation industry is hurting right now. So aircraft lessors, airport authorities, creditors etc will be much more willing to work with the administrators right now as they have no where else to go themselves. If times were good and aviation was booming it might be a very different story.

Not saying it’s going to be all skittles and rainbows for Virgin going thru this, as they now have no control over the outcome. It’s going to end up being whatever the administrators and future owners want it to be. That could well mean more redundancy’s or the businesses being broken up and sold off piecemeal.
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Old 21st Apr 2020, 11:15
  #88 (permalink)  
 
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Dragon Man. It appears Deloitte's has taken a charge over VA cash for $35M to cover administration fees and charges.
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Old 21st Apr 2020, 11:20
  #89 (permalink)  
 
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I agree, in this case Voluntary Admin may well result in Virgin being able to trade out of this situation. I just think the people saying that this is a great result and will end up with a bigger better airline with no losses that will make Qantas shake in their boots is verging on insane. Being hopeful is good, a leaner and better carrier out of this is good for everyone but it is not an ‘easy’ way out.
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Old 21st Apr 2020, 12:09
  #90 (permalink)  
 
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Originally Posted by B772 View Post
Dragon Man. It appears Deloitte's has taken a charge over VA cash for $35M to cover administration fees and charges.
Sounds about right.
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Old 21st Apr 2020, 12:12
  #91 (permalink)  
 
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Originally Posted by Ollie Onion View Post
I reckon Alan has been quiet as he got a smack on the hand for some of the statements he made, also he is busy trying to figure out how to ramp things up again and how many jobs, if any, that are going to go and when.
The smack on the hand was nothing. A non-event. Alan wouldnít have even blinked. However, you are correct that the silence is deafening. The reason is simple; VA may have gone into Administration and the Irish toad obviously will be looking at post COVID strategies, but he also has an airline that is bleeding daily, potentially to the tune of $6m or more per day. If the current crisis was to continue for say another 6 months unabated, QF will be in their own depth of shit. QF are hurting too, make no mistake about that. They are just fortunate that they are a bigger entity with a few more shekels in the bank. But that doesnít provide them with Ďbusiness immunityí. This game has a long way to play out yet. But rest assured QF arenít getting a free roll of the dice to pass Go and collect $200. Quite simply the spotlight is all over VA at the moment. If a decent investigative journalist or people in general started poking around the fringes of the Rat I think you will find that not all is peaches and cream.




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Old 21st Apr 2020, 12:22
  #92 (permalink)  
 
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I agree, in this case Voluntary Admin may well result in Virgin being able to trade out of this situation. I just think the people saying that this is a great result and will end up with a bigger better airline with no losses that will make Qantas shake in their boots is verging on insane. Being hopeful is good, a leaner and better carrier out of this is good for everyone but it is not an ‘easy’ way out.
I don't think anyone is suggesting it will be bigger. But I don't think you need to be an accountant to work out that if there's maybe $3bn less debt ($240m saved in interest payments). 330 leases wiped. I don't know the figure on that but I've heard they lose the company in the vicinity of 30-40m per year. 1300 employees redundant already, another $13m on the bottom line. Maybe 20 x 737 airframes gone with the axing of VANZ. A320 fleet gone from Tiger. Pretty easily you can see $300m in savings straight up. Scurrah has been talking between 300 to 400m in cost reductions are possible. Yep, there will be less airframes, but will there be an equivalent drop in revenue. I suspect not. Unprofitable routes will also be axed. The company had already withdrawn from Hong Kong, so it's not as if there isn't already a deep understanding of where the problems are and a fair bit of action has already been taken. In fact pre 'rona predictions were for a return to profitability despite having the current debt burden.

It's pretty easy to present a cogent argument that resturctured and unburdened from a significant amount of debt, Virgin will absolutley be profitable. I would like to say "and quickly" but that will be dependent on how the climb out of lockdown is managed, along with the publics appetite to be jammed into an aluminium tube with 180 other Covid-19 transportation units..

The question is probably not if it will be profitable, but more likely will the profit be well managed, or pissed away on McLaren's, as it has been in the past. And that wasn't even profit.
Counter that against Qantas who will have a very large wide body fleeet sitting around idle for 12 months hoovering up spare cash, and you can also see pretty easily that if domestic airtravel doesn't return to normal quickly, and the borders remain shut for 12 months, Qantas could very easily be in a cash poor position, and the topic of administration could be more than just a thread on PPRuNe. Elaine didn't run straight to the market and borrow a billion for the fun of it. He thinks he might need it. And of course you're aware that billion is debt. The same sort of debt that Virgin has. Just not as much of it. Yet.
The most likely outcome at this stage is, barring mass stupidity from the australlian public, a controlled return to the new normal over the next 6 months, with a competitive Virgin lite keeping the incumbent market leader honest.
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Old 21st Apr 2020, 12:27
  #93 (permalink)  
 
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Originally Posted by dragon man View Post
Meanwhile at Qantas Alan will have to find the money to make both pilots and FAs redundant and deal with an inappropriate fleet internationally while his main cash cow (domestic) is under the pump from a reinvigorated Virgin.
Not really. No international staff have to be made redundant, they will be held on indefinite stand down until flying resumes. It costs a tiny bit to keep the aircraft maintenance status current. QF Domestic will remain the market leader, especially with FF who'll be reluctant to spend in an airline close to the brink, and a VA that concentrates on core routes will allow more minor routes to become QF monopolies. A slimmed down Virgin will remain, but I'd say the process for that to happen will take months, probably a year.
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Old 21st Apr 2020, 12:46
  #94 (permalink)  
 
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Is the majority of QFs international fleet owned? Thatíll only cost them depreciation on those assets, unlike leasing costs which of course is outgoing cash.
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Old 21st Apr 2020, 13:49
  #95 (permalink)  
 
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Originally Posted by jethro_027 View Post
Agree. I canít get my head around the arguments that VA isnít Australian enough, not worthy of a government loan and should look to the market. But at the same time if VA goes to the market and gets Chinese money, well then thatís bad because itís too Australian.
Isn't it just racist then? It's OK if it's owned by an international conglomerate of Gulf, British and Asian interests, but not if it's majority Chinese owned?

The FIRB should be about WHETHER it's strategically sound for an Australian entity (Virgin Aus IS an Australian business, regardless of the nationality of the shareholders) to be sold to foreign interest at all first, then WHICH foreign interests, i.e. in terms of our diplomatic and strategic alliances should be a secondary, albeit still vitally important consideration.
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Old 21st Apr 2020, 14:39
  #96 (permalink)  
 
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the pandemic that virgin had to have

Years of swilling pig snouts in the trough.
The little italian couldn't run a line through a sentence, much less run an airline.
The same board continues to preside over the mess they have created and essentially condoned for a decade.
Scurrah intentions solid, but even then the changes needed will only occur as a result of vol admin.
Too many of the cult members seriously think drinking from the kool aid will make it all better. Legacy of the little italian and his groupies.
Federal government not willing to assist, but happy to spend 600-700 million of taxpayer $$'s under the F.E.G. to pay workers entitlements under liquidation scenario.
Federal government failing the airline aviation / tourism sectors dismally, as it's not a matter of if, just when, the little irish POS, will have his little hand out as well.

Guess that will be a different story then, for the 40% foreign owned national flag carrier.


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Old 21st Apr 2020, 14:50
  #97 (permalink)  
 
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spot on

Originally Posted by virginexcess View Post
I don't think anyone is suggesting it will be bigger. But I don't think you need to be an accountant to work out that if there's maybe $3bn less debt ($240m saved in interest payments). 330 leases wiped. I don't know the figure on that but I've heard they lose the company in the vicinity of 30-40m per year. 1300 employees redundant already, another $13m on the bottom line. Maybe 20 x 737 airframes gone with the axing of VANZ. A320 fleet gone from Tiger. Pretty easily you can see $300m in savings straight up. Scurrah has been talking between 300 to 400m in cost reductions are possible. Yep, there will be less airframes, but will there be an equivalent drop in revenue. I suspect not. Unprofitable routes will also be axed. The company had already withdrawn from Hong Kong, so it's not as if there isn't already a deep understanding of where the problems are and a fair bit of action has already been taken. In fact pre 'rona predictions were for a return to profitability despite having the current debt burden.

It's pretty easy to present a cogent argument that resturctured and unburdened from a significant amount of debt, Virgin will absolutley be profitable. I would like to say "and quickly" but that will be dependent on how the climb out of lockdown is managed, along with the publics appetite to be jammed into an aluminium tube with 180 other Covid-19 transportation units..

The question is probably not if it will be profitable, but more likely will the profit be well managed, or pissed away on McLaren's, as it has been in the past. And that wasn't even profit.
Counter that against Qantas who will have a very large wide body fleeet sitting around idle for 12 months hoovering up spare cash, and you can also see pretty easily that if domestic airtravel doesn't return to normal quickly, and the borders remain shut for 12 months, Qantas could very easily be in a cash poor position, and the topic of administration could be more than just a thread on PPRuNe. Elaine didn't run straight to the market and borrow a billion for the fun of it. He thinks he might need it. And of course you're aware that billion is debt. The same sort of debt that Virgin has. Just not as much of it. Yet.
The most likely outcome at this stage is, barring mass stupidity from the australlian public, a controlled return to the new normal over the next 6 months, with a competitive Virgin lite keeping the incumbent market leader honest.
Well said.
And therein lies the issue for the little irish, international borders remaining closed will be a FAR greater issue for the Q group going forward. Suppose it's why the POS has been so hell bent on destruction of VA.
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Old 21st Apr 2020, 18:14
  #98 (permalink)  
 
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The first thing Deloitte will do is a full set of management accounts that are warts and all honest. Until they are prepared, no body knows what the state of play is. There may be some surprises. This accounts will have a rigorous contribution analysis (Revenue minus variable costs) to indicate which fleets/sectors, etc. are paying their way by making a contribution to fixed costs as well as profit. I you don’t do that first, you might chop off the wrong bits.

I can think of two reasons VB wasn’t bailed out and “foreign ownership “ isn’t one of them - remember these pricks are buying submarines from France.;

1. QF and the rest would have formed a queue behind it.

2. The economic high priests in Treasury and PM&C hold that Australia can only afford one airline - because of the economy of scale arguments they were taught at ANU.

Of the two reasons, (2) is more deadly because these bastards will stop at nothing to prove that their theories, on which they have built their careers, are correct. They are the reason we have so little manufacturing here. They were taught we are a farm and a mine under the doctrine of competitive advantage. Their next battle will be to prevent forgiveness of AsA and other Commonwealth charges which VB will inevitably ask for on the grounds that “it sends the wrong signal” to industry. I pleaded with some of these clowns for a bailout when Ansett went under and was told to go back to my cubicle and shut up for exactly this reason.

Qantas will be doing everything in their power, ethical or not, to support the acolytes of (2). That has probably already started with private briefings to selected public servants on “The structure of the Australian Airline Industry Post Pandemic” which will of course be self serving and have no place for VB. Watch out for new “talking points” from the likes of GT, Ministers and Public Servants, they will come from those briefings.

Qantas will be practicing matrix marketing management aimed at Government right now with the lunches and the odd Chairman’s lounge invitation thrown in - when social distancing makes it possible of course. They will know exactly who all the decision makers are and will assiduously play off each against the other to get what they want.

The reason AJ is silent is that he is working hard to grease the skids under VB, as he should as a responsible CEO.

Last edited by Sunfish; 21st Apr 2020 at 18:36.
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Old 21st Apr 2020, 19:25
  #99 (permalink)  
 
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Further to my last post, right on cue, here comes the ABC with some talking points! I wonder who set up the “deep background” for this one? The message? Virgin is a bad business that won’t survive.

Virgin Australia shows again that this nation can't sustain two airlines

It was a throwaway line in a different time.

Former Qantas boss Geoff Dixon, who took over running Qantas just months before the demise of Ansett Airlines, was under no illusions about the difficulties facing a second carrier.
"The problem with the Australian market is that it's big enough for probably one-and-a-half airlines," he quipped privately, years later.

https://www.abc.net.au/news/2020-04-...lines/12169620
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Old 21st Apr 2020, 19:32
  #100 (permalink)  
 
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And this one. Journalists are lazy. Someone is feeding them. The negative message here is that government has already done enough. Virgin is greedy.

The Government doesn't want Virgin Australia to go the way of Ansett, so why won't it hand over more cash?

On March 31, Virgin went into a trading halt and confirmed it had asked the Federal Government for $1.4 billion to help it get through the pandemic.

Ultimately, the Government's line was that it is "not in the business of owning an airline".

Part of the reason the Federal Government gave for its reluctance to offer Virgin a loan was that it had already funded more than $1 billion worth of assistance for the airline sector.
Coronavirus update: Follow the latest news in our daily wrap.

That included waiving fees for fuel excise and security screening charges, as well as for select regional routes and last week's announcement that the Government would underwrite the cost to resume some domestic routes.

Remarking on the company going into voluntary administration on Tuesday morning, Deputy Prime Minister Michael McCormack noted Virgin had been able to access most of the money already on the table.

"Virgin has been able to access the initial announcement, where $715 million was put on the table by way of waving fees when it comes to fuel excise, Airservices Australia charges and such things as security screening," he said.

Mr McCormack said Mr Scurrah had told him Virgin had benefited from those announcements to the tune of tens of millions of dollars.
https://www.abc.net.au/news/2020-04-...-said/12169952

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