Private equity take-over for Virgin Australia?
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Originally Posted by hoss58
Of course. They are just arbitrary figures.
Even 50% would still be better than what C-link would give you.
Cheers Hoss
Even 50% would still be better than what C-link would give you.
Cheers Hoss
An apparently "leaked" flyer sent to interested parties yesterday as reported by the AFR.
How do they keep a straight face when they say "proven profitability"?
They were so profitable that they are in administration with $5 billion in debts.
Deloitte's seven point pitch included:
- Attractive two player domestic market with proven profitability
- Strong ongoing demand for domestic air travel (long distances between major cities, limited alternative transport options, tourism destination)
- Strategically valuable access to routes and slots in the "Golden Triangle", historically one of the most profitable operating jurisdictions globally for air travel
- Highly cash generative and distinguished Velocity Frequent Flyer loyalty model, in excess of 10 million members and 90 partners
- Key strategic assets and infrastructure, including aircraft, route network, airport gates/slots, built over 20 years
- Unique opportunity to 'relaunch' Virgin Australia with a sustainable capital structure post COVID-19
- Strong support from government, regulators and unions - have all expressed a desire to keep Virgin flying following recapitalisation
They were so profitable that they are in administration with $5 billion in debts.
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Originally Posted by Icarus2001
How do they keep a straight face when they say "proven profitability"?
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Originally Posted by normanton
My thoughts exactly. Won't stop the state governments putting in stupid offers.
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Originally Posted by Paragraph377
Likely it refers to aspects of the business. The triangle route and Velocity made them money, just not enough money to cover the loss making parts of the business. So technically it’s not a furphy, but it is a long stretch of the truth bow.
Tiger or Alliance or ?
How many F50s does Alliance have ? Do they work up to 90 minutes or bit longer? If so, could they do some shorter Qld routes ?
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Strong ongoing demand for domestic air travel (long distances between major cities, limited alternative transport options, tourism destination)
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Originally Posted by rmm
I think that's much further down the track. 10% plus unemployment, consumer confidence down, recession (possible depression) conditions, tourism - bars, restaurants & sporting events probably the last to reopen.
Far less space at Coles/Woolies/Bunnings
Last edited by BNEA320; 23rd Apr 2020 at 02:45.
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Originally Posted by chookcooker
so you’re saying:
1: making an employee redundant is expensive
2. Therefore it’s better to make every single employee redundant.
3.????????
4. Profit!!
1: making an employee redundant is expensive
2. Therefore it’s better to make every single employee redundant.
3.????????
4. Profit!!
If it can't come up with a business plan that shows it will be able to service all those debts, it has not choice but to liquidate. That might mean there not being enough in the pot to pay all entitlements, but you can't be a running business and not pay full entitlements to employees you make redundant.
I'm not saying it's a better outcome, I'm saying it might be a commercial reality.
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Originally Posted by Wizofoz
Making employees redundant is expensive IF you are trying to hold onto your assets and get an operation functioning again. To emerge from administration, VA must show it has a business plan that means it can service it's debt. It is trying to negotiate with debtors, but each redundant employee is a mark on the red side of the ledger.
If it can't come up with a business plan that shows it will be able to service all those debts, it has not choice but to liquidate. That might mean there not being enough in the pot to pay all entitlements, but you can't be a running business and not pay full entitlements to employees you make redundant.
I'm not saying it's a better outcome, I'm saying it might be a commercial reality.
If it can't come up with a business plan that shows it will be able to service all those debts, it has not choice but to liquidate. That might mean there not being enough in the pot to pay all entitlements, but you can't be a running business and not pay full entitlements to employees you make redundant.
I'm not saying it's a better outcome, I'm saying it might be a commercial reality.
I maybe getting confused with chapter 11 in USA, but think admin in Australia means just that. The creditors are stuffed. Who would give an airline credit ?
The creditors are stuffed. Who would give an airline credit ?
https://asic.gov.au/regulatory-resou...for-creditors/
VAH own about half of their fleet. Firesale price in this market? 70 jets at 10 million each average price? 700 million right there. Good luck with a sale though.
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Originally Posted by hoss58
Of course. They are just arbitrary figures.
Even 50% would still be better than what C-link would give you.
Cheers Hoss
Even 50% would still be better than what C-link would give you.
Cheers Hoss
PG
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Originally Posted by Popgun
If it was me, I’d be pitching for JQ salaries minus 10-20%. That way it would be very clear that the labour side of the cost base was competitive and could not be held accountable for profitability failure.
PG
PG
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Happy to be corrected but in order for VA to be "sold" as a going entity the accumulated debt has to be settled, it won't be at the full debt value but a proportion ie 20 cents in the $/30 cents....whatever.
If the creditors reckon that in liquidation they can get 50 cents but are only being offered 30 cents by the administrator they will likely say "get stuffed".
The creditors will decide whether VA can continue - contingent of course on finding an investor willing to provide the xx cents in the $ to buy off the creditors.
As was proven by Fox/Lew any investor will be looking at what THEY can get out of it, if they suddenly decide they can't get what they want/demand they'll spit the dummy and kill the deal.
If anyone was REALLY concerned about running an airline they'd either buy the Tiger AOC outright (if possible) or team up with Alliance, either way expand in their own time in their own direction and leave the VA mess to the administrator.
Just IMHO.
Cheers.
If the creditors reckon that in liquidation they can get 50 cents but are only being offered 30 cents by the administrator they will likely say "get stuffed".
The creditors will decide whether VA can continue - contingent of course on finding an investor willing to provide the xx cents in the $ to buy off the creditors.
As was proven by Fox/Lew any investor will be looking at what THEY can get out of it, if they suddenly decide they can't get what they want/demand they'll spit the dummy and kill the deal.
If anyone was REALLY concerned about running an airline they'd either buy the Tiger AOC outright (if possible) or team up with Alliance, either way expand in their own time in their own direction and leave the VA mess to the administrator.
Just IMHO.
Cheers.
The reason Abeles was a buyer for Ansett is that the airline had a seat at the IATA clearing house in Montreal. No finer money laundering device existed at that time.
’Then there was the “sale” of DC-9’S to Les Hong at Evergreen. Those aircraft were converted to American registration, painted in US Navy colours and leased to it for staff transport. All that conversion was at Ansett’s expense. Les was a guest at one of the Murdoch kids weddings.
Airlines generate lots of cash...... Very attractive to some.
Sir Peter was the only man who could physically scare G McM.
’Then there was the “sale” of DC-9’S to Les Hong at Evergreen. Those aircraft were converted to American registration, painted in US Navy colours and leased to it for staff transport. All that conversion was at Ansett’s expense. Les was a guest at one of the Murdoch kids weddings.
Airlines generate lots of cash...... Very attractive to some.
Sir Peter was the only man who could physically scare G McM.
Last edited by Sunfish; 23rd Apr 2020 at 17:39.
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Originally Posted by BNEA320
but aren't you foregetting that the administrator can make most of that debt mountain go away
The creditors are stuffed.
I’m sure someone (maybe Sunfish) with more knowledge around restructures can provide more light, and I might be quite wrong...but what to do with the bondholders when they amount to $1.8B worth of debt is important. If another administrator got the bondholders, unions and others onside don’t be so sure they won’t be knocking on the Virgin restructure door.
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Originally Posted by crosscutter
Provided it is approved by the required percentage of creditors and the outcome is better than liquidation.
The secured creditors are in a pickle as much as the unsecured. They would love to wipe out the bondholders. But the bondholders will know this. As might certain private equity investors. So the bondholders might prefer a debt to equity swap, so ironically, the unsecured bondholders now become a major shareholder. Is this situation less optimal for the majority of creditors? I’m sure it’s being worked out. But If it is better, should a proposal offer the bondholders a debt to equity swap, it might be the best option as it gives the bondholders something, whilst the secured creditors remain untouched as leased aircraft are sent back home.
I’m sure someone (maybe Sunfish) with more knowledge around restructures can provide more light, and I might be quite wrong...but what to do with the bondholders when they amount to $1.8B worth of debt is important. If another administrator got the bondholders, unions and others onside don’t be so sure they won’t be knocking on the Virgin restructure door.
The secured creditors are in a pickle as much as the unsecured. They would love to wipe out the bondholders. But the bondholders will know this. As might certain private equity investors. So the bondholders might prefer a debt to equity swap, so ironically, the unsecured bondholders now become a major shareholder. Is this situation less optimal for the majority of creditors? I’m sure it’s being worked out. But If it is better, should a proposal offer the bondholders a debt to equity swap, it might be the best option as it gives the bondholders something, whilst the secured creditors remain untouched as leased aircraft are sent back home.
I’m sure someone (maybe Sunfish) with more knowledge around restructures can provide more light, and I might be quite wrong...but what to do with the bondholders when they amount to $1.8B worth of debt is important. If another administrator got the bondholders, unions and others onside don’t be so sure they won’t be knocking on the Virgin restructure door.
I have a question that I’m sure some one can answer. What happens to all the staff entitlements? For example leave, LSL and sick leave? Has all that just disappeared suddenly?
Based on my experience with the Ansett collapse all leave,LSL and 8 weeks redundancy were paid but guaranteed by the Government. Sick leave is not cashed out at anytime. If you resign you still don't get sick leave. Its accrued but not a cash liability.
