"Virgin Australia Mk II could launch in as little as three months"
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Last edited by crosscutter; 25th Apr 2020 at 07:03.
If you are $5b in debt & you "restructure" how are you not in $5b debt anymore ?
Because I would like to apply that "principal" to my mortgage.
Because I would like to apply that "principal" to my mortgage.
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Therein lies the art of the administrator. They have to convince up to 12,000 creditors that the best deal is....X and if the creditors do not agree they can stop the process and force liquidation. Out of all those creditors only about twenty will have a real say in what happens.
But if the administrators come up with a 20 cents on the dollar deal (to keep Virgin running / restructure ) or even 60 cents on the dollar, Hell 90 cents on the dollar, why would anyone even consider being part of Virgin2 ? I mean if you were an investor big or even a small one why wouldn't you invest in a thousand other things before you invested in a business that has already proven is pretty much a disaster, especially in the current climate. I don't see any way Virgin has a chance. I want it to keep flying, I really do, but it seems to me like it's all over.
I mean if you were an investor big or even a small one why wouldn't you invest in a thousand other things before you invested in a business that has already proven is pretty much a disaster, especially in the current climate.
I guess the answer to your question is.....The administrator says to the big creditors, we can liquidate and you will get 20 cents on the dollar return. Let us restructure and hold off on the debt for twelve months and we can get you 60 cents on the dollar. Of course I plucked these numbers from the air. Do you take 20 guaranteed or hope for trading conditions to get you 60 in twelve months? That is the seven billion dollar question, no wait, maybe eight billion dollar question.
Then the longer the administrator is in there the less the pile of cash becomes, at a remarkable pace!
How much did the brothers take out of AN.
Look at many other administrations/liquidations, there is guarantees one who get $1 on the $1!
How much did the brothers take out of AN.
Look at many other administrations/liquidations, there is guarantees one who get $1 on the $1!
This may be useful to some people. It is the web page set up on Deloitte's website for details of documents around the administration.
https://www2.deloitte.com/au/en/page...sidiaries.html
https://www2.deloitte.com/au/en/page...sidiaries.html
The liabilities are in the Virgin half year report. Is that credible?
Virgin has around $5B in interest bearing debt. However, in administration you need to account for all creditors. That means all those owed money become creditors from employees to secured bank lenders. So that’s all current and non current liabilities on the Statement of Financial Performance. That amount adds up (according to Virgin as of 31/12/19) to $8.3B. That includes $1.2B in forward bookings I believe, which isn’t included in the Deloitte numbers. In addition, some payments I’m sure were made before administration and they will have cash on hand as you mention.
Happy to be shown wrong.
I note aircraft lease liabilities amount to $1.9B in the Deloitte affidavit. Surely that’s the cost of all the leased aircraft serving out their respective leases?
My initial point was PS was not asleep at the wheel. He and the board knew the situation and the administrator didn’t come in and shine any new light as others have suggested. The figure quoted by Deloitte was no surprise.
Last edited by crosscutter; 25th Apr 2020 at 07:56.
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This AFR article also pretty damning, and there is no way PS would not have known about this, so here we have the airline on one hand saying Velocity is independent and not under threat and telling Velocity members they are protected by a trustee, when in the weeks prior to that and the airline crashing into administration, it pulled $200 million out the Velocity trust fund presumably just to stay solvent and keep flying? That's $200 million which the Velocity trust fund will not see again, they're now just one of 10,200 credits clawing for $7 billion, they'll get cents in the dollar, so that's almost $200 million of Velocity purchasing power gone.
https://www.afr.com/companies/financ...0200422-p54mfj
The trust set up to protect Velocity Frequent Flyer members lent up to $200 million to Virgin Australia, positioning the company as a creditor to the failed airline and raising questions about how much cash is actually backing the loyalty scheme’s points.
Concerns about the cash backing for the loyalty scheme’s 10 million members arise as the Virgin administrator, Deloitte, estimates that the failed airline owes more than $6.8 billion to 10,000 creditors, much more than the $5.3 billion of interest-bearing liabilities shown in the airline’s accounts.
Concerns about the cash backing for the loyalty scheme’s 10 million members arise as the Virgin administrator, Deloitte, estimates that the failed airline owes more than $6.8 billion to 10,000 creditors, much more than the $5.3 billion of interest-bearing liabilities shown in the airline’s accounts.
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What “checks and balances” would have been in place for a business that is 65% owned by another (in this case Velocity by Virgin Aus) when a loan is requested. It seems counter productive to “use” (perhaps a harsher word than I want use) a trust set up to protect the FF program....but I understand the circular argument that without the airline the FF program is useless.
Curious really...as lost points with Ansett and not looking that flash with Virgin atm.
Curious really...as lost points with Ansett and not looking that flash with Virgin atm.
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Just call it Tiger, which they bought for $1 and tell Tricky Dick he can keep his logo saving $$$$$$$
"Why not call the new airline ANSETT "
Call it Australian Airlines (oh wait - isn't that owned by QF)
The Koala Carrier
Airlines of the Lucky Country
Air Kangaroo - guaranteed to know your teeth out as we hop down the runway
The Koala Carrier
Airlines of the Lucky Country
Air Kangaroo - guaranteed to know your teeth out as we hop down the runway
Why not call it Virmin Australia? They only have to change one letter so it's nice and low-cost and it's reflective of the nature of their entry into this industry. Perfect fit.
Square bear, it was amazing back at the time how many people felt the need to whine about their FFF points whenever they met unemployed former AN staff instead of shutting their traps out of respect for those who'd lost entire livelihoods. Some people, hey?
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TooFiddy,
I understand where you are coming from regarding your reply, but the loss of any FF points is totally far from my grievance (they are just numbers after all) My question (maybe badly worded) was along the lines of the business practice of how a loan can transfer from one arm of a business to another, to the detriment of the second business. (In this case a supposedly protected FF program to its umbrella arm that is suffering a great deal of financial loss.
My post was a question about good corporate governance, and those that are pulling the strings, and where it impacts, such as consumer confidence, public support, and Government willingness to invest etc.
PS: I am also a Covid 19 Aviation victim as well, so feeling the pain (as much as many) as well.
Good luck.
I understand where you are coming from regarding your reply, but the loss of any FF points is totally far from my grievance (they are just numbers after all) My question (maybe badly worded) was along the lines of the business practice of how a loan can transfer from one arm of a business to another, to the detriment of the second business. (In this case a supposedly protected FF program to its umbrella arm that is suffering a great deal of financial loss.
My post was a question about good corporate governance, and those that are pulling the strings, and where it impacts, such as consumer confidence, public support, and Government willingness to invest etc.
PS: I am also a Covid 19 Aviation victim as well, so feeling the pain (as much as many) as well.
Good luck.
It is not known how much the total admin of AN cost ( see https://www.michaelwest.com.au/myste...sett-accounts/), but PwC walked away with 1.8m for 5 days work before the 2 Marks replaced them:
"Ansett collapsed the day after the September 11 attacks in 2001. Three partners of PricewaterhouseCoopers were initially appointed administrators but their tenure lasted just five days.
According to the ”Third Report to Creditors” by Korda Mentha, PwC received $1.8 million for this five days of work. Apparently $1.1 million of this was approved by the court. That was evident from an earlier report.
In accordance with professional obligations, PwC’s fees should have been time-based, Knapp says. Incredibly, the five days of PwC work is equivalent to 53 partners working an 80-hour week on the prevailing charge-out rate of $420 an hour."
