Private equity take-over for Virgin Australia?
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I have worked for a Chinese boss. Trust me; it is not something you should want to do. The Chinese way of management is a vertical line from the boss straight down to the bottom where every other person resides. The pyramid structure of accountability and management we are used to is not the Chinese way.
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Just being reported now...….
Ben Butler
The move comes after the federal government rebuffed the airline’s request for a $1.4bn emergency loan as part of a wider industry bailout package and despite duelling aid offers from NSW and Queensland, each of which wanted to host Virgin Australia’s HQ.
It is not clear what will happen to the approximately 10,000 people who work for Virgin Australia if it goes into administration.
Also unclear is what will happen to its fleet of 130 planes, many of which are heavily mortgaged.
The company has been crushed by a $4.8bn mountain of debt and has been burning cash while the fleet is grounded.
Deloitte understood to be appointed administrator for Virgin Australia
It is understood big four accounting firm Deloitte will be appointed as Virgin Australia’s administrators.The move comes after the federal government rebuffed the airline’s request for a $1.4bn emergency loan as part of a wider industry bailout package and despite duelling aid offers from NSW and Queensland, each of which wanted to host Virgin Australia’s HQ.
It is not clear what will happen to the approximately 10,000 people who work for Virgin Australia if it goes into administration.
Also unclear is what will happen to its fleet of 130 planes, many of which are heavily mortgaged.
The company has been crushed by a $4.8bn mountain of debt and has been burning cash while the fleet is grounded.
a complete change of board is the first step otherwise how can the airline hope to chart a new course. A fish rots from the head is an old and true adage. The board, and Borgetti have created the mess. How about some accountability. Sacking Tiger pilots, great move idiots. Blame never apportioned where it belonged. Crap rostering, crap management, crap lease arrangements on aircraft. Crap ideas (Bali, catering etc) by managers have sunk this Titanic.
I’d love to know what Deloitte will charge . Take a guess, partner $1,000 an hour down to a secretary/assistant at $200 an hour all plus GST. In most cases there is usually not much left after the administrators are done. Hope they survive. Australia needs a second airline.
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Not all management. Any that joined and spoke sense or was found to have ACTUAL and valuable airline experience, even at management level, capable of pointing out flaws in operations and the direction of the company was quickly shown the door and I'm not just talking about JT. Lots of people in VA in management positions who couldn't run a tart shop.
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Borgetti took upwards of 42 million out in his 8 year tenure. You know all the staff uniforms “Dina Corp made in China” are actually made in the back streets of Nandi Fiji. Company searches in Fiji show Mrs Borgetti as the Director. Scurrah can go back to playing with a train set or get in the job seeker line with the rest of us. Ahhhh then there’s Stewie
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Borgetti took upwards of 42 million out in his 8 year tenure. You know all the staff uniforms “Dina Corp made in China” are actually made in the back streets of Nandi Fiji. Company searches in Fiji show Mrs Borgetti as the Director. Scurrah can go back to playing with a train set or get in the job seeker line with the rest of us. Ahhhh then there’s Stewie
This has been a Richard Branson Ponzi scheme with John and Richard "Madeoff" pouring the Cool-aid.
Remember apart from his Royal Shortness pocketing $$$M's RB has benefitted to the tune of, I believe, $17M per year licencing fee for the "brand" that has lost her "innocence"!
This event is a very bad day for the believers and those who did their job not to mention suppliers etc who will get crucified in the wind-up.
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All you can say is hang there. Many, many great fellas and girls there. Gut feel says that what remains will be picked up, let's hope this is the case.
It's a tough gig, I now think that most Australian airline pilots will experience this type of event in future (if they haven't already).
It's a tough gig, I now think that most Australian airline pilots will experience this type of event in future (if they haven't already).
Whoever is charged with finding a buyer for Virgin Australia, there's two obvious places to start.
Virgin chief executive Paul Scurrah. The company's board is set to call in administrators following a meeting on Monday night Peter Braig
The first is BGH Capital, which already has a team and advisers working on the case.
The second is another private equity player, which specialises in airline investments and whose interest in Virgin stretches back close to a decade.
That firm is Arizona-based Indigo Partners LLC, which is the owner of four low-cost airlines including Frontier Airlines in the United States, JetSMART (Chile), Volaris (Mexico) and Wizz Air (Hungary).
It is understood Indigo Partners' dealmakers have been sniffing around Virgin for years, but constantly hit hurdles in the shape of Virgin's jam-packed and stubborn share register and its big pile of debt which is now worth $5 billion.
Indigo Partners' tyrekicking hit a peak in 2015 when one-time strategic investor Air New Zealand was interested in selling its stake, sources said. Air New Zealand's investment peaked at 26 per cent and buying the Kiwi's shares would've been a quick way to become Virgin's biggest shareholder.
Indigo has remained around the hoop in the years since and with Virgin's difficult share register set to be erased and the debt reduced, it's expected to be back kicking tyres in no time.
And with Virgin's board to call in the administrators following a meeting on Monday night - and cite solvency concerns, the Australian airline definitely fits into the not as strong balance sheet category.
Deloitte is expected to get the administration gig, while advisers are also flocking to the various groups of lenders. You have to worry about the retail bond investors, who only bought their notes late last year. Their trustee is AET, owned by Sargon Capital, which is also in administration.
As for Virgin's bankers, Morgan Stanley and UBS, we expect they'll be keeping close to Deloitte and spruiking their knowledge of the business and the field of potential.
Deloitte will no doubt want a quick deal in an effort to keep Virgin's business together, as much as is possible in light of government-enforced travel restrictions which have sunk the airline.
Virgin chief executive Paul Scurrah. The company's board is set to call in administrators following a meeting on Monday night Peter Braig
The first is BGH Capital, which already has a team and advisers working on the case.
The second is another private equity player, which specialises in airline investments and whose interest in Virgin stretches back close to a decade.
That firm is Arizona-based Indigo Partners LLC, which is the owner of four low-cost airlines including Frontier Airlines in the United States, JetSMART (Chile), Volaris (Mexico) and Wizz Air (Hungary).
It is understood Indigo Partners' dealmakers have been sniffing around Virgin for years, but constantly hit hurdles in the shape of Virgin's jam-packed and stubborn share register and its big pile of debt which is now worth $5 billion.
Indigo Partners' tyrekicking hit a peak in 2015 when one-time strategic investor Air New Zealand was interested in selling its stake, sources said. Air New Zealand's investment peaked at 26 per cent and buying the Kiwi's shares would've been a quick way to become Virgin's biggest shareholder.
Indigo has remained around the hoop in the years since and with Virgin's difficult share register set to be erased and the debt reduced, it's expected to be back kicking tyres in no time.
Using COVID-19 to grow its portfolio
Interestingly, Indigo Partners has made no secret it could use the COVID-19 inspired downturn to grow its portfolio. One of the firm's principals, Brian Franke, was recently quoted as saying: “Our airlines today are in good shape, but we are looking for opportunities at airlines that don’t have as strong a balance sheet.”And with Virgin's board to call in the administrators following a meeting on Monday night - and cite solvency concerns, the Australian airline definitely fits into the not as strong balance sheet category.
Deloitte is expected to get the administration gig, while advisers are also flocking to the various groups of lenders. You have to worry about the retail bond investors, who only bought their notes late last year. Their trustee is AET, owned by Sargon Capital, which is also in administration.
As for Virgin's bankers, Morgan Stanley and UBS, we expect they'll be keeping close to Deloitte and spruiking their knowledge of the business and the field of potential.
Deloitte will no doubt want a quick deal in an effort to keep Virgin's business together, as much as is possible in light of government-enforced travel restrictions which have sunk the airline.
Why would he? His payday came the day the place was floated. He took his share, eventually sold it keeping around 10% equity as a ‘token measure’ and a way to con people into believing it was a good investment becuase Richard still had a stake in the company. All smoke and mirrors. Richard made $960m from the float. He couldn’t give a flying fu#k if the other 10% fell over. For an initial investment of around $8m out of pocket, he did very very well. The Master salesman creating hype and promising to make things fair and bring down ticket prices. Well, he did bring down ticket prices but it wasn’t because he gave a **** about the AN/QF duopoly, it was about himself. But the loyalists followed his every goofy prank, every crazy idea or silly challenge to other companies and they believed his mantra about ‘staff first, company second, profits third’. What an absolute load of bollocks. People might detest Alan Joyce, but at least you can see the parasite you are dealing with, not quite the same with the swinger from Necker Island. There are so many twists in the Virgin Blue story that so many never got to see.
Virgin Atlantic is on the ropes and "Bernie" Branson is asking UK Govt for a bailout...
The trick would perhaps need to be renegotiated lease contracts. I don’t know what Virgin is paying, but funding today is supposed to be cheap - almost zero rates. Fuel is now SFA as well. A voluntary administration may make it possible to break and renegotiate those leases and tap in to cheap money.
The person - legal/financial who could successfully run such a deal is not common and would expect to walk away personally with at least $100 million if they pull it off. This would only work if ALL lessors were convinced to buy into exactly the same deal on the understanding that no better deal is forthcoming and that the alternative is repossessing the jets or a fire sale.
...However given Boeing’s screw up with the Max, there may be a ready market for Virgins aircraft.
These are very stressful times, I hope you all come out of this smiling.
The person - legal/financial who could successfully run such a deal is not common and would expect to walk away personally with at least $100 million if they pull it off. This would only work if ALL lessors were convinced to buy into exactly the same deal on the understanding that no better deal is forthcoming and that the alternative is repossessing the jets or a fire sale.
...However given Boeing’s screw up with the Max, there may be a ready market for Virgins aircraft.
These are very stressful times, I hope you all come out of this smiling.
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I think that the only chance for something to come out of this is for an investor to make an acceptable offer for the AOC as a going concern with minimum aircraft( even 1) , infrastructure, technology and ground service but, only after securing deals for the State Government money , maybe some tax relief and airport access.
Ansett Mark 2/Tessna/ Non-Virgin.
Let's hope that these administrators have learned from the way Ansett was dragged out.
Unless this virus situation extends indefinitely, the conditions are right to start an operation.
The American investor would be the front runner with , perhaps with a local to come in ( like one or two of the major finance creditors, to get their agreement to the deal).
Needs major creditor approval but, it will probably be the only offer.
Just dependant on the creditors accepting their % of what $$ are left and, more $$ be left from an offer that comes now than one that comes later.
The Chinese airlines may try but, typical of their style, they will drag it out haggle to get the best price and they really couldn't run the operation as their airline system is still government controlled.
They don't come up with ideas, have few management skills and they basically do as they are told by the government.
The new entity will leave behind the debt, majority of aircraft and employees.
A restart of services will commence up and down the coast and maybe Perth with new deals for a number of same leased Virgin aircraft after new leases are negotiated with the owners, who would have repossessed the equipment..
It could come together but, it will basically start from day one again and don't expect low fares.
Good luck to all of those who have lost jobs and are left behind.
Ansett Mark 2/Tessna/ Non-Virgin.
Let's hope that these administrators have learned from the way Ansett was dragged out.
Unless this virus situation extends indefinitely, the conditions are right to start an operation.
The American investor would be the front runner with , perhaps with a local to come in ( like one or two of the major finance creditors, to get their agreement to the deal).
Needs major creditor approval but, it will probably be the only offer.
Just dependant on the creditors accepting their % of what $$ are left and, more $$ be left from an offer that comes now than one that comes later.
The Chinese airlines may try but, typical of their style, they will drag it out haggle to get the best price and they really couldn't run the operation as their airline system is still government controlled.
They don't come up with ideas, have few management skills and they basically do as they are told by the government.
The new entity will leave behind the debt, majority of aircraft and employees.
A restart of services will commence up and down the coast and maybe Perth with new deals for a number of same leased Virgin aircraft after new leases are negotiated with the owners, who would have repossessed the equipment..
It could come together but, it will basically start from day one again and don't expect low fares.
Good luck to all of those who have lost jobs and are left behind.
Evertonian
Considering all the "smiles", "back slapping", "she'll be right mate" and "don't worry we've got your backs" from Virgin and Deloitte can someone explain why if its such a great idea this Voluntary Administration wasn't undertaken years ago?
The way its being promoted its all "fun in the sun". One would hope those who have far exceeded their station in life wont get away with it this time and will be held accountable.
The way its being promoted its all "fun in the sun". One would hope those who have far exceeded their station in life wont get away with it this time and will be held accountable.
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Considering all the "smiles", "back slapping", "she'll be right mate" and "don't worry we've got your backs" from Virgin and Deloitte can someone explain why if its such a great idea this Voluntary Administration wasn't undertaken years ago?
The way its being promoted its all "fun in the sun". One would hope those who have far exceeded their station in life wont get away with it this time and will be held accountable.
The way its being promoted its all "fun in the sun". One would hope those who have far exceeded their station in life wont get away with it this time and will be held accountable.
And you have to be near insolvent.
I would not get too excited about the prospects for VA under administration. This financial meltdown has just started. It has some way to go before it hits the bottom. Delta may walk away from Virgin Atlantic to save themselves. Not unlike Air New Zealand did with Ansett. It looks like South African Airways will be next to bite the dust.
