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Private equity take-over for Virgin Australia?

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Private equity take-over for Virgin Australia?

Old 17th Apr 2020, 06:38
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Private equity take-over for Virgin Australia?

Private investors are reportedly circling Virgin Australia for a 'take-over and turn-around’ manoeuvre which could result in leaner, more competitive (but potentially domestic-only) airline

https://www.executivetraveller.com/n...uity-take-over

This doesn’t sound like the worst that could happen, in fact it might end up being just what Virgin and Australia needs. Still two airlines so still competition, but not a Virgin that’s trying to be Qantas and suffering for it. Also, being in Australian hands sounds good to me!

Last edited by MelbourneFlyer; 17th Apr 2020 at 07:16.
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Old 17th Apr 2020, 06:58
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Originally Posted by MelbourneFlyer View Post
Private investors are reportedly circling Virgin Australia for a 'take-over and turn-around’ manoeuvre which could result in leaner, more competitive (but potentially domestic-only) airline

https://www.executivetraveller.com/n...uity-take-over

This doesn’t sound like the worst that could happen, in fact it might end up being just what Virgin and Australia needs. Still two airlines so still competition, but not a Virgin that’s trying to be Qantas and suffering for it. Also, being in Australian hands sounds good to me!
Yes agree their best bet at survival it will seem, though will still involve a lot of fleet and susbequent jobs (both direct and indirect) being shed in any re-launch.
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Old 17th Apr 2020, 07:06
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Yes, some hope. They will only jump in once the company is in administration. Relief from debt and shareholders becomes possible then.
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Old 17th Apr 2020, 07:25
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If, and I repeat if, it happens, assuming Branson pulls out would he also take the IP rights to the name “Virgin” with him?
and if so what would you call the resurrected airline?
Ansett MUST be taken.
of course you could call it Ozjet...........................


I’ll get my hat............
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Old 17th Apr 2020, 07:36
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I see VARA emerging with the fifo operation and the rest well, split away.
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Old 17th Apr 2020, 07:40
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Agree with topend3.
Come administration time I don’t think they’ll be a lack of interest in buying the operation.
A bit less fat though which was always going to be the way. They were on that road anyway.
There has to be competition and a second major in Australia.
Thoughts are with you VA guys and girls!
I just hope those TPG guys remember to wake up the guy writing the cheque!

Last edited by Wingspar; 17th Apr 2020 at 07:52.
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Old 17th Apr 2020, 07:47
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Originally Posted by airspace alpha View Post
If, and I repeat if, it happens, assuming Branson pulls out would he also take the IP rights to the name “Virgin” with him?
and if so what would you call the resurrected airline?
Ansett MUST be taken.
of course you could call it Ozjet...........................


I’ll get my hat............
I doubt RB would take the IP rights to the Virgin brand if his share holding was diluted - he makes far more from the naming rights than any ownership of the Company through shares.
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Old 17th Apr 2020, 08:11
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They will only jump in once the company is in administration.
Exactly, why move in now and be responsible for all the debt, and the redundancies which have to come ? Once an administrator is appointed, the creditors are put behind a wall, the administrator works out what everyone will get in the event of a winding up and sell off of the assets. Now your proposal goes in for a take over and it only has to be slightly above what the creditors would otherwise get for them to agree to it. You just bought yourself a new airline free from any hangover from the previous company. Next you post out contracts with your terms and conditions to the staff you want to take on.

The potential purchasers won't give out too many details regarding their intentions at this stage incase it affects the price. They could go for a 30-40 B737 domestic only low cost operation (Virgin Blue MK2) or they could envisage a 70-80 sized fleet of B737s to maintain the previously profitable parts of the network. International, if at all limited to NZ, Bali and Fiji. Business class, which the aircraft are already fitted for, akin to the JQ/Scoot/AirAsia offering not trying to compete with QF for the top end of town.

Aircraft leases will be easy to obtain on favourable terms so there's no hurry to commit at this stage.
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Old 17th Apr 2020, 08:19
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If they run a 30-40 aircraft operation they’ll be slaughtered by Jetstar. They need critical mass to spread the costs with a similar footprint.

My guess is Alliance will buy VARA and we will see what happens to the 737s
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Old 17th Apr 2020, 08:23
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Anyone who’s been following the SAA situation will recognise the impending restructure of Virgin is exactly what financial analysts in SA say should have happened to SAA years ago. More loans likely entrench existing deficiencies as access to the needed restructuring facilities are unavailable. The advantage is minimal staff losses but it’s kicking the can down the road. There will be no shortage of reinvestment for the ‘new Virgin’, which I guess is scant comfort for employees. Their emotions should be directed at JB firstly, and the board next, who shirk away from all responsibility other than compliance. I feel for all employees of Virgin. It makes me angry. The ivory tower cultivates and spreads the cancer but gets to walk away with the magic pill whilst blaming the hostile environment.
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Old 17th Apr 2020, 08:36
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Their emotions should be directed at JB firstly
I'm pretty sure every single employee is on the same page with that one!
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Old 17th Apr 2020, 08:50
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Originally Posted by Blueskymine View Post
If they run a 30-40 aircraft operation they’ll be slaughtered by Jetstar. They need critical mass to spread the costs with a similar footprint.

My guess is Alliance will buy VARA and we will see what happens to the 737s
Why bother buying anything? Wait for it to fall over and then pick up the FIFO contracts.

The mines are already getting nervous.
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Old 17th Apr 2020, 08:59
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The mines are already getting nervous.
Maybe Twiggy should buy Virgin!
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Old 17th Apr 2020, 09:05
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I would have thought Alliance will be looking even more closely at what is unfolding with VARA. WA FIFO operations must have some appeal as Alliance are already in the field.
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Old 17th Apr 2020, 09:15
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As said above, there is no way any Private Equity Investor would touch VA until it is debt quarantined, ie, in administration. The debt has to be removed prior to a new investor coming on board.
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Old 17th Apr 2020, 09:35
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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.
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Old 18th Apr 2020, 00:50
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Dunno about private equity, the news this morning was that China Southern is one of the 2 main contenders.

Destroy the world economy, buy it back at fire sale prices, own the world. Simples.
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Old 18th Apr 2020, 01:16
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Bit of perspective. I am not a JB fanboy BUT, VA hasn’t turned a profit over the last 6 years due to the capital investment of putting the airline on a path of direct competition with QF. the shareholders have stumped up billions in order for this to happen. No dividends have been issued so hence no money going back O/S. I think the owners finally realised a change of leadership was required hence JB told to move on. ANZ debacle most likely precipitating that. If that investment had not been made then we would still be competing against JQ alone and all this talk of industry competition would be moot, QF would be doing exactly as they please, Gouging out the public. Plenty of examples of this behaviour still going on. So if we were still VB and eking out a meagre profit against JQ would that be a good thing, who knows, probably wouldn’t be in this situation, but then all of you who don’t get staff travel would be paying for it........remember QF is in a good position financially at the moment, well they say they are - all bravado in my opinion, but they have already been ‘chosen’ as the winner regardless of the VA outcome. And let’s not forget the billions in dividends going to QF’s 41% foreign shareholders for all you ‘advance Australia fair’ followers. How much investment has QF actually done in the business (apart from bonus/dividend inducing buy backs) over the last decade........bueller......bueller.......bueller.
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Old 18th Apr 2020, 01:22
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Originally Posted by No Idea Either View Post
Bit of perspective. I am not a JB fanboy BUT, VA hasn’t turned a profit over the last 6 years due to the capital investment of putting the airline on a path of direct competition with QF. the shareholders have stumped up billions in order for this to happen. No dividends have been issued so hence no money going back O/S. I think the owners finally realised a change of leadership was required hence JB told to move on. ANZ debacle most likely precipitating that. If that investment had not been made then we would still be competing against JQ alone and all this talk of industry competition would be moot, QF would be doing exactly as they please, Gouging out the public. Plenty of examples of this behaviour still going on. So if we were still VB and eking out a meagre profit against JQ would that be a good thing, who knows, probably wouldn’t be in this situation, but then all of you who don’t get staff travel would be paying for it........remember QF is in a good position financially at the moment, well they say they are - all bravado in my opinion, but they have already been ‘chosen’ as the winner regardless of the VA outcome. And let’s not forget the billions in dividends going to QF’s 41% foreign shareholders for all you ‘advance Australia fair’ followers. How much investment has QF actually done in the business (apart from bonus/dividend inducing buy backs) over the last decade........bueller......bueller.......bueller.
Great point. Except Qantas has been able to pay is 41% foreign owned shareholders because it makes a profit. Virgin doesn't. They couldn't get it together when the times were good, and they won't be getting anywhere when the times are bad. Wrap it up. Start again.

Are you claiming because Qantas is 41% foreign owned, its not an Australian airline?

Also could you tell me where the Virgin "profits" would go if they ever made some?

Last edited by normanton; 18th Apr 2020 at 01:35.
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Old 18th Apr 2020, 03:17
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https://www.dailymail.co.uk/news/art...-bail-out.html

Now the CHINESE are considering buying Virgin Australia after the Morrison government refused to bail out embattled airline

  • Chinese airlines are considering purchasing the struggling Virgin Australia
  • Chinese-owned carriers are in talks about buying the Queensland-based airline
  • The Morrison government refused to give the company a $1.4billion bailout
  • A joint approach from two Chinese carriers could save the airline from collapse
By ISABELLE STACKPOOL FOR DAILY MAIL AUSTRALIA

PUBLISHED: 16:50 BST, 17 April 2020 | UPDATED: 17:21 BST, 17 April 2020

Chinese airlines are considering buying embattled Virgin Australia after the Morrison government refused to bail out the struggling airline.

China Southern Airlines, China East Airlines and Air China are all in discussions about purchasing the carrier in a last-minute takeover in a bid to stop its 'catastrophic' collapse.

Sources told the Courier Mail that the Chinese government-owned airlines were yet to make a formal offer.

However any offer could provide a much-needed lifeline to Virgin Australia and the market-led cash solution the Morrison government urged them to find.

Chinese-owned airlines are considering purchasing Virgin Australia (pictured) to stop the company from collapsing amid the coronavirus crisis Virgin Australia wanted the Federal Government to hand over $1.4billion to save them from collapse but the money has not been forthcoming.

A joint approach from two Chinese carriers could see the foreign-owned Virgin Australia Group prevented from falling into voluntary administration.

The move would likely require approval from the Foreign Investment Review Board before a solution could be reached.

It is believed Australians would lose millions of Velocity Points and flight credits if the company went into administration.

On Friday night it was revealed that the Queensland government will offer the troubled airline $200million towards a bailout in the hope that other states will follow suit.

The company's corporate headquarters are located in Brisbane but the head office and Velocity Frequent Flyer businesses may potentially move to Melbourne.

The managing director of the Virgin Australia Group, Paul Scurrah, on Wednesday refused to speculate about voluntary administration.

A joint approach from two Chinese carriers (pictured) could save the struggling company On Thursday Virgin Australia asked the ASX to suspend its shares for seven days and revealed it was in confidential talks to save the company from collapse.

'These discussions have continued over the last two days including discussions which remain confidential and are incomplete,' Virgin said in a statement to the ASX.

'The company is not presently in a position to make an announcement to the market with respect to these matters.'

Virgin Australia has already suspended all but one domestic route, stood down 8,000 workers and had its credit rating downgraded.

The Federal Opposition called on the government to provide financial support for Virgin Australia yesterday.

Labor Senator for Queensland, Murray Watt, said it was 'an issue of national interest' to keep Virgin Australia afloat.

Senator Watt said the government should take an equity stake in Virgin Australia and that the airline was a 'proud Queensland company' essential to the state's tourism.

'Maintaining two airlines is critical for a functioning tourism industry and jobs,' he said.

Prime Minister Scott Morrison previously said any public funding for aviation would be spread across the entire sector.

The Morrison Government have refused Virgin Australia's plea for a $1.4billion bail out
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