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20 buyers now circling Virgin Australia

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20 buyers now circling Virgin Australia

Old 6th May 2020, 14:06
  #101 (permalink)  
 
Join Date: May 2016
Location: Sunshine Coast
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Originally Posted by Section28- BE View Post
This maybe, relevant to all- that ARE 'In' it-



Link to the 'said' proposed COI group/statement here: https://www2.deloitte.com/content/da...ors-050520.pdf

Rgds
S28- BE
You might have noticed that despite the lengthy list of representatives on the COI there is no one representing customers who are currently holding travel credits.

That is because while the business remains a going concern no one holding a travel bank credit is considered a creditor; they are what are known as contingent creditors and the travel bank credits (what is usually known as Unearned Revenue) are contingent debt. Because of that contingent position the value of the travel bank has not yet been reflected in the business's declared $6.88 billion debt position. When you include those travel bank credits Virgin's truer liabilities are more like $8 billion than $6.8 billion.

And to a certain extent the contingent debt represented by the travel credits is more difficult to deal with for an administrator than noncontingent unsecured debt like bonds and bondholders. That's because unlike other unsecured debt that can be negotiated down, any prospective buyer really has no option other than honouring travel credits at full or close to full face value if they hope to bank on customer loyalty shoring up their market share on the other side, . That contingent debt becomes pretty much non-negotiable.

That's conservatively a $1 billion hit to revenue that any buyer is going to have to suck up in their first year of flying.

So, yeah, that odd shaped brownish object bobbing up and down at the deep end of the pool, that's not a Chokito.
MickG0105 is offline  
Old 6th May 2020, 21:28
  #102 (permalink)  
 
Join Date: Apr 2009
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Virgin headed for another disaster, says REX chairman



https://www.afr.com/companies/transp...0200506-p54qb3
“Mr Lim said Virgin's EBAs had lumbered the airline with high fixed costs and they needed to be fixed while Mr Strawbridge had the powers of an administrator and before the release of a deed of company arrangement.

"It is well known that in the last 10 years Virgin's management has been extremely lax and extremely non-courageous in their negotiations over EBAs," Mr Lim said”
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Old 6th May 2020, 21:38
  #103 (permalink)  
 
Join Date: Jan 2019
Location: Australia
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Originally Posted by machtuk View Post
"IF" VA comes back under some sort of guise they will come back in a very fragile market! The whole country has been decimated on so many fronts (forget the world) so yield will be low at least in the foreseeable future.
To make any attempt work the new "Co" will have to be a very lean operation. Now what can be cut!
Leasing? Hardly!
Maint? Nope!
Fuel? They wish!
Airways charges? Hardly!
Airport leases and associated costs? In yr dreams!
CREW/personel? Exactly!
The hunan element is the only area that can be squeezed & they will come flocking!
Interesting times ahead! If the flying game returns anywhere near pre the CV BS then it won't return for everyone!
Well actually....

- Leases: Good chance the leases will actually be cheaper - and if the leasors dont come to the party in any new business, they can have their aircraft back, because all wonít be required. And as an aircraft owner, you would not want to own second hand jets at the moment.

- Fuel: Not sure if you have seen the price of oil at the moment. But in a soft economy, that price of fuel isnít going up in a hurry any time soon.

- Maintenance: Youíre quite possibly right here. But less flying means less maintenance overheads.

- Airport leases: Yup fair enough.

- Staff wages: Again you are probably right. Having said that, if the airline is sold as a going concern, all employee EAs remain in force. That of course doesnít stop a new owner from shrinking the workforce, or unions negotiating with new owners to keep more people employed but on lower Ts and Cs.

Very simplistically airline costs are 1/3 fuel, 1/3 employee costs and 1/3 fixed overheads. Those fixed overheads also include real estate leases etc etc. All of which youíd expect to be up for renegotiation.

This certainly doesnít mean things will be fine and beaut. Obviously things arenít going to be great at Virgin for quite a while. To start from an almost $0 revenue position is going to be very very difficult.

Once travel restrictions are lifted, I am planning on being on 50% salary for 12-18 months. From that point who knows - but any serious buyer of VA would (you would hope) understand the market they are getting themselves into. And assuming itís not bought by private equity with the intention of chopping it up, or flicking it in 3 years time, within the medium term, it COULD be a profitable business.
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Old 6th May 2020, 21:53
  #104 (permalink)  
 
Join Date: Oct 2019
Location: Sydney
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Originally Posted by machtuk View Post
To make any attempt work the new "Co" will have to be a very lean operation. Now what can be cut!
Leasing? Hardly!
Maint? Nope!
Fuel? They wish!
Airways charges? Hardly!
Airport leases and associated costs? In yr dreams!
CREW/personel? Exactly!
The hunan element is the only area that can be squeezed & they will come flocking!
I don't think that's quite right. Aircraft and airport leases could both quite possibly be reduced. For aircraft, that's pretty straightforward - there's a global surplus of aircraft, and the administrator has the power to cancel contracts, which means they can credibly say to lessors, "You can keep your lease, at an X% discount, or we'll cancel it and talk to the other lessors."

For airports it's a bit trickier because most airports are monopolies in their city, but still possible because the administrator only needs a majority of creditors to agree to their plan - they can say "Agree to a discount now, or we'll cancel the contract and you can try to renegotiate it in an environment where your terminals are half empty and VA only needs two thirds of the floor space."

Obviously, maintenance activities can't easily be cut. But there may be savings to be had on parts and labour. There'll be a glut of parts, and a lot of MRO shops hunting for business

Fuel and charges - agreed.

Also, don't forget all of the other supplier costs - catering, uniforms, cleaning etc. All of that is up for negotiation too.
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Old 6th May 2020, 22:27
  #105 (permalink)  
 
Join Date: Sep 2018
Location: Melbourne
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It's only my take on it, nobody knows for sure how and even if VA will come back. The 'human' element covers most of the day to day operations not just the guys at the pointy end.
Fuel will get more expensive once the thruput goes up in fact 'if' normality returns then everything cost wise will rapidly increase, just not wages, that's the bit that can be 'fiddled' with. Bit like'89 that was a turning point in aviation as far as conditions go so will this disaster!
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Old 7th May 2020, 01:01
  #106 (permalink)  
 
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Gotta agree with machtuk.

Workplace T&Cís will be squarely in the sights of any future owner.

Assuming VA can be saved?
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Old 7th May 2020, 01:04
  #107 (permalink)  
 
Join Date: Jan 2019
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Originally Posted by KRUSTY 34 View Post
Gotta agree with machtuk.

Workplace T&Cís will be squarely in the sights of any future owner.

Assuming VA can be saved?
Workplace Ts and Cs will be squarely in the sights of all airlines at the moment. QF pilots are very fortunate they signed off EAs before the real damage of this pandemic was known.

I donít envy JQ pilots having to essentially restart negotiations in the current climate.

And I certainly donít envy VA pilots whoíll be no doubt asked to take pay cuts to save jobs, and even then youíd have to question whether or not it will be enough to save all jobs.
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Old 7th May 2020, 01:08
  #108 (permalink)  
 
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Originally Posted by Colonel_Klink View Post
I donít envy JQ pilots having to essentially restart negotiations in the current climate.
I think you will find for once it's the company wanting to restart the negotiations!

Agreed about the Qantas LH EBA. Very lucky indeed. If a NO vote won the subsequent negotiations would have been a blood bath.
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Old 7th May 2020, 02:29
  #109 (permalink)  
 
Join Date: Jul 2007
Location: BAO
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Notice to virgin australia noteholders

The following extracts ex the Deloitte/Virgin webpage (https://www2.deloitte.com/au/en/page...sidiaries.html) and the Administrators correspondence to "Unsecured Noteholders" of 06 May:

'SEEKING EXPRESSIONS OF INTEREST IN RESPECT OF NOTEHOLDER CONSULTATIVE COMMITTEE'
And:
'We also refer to the following notes issued by Virgin Australia Holdings Limited:
  1. USD350M 7.875% unsecured senior notes due 2021.
  2. AUD150M 8.25% unsecured fixed rate notes due 2023.
  3. AUD250M 8.075% unsecured fixed rate notes due 2024
  4. USD425M 8.125% unsecured senior notes due 2024
  5. AUD325M 8% unsecured senior notes due 2024
(together the ďNotesĒ).'
The 'margin' is interesting ('I' thought ???), given the times relative to the broader economy and global rate cutting/quantitative easing etc. by Central Banks of recent years. Be a tough 'Gig' chairing/running this 'consultative process'................, I would have thought.

Rgds
S28- BE
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Old 7th May 2020, 02:47
  #110 (permalink)  
 
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Originally Posted by Section28- BE View Post
The following extracts ex the Deloitte/Virgin webpage (https://www2.deloitte.com/au/en/page...sidiaries.html) and the Administrators correspondence to "Unsecured Noteholders" of 06 May:

And:

The 'margin' is interesting ('I' thought ???), given the times relative to the broader economy and global rate cutting/quantitative easing etc. by Central Banks of recent years. Be a tough 'Gig' chairing/running this 'consultative process'................, I would have thought.

Rgds
S28- BE
The percentages are quite high but thatís most likely because of the element of Ďriskí associated with said loans. Although not huge amounts in the context of a large business with 10,000 staff, aviation is/has always been a risky venture to invest/loan money to. The publicised national interest rates although at an altime low in Australia and the USA are predominately aimed at those with cash in bank (robs them of interest). Interest rates for home buyers, businesses, car loans etc are normally much higher than the published Reserve Bank official rates. The whole fractional banking system is a Ponzi scheme set up to enrich the 1% while screwing over the remaining 99%. Central banks should be called the Mafia because that is what they are. Negative interest rates, quantitative easing, whoever heard of such BS. They are desperate to keep the Ponzi scheme going. Good luck with that. The string has been unravelling bit by bit but has really sped up recently. Sadly, there is no value in the VA carcas. And as for QF, I wouldnít believe everything you read. They too have numerous creative measures that they employ to ensure the business looks healthier than what it is. As long as the right boxes are ticked (tricked) on paper and the Big Dogs are getting their bonuses the rest of the business is just Ďstuffí.

When will people understand that the system is rigged.




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Old 7th May 2020, 02:59
  #111 (permalink)  
 
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Originally Posted by Colonel_Klink View Post

I donít envy JQ pilots having to essentially restart negotiations in the current climate..
I donít think there will be any mention of negotiation until 2021. JQs focus will be on the business and Iím happy with that. Iím sure there will be ppl who disagree and think they deserve more.

Ragnor is online now  
Old 7th May 2020, 04:11
  #112 (permalink)  
 
Join Date: Jul 2008
Location: Australia
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If the chest beating PIA hadn't taken place an agreement may well have been reached before the C19 shutdown. There will probably be a wage freeze for at least two years and no back pay when an agreement is signed. Whats the bet that single sector BOC will be no longer rostered.
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Old 7th May 2020, 23:49
  #113 (permalink)  
 
Join Date: Aug 2019
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Originally Posted by Hoosten View Post
I'm sorry to see him go.

It will be impossible for him to post under a new user name, without being instantly recognisable.

He has had a great deal of grief to deal with, that may have coloured his postings at times. But he does have more professional experience than most of you will give him credit for. You lot love to think because you've got an ATPL and a jet command or right seat that you're experts in everything else. It's the Type A pilot way.

I don't know him, I know of him and I know his qualifications through a few sources. I reckon he'd be an interesting dude to have a beer with.

And why the **** not can a bloke in his 70's have a chat about his travels, whether they're first, business or economy, he's earned it. If you see this is as rubbing your nose in it, you're a bit fragile.
Hoosten has been banned? Conspiracy theorists may assume thatís evidence he was Sunfishís alter ego.
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Old 8th May 2020, 00:19
  #114 (permalink)  
 
Join Date: Jul 2010
Location: Asia
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QF Pilots have a strong company and a strong union, they are likely to be able to maintain their T&Cs unless the company is still experiencing heavy losses in 6-12 months time. Obviously their Pilots will be earning less as flying pay, overtime, duty allowances, night stop allowances etc will down due to less flying, but the basic structure should still be intact.

A new pay deal will be high up on the list of any potential purchaser of VA, who will want to know the exact running costs of the new entity. No one will agree to buy and start enterprise bargaining with the workforce once they take over. A 2 year agreement on similar terms to JQ is likely to be on the table and needs to be signed off before any sale goes through.
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Old 8th May 2020, 00:36
  #115 (permalink)  
 
Join Date: Dec 2001
Location: Brisvegas
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and the administrator has the power to cancel contracts, which means they can credibly say to lessors, "You can keep your lease, at an X% discount, or we'll cancel it and talk to the other lessors."
Well that is partly true I guess. One could also say that the the lessors can force liquidation to recoup some of their contracted lease fee.
The administrators cannot wave a magic wand to make debt disappear. If enough creditors agree they can force liquidation.
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Old 8th May 2020, 01:57
  #116 (permalink)  
 
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Location: australia
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Very educational to read thu this thread. Only have a PHD in the School of Life.
Sorry about Suuny, At least he was correct about the regulator we have. We can blame ourselves for that...never united enough to tell CAsA to Foxtrot Oscar. Altho I see of recent times that Phil Hurst has the cajones to tell ;em their latest brain fart is crap.
Some laughs along the thread way too , but top marks go to Junior for the Downfall exerpt. A winner !!
Best belly cackle for years Thanks.
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Old 8th May 2020, 05:51
  #117 (permalink)  
 
Join Date: Dec 2000
Location: Australia
Posts: 689
Krismiler, I hope you are right regarding Qantas but I don’t see how? The PM today just said international travel is not even on the radar and jobkeeper runs until October I think. Using AirNZ /BA as an example everyone is going to have to take a hit, it is just a matter of how many and how much. Anything else just isn’t plausible in the short term. The same for VA if it comes back no doubt at all.

Last edited by ozbiggles; 8th May 2020 at 06:05.
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Old 8th May 2020, 06:36
  #118 (permalink)  
 
Join Date: May 2011
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Originally Posted by ozbiggles View Post
Krismiler, I hope you are right regarding Qantas but I donít see how? The PM today just said international travel is not even on the radar and jobkeeper runs until October I think. Using AirNZ /BA as an example everyone is going to have to take a hit, it is just a matter of how many and how much. Anything else just isnít plausible in the short term. The same for VA if it comes back no doubt at all.
oz, itís because once jobkeeper runs out, the International pilots will be paid nothing, zero, zilch.

All the talk of pilots taking pay hits such as 30% for ANZ pilots is because they are on full base pay. This is a theme all around the world where pilots are on full base pay but due to our local industrial rules, Australian pilots are stood down on no pay.

Virgin is a whole other argument because they are in administration. Out of respect for Virgin employees, Iím not going to go into this argument here because quite frankly my opinion means not much.
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Old 8th May 2020, 06:48
  #119 (permalink)  
 
Join Date: Dec 2000
Location: Australia
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Your opinion matters to me angryrat!
I’m slightly confused but I will work on it!
On the positive side at least there will be some bumper tax returns in Jul 2020 and 21
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Old 8th May 2020, 08:06
  #120 (permalink)  
 
Join Date: Jan 2019
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Originally Posted by krismiler View Post
A new pay deal will be high up on the list of any potential purchaser of VA, who will want to know the exact running costs of the new entity. No one will agree to buy and start enterprise bargaining with the workforce once they take over. A 2 year agreement on similar terms to JQ is likely to be on the table and needs to be signed off before any sale goes through.
Whilst it may be high up on the list of a potential purchaserís To Do list - it absolutely doesnít not need to be signed off before any sale goes through - and any suggestion that it does, is a complete nonsense.
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