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AFR - Virgin Administrators come under fire for doubtful forecasts

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AFR - Virgin Administrators come under fire for doubtful forecasts

Old 28th May 2020, 06:35
  #101 (permalink)  
 
Join Date: Feb 2001
Posts: 229
Originally Posted by crosscutter View Post
Yes, very true...just when you think you can be clever, youíre proven wrong...such is life.

Your point is very relevant as is this clause:
The exercise of the casting vote is most appropriate in circumstances where either creditors with a majority in value have such an overwhelming interest that it is inappropriate to allow a majority in number who do not have the same monetary interest to carry the day, or vice versa;

There is also another factor in which I believe has been overlooked. The debt does not get absolved in the 'sale to the new owners', but will carry forward, somewhat reduced. The Secured Creditors would need a pretty good reason to vote in favour. The company may return, but not to its former self. Im guessing some of the assets will have to be sold to pay off the debt currently owed for previous Leasing, Litigation and costs for a new restructure...etc. This would mean less assets and more risk for the remaining credit holders..
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Old 28th May 2020, 12:04
  #102 (permalink)  
 
Join Date: Jan 2019
Location: Australia
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Originally Posted by IBE8720 View Post
Is the Administrators SOLE aim is the best price or best chance of survival for the company? As someone said, Who are Deloitte working for?
Hypothethically.....
eg:
Bidder A are a group of Investment Bankers. They submit the highest bid as they see more value in the resale value of the company once they break it apart. That is their true motivation.

Bidder B is a Supermarket Chain that wants to buy an airline. They submit a bid $100 million lower. But claim greater industry expertise because they have a former airline CEO involved.

So the Administrator feels/cares that Bidder B have a better chance of survival as a new entity, so recommend to go with the lower bidder.
But the creditors actually get the final vote.

Or a scenario like that is possible?
The Administrator is required to come to a decision based on the interests of ALL creditors - and that includes employees, secured and non secured creditors, leasing Companies, etc.

If Company A in your situation was going to pay $100m more than Company B, but only operate 40 domestic aircraft, versus Company B who were going to pay slightly less but operate more aircraft, and hold on to the WB and VARA - there is a compelling argument that Company B might be in the greater interest of ALL creditors when compared to Company A.

My understanding is that the Administrator will have a recommendation of the preferred bidder - a majority of creditors in both terms of number AND value must approve the sale. Ultimately though, the Administrator has the final say if a consensus canít be reached by creditors and have the authority to sell the business - although I would imagine if that occurred, the decision would be up for challenge in the courts.

So in summary, it is not necessarily the highest bidder that will be successful.
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Old 28th May 2020, 19:51
  #103 (permalink)  
 
Join Date: Nov 2005
Location: UK
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- although I would imagine if that occurred, the decision would be up for challenge in the courts.
If there are no funds available (as is the situation with VAH after June), a court challenge would be meaningless.

Last edited by Led Zeppelin; 28th May 2020 at 21:00.
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Old 28th May 2020, 20:42
  #104 (permalink)  
 
Join Date: Jan 2006
Location: Sydney Australia
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[QUOTE=Colonel_Klink;10795699]

If Company A in your situation was going to pay $100m more than Company B, but only operate 40 domestic aircraft, versus Company B who were going to pay slightly less but operate more aircraft, and hold on to the WB and VARA - there is a compelling argument that Company B might be in the greater interest of ALL creditors when compared to Company A.

Only if the Administrators have a fundamental lack of understanding as to what led VA into this mess in the first place.
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Old 29th May 2020, 08:28
  #105 (permalink)  
 
Join Date: Sep 2005
Location: NT
Posts: 160
If it was ďtellingĒ that Brookfield pulled their bid, is it equally ďtellingĒ theyíre back? Or does that not suit the rhetoric?

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Old 29th May 2020, 09:52
  #106 (permalink)  
 
Join Date: Jan 2019
Location: Australia
Posts: 110
[QUOTE=KRUSTY 34;10796105]
Originally Posted by Colonel_Klink View Post

If Company A in your situation was going to pay $100m more than Company B, but only operate 40 domestic aircraft, versus Company B who were going to pay slightly less but operate more aircraft, and hold on to the WB and VARA - there is a compelling argument that Company B might be in the greater interest of ALL creditors when compared to Company A.

Only if the Administrators have a fundamental lack of understanding as to what led VA into this mess in the first place.
For what itís worth Krusty, I donít think thatís actually a credible scenario. I was just trying to make the point that the highest bidder isnít necessarily going to be the preferred option by the administrator.

From all the media - itís hard to think the WBs survive. If they do - it will only be one of the current types.

And as for VARA - there is essentially no mention of them. All I keep hearing is one NB type. If you take that literally, then no more ATR or West Coast 320/F100. I just wonder if the advisors of the international bidders seriously understand the WA charter market. It makes money, has significant on carriage and is a pretty good for those WA corporate accounts....I sincerely hope that it survives.
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Old 29th May 2020, 10:14
  #107 (permalink)  
 
Join Date: Jan 2006
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Thanks Colonel, I did take some of your remarks literally.

Hopefully the value of the West Coast Operations wonít be lost on the bidders, but Iím afraid if past airline administrations are anything to go by, Iíll doubt it.
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Old 29th May 2020, 20:49
  #108 (permalink)  
 
Join Date: Jun 2019
Location: Denmark
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[QUOTE=Colonel_Klink;10796528]
Originally Posted by KRUSTY 34 View Post


And as for VARA - there is essentially no mention of them. All I keep hearing is one NB type. If you take that literally, then no more ATR or West Coast 320/F100. I just wonder if the advisors of the international bidders seriously understand the WA charter market. It makes money, has significant on carriage and is a pretty good for those WA corporate accounts....I sincerely hope that it survives.
Is VARA under administration? legit question. I thought they were two separate AOC and business. ATR use to be on the VARA/Skywest books but now on Virgin
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Old 29th May 2020, 21:09
  #109 (permalink)  
 
Join Date: Jan 2019
Location: Australia
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[QUOTE=Ragnor;10797033]
Originally Posted by Colonel_Klink View Post

Is VARA under administration? legit question. I thought they were two separate AOC and business. ATR use to be on the VARA/Skywest books but now on Virgin
They are.....the only part of VA that is not under administration is Velocity. Why you ask? I have no idea!
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Old 29th May 2020, 21:31
  #110 (permalink)  
 
Join Date: Jun 2019
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Just wondering, after reading SMH this morning s$%t is getting real for VA. With Brookfield back on the scene yesterday this could cause legal action by the other 4 delaying the process. Government rejecting Deloitte request for funds to keep operating escalating fears among the 4 remaining bidders and unions liquidation could happen before a deal is reached.
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Old 29th May 2020, 22:29
  #111 (permalink)  
 
Join Date: Aug 2013
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This from a post re the expected British Airways redundancies:

Employees often fail to grasp that the CEO has a list of priorities; The first is that 'The company must still be in business when the sun rises tomorrow.'.
The second is the stock-price
Third; The stock-holders.
Employees don't even come within the top 20. All the 'management-speak' about the employees being the company's greatest asset etc is pure BS.. In the eyes of a CEO, employees are a costly necessity, nothing more.
Employees are nothing more than a cost centre for any of the bidders. No one should be under any illusion that there is benevolence in their minds.

Last edited by Denied Justice; 29th May 2020 at 23:08.
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Old 30th May 2020, 07:20
  #112 (permalink)  
 
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I wonder how many of these "serious bidders" have just used this as an opportunity to get access to the "data room" to see where the money is made and lost before walking away and using that data to start up from scratch without the high debt load and industrial issues? Yes it takes time to get an AOC, startup etc... but now is the best time to do it as the market is pretty much non existant for the next 6-12 months anyways.
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Old 30th May 2020, 07:35
  #113 (permalink)  
 
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Originally Posted by ANstar View Post
I wonder how many of these "serious bidders" have just used this as an opportunity to get access to the "data room" to see where the money is made and lost before walking away and using that data to start up from scratch without the high debt load and industrial issues? Yes it takes time to get an AOC, startup etc... but now is the best time to do it as the market is pretty much non existant for the next 6-12 months anyways.
That, would be smart of them. why buy an airline in the current environment QF and JQ will come back slowly. In the mean time they could start their own operation whilst confidence grows, and hey, there will be 100s of pilots keen and they will work for much less than what JQ pay just to get back in the game.

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Old 30th May 2020, 09:04
  #114 (permalink)  
 
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Originally Posted by Ragnor View Post
That, would be smart of them. why buy an airline in the current environment QF and JQ will come back slowly. In the mean time they could start their own operation whilst confidence grows, and hey, there will be 100s of pilots keen and they will work for much less than what JQ pay just to get back in the game.
Well lucky for the rest of us your genius is wasted flying the line at QF, those fools at Deloitte and Clayton Utz wouldnít stand a chance against your cunning prowess.
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Old 30th May 2020, 10:19
  #115 (permalink)  
 
Join Date: Aug 2004
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Don’t get your hopes up.

‘They companies involved in these bids are concentrating on their absolute number one priority............

.........Which is their exit strategy from the business about three to five years from now.

They are not long term investors, except perhaps Temasek. Their objective is to clean out the business of any obvious stupidities, take or “acquire” all the businesses cash, load it up with humongous amounts of cheap (at present) debt and then flog shares in this lipstick bedecked pig to mum and dads super funds or stupid institutional buyers, making a cool billion or two in the float.

Unfortunately QF management can kill their float plans stone dead any time it wants to. Just wait till the float is underwritten and announced, then start aggressive discounting and he float fails.

My guess, unfortunately, is that Virgin is for the knackers yard because I can’t see a successful exit strategy for investors. Furthermore QF management are blameless.


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Old 31st May 2020, 00:16
  #116 (permalink)  
 
Join Date: Mar 2006
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The reality is that it's dollars only that drives this forward. Any of these bidders will be looking at a quick turnover and sale because that's the way they operate. Does not matter what the business is.

I wouldn't mind betting that all the "data room" examination has provided is an idea of the true costs of VAH - bidders will run a mile at taking a percentage of the debt, staff agreements, existing leases etc etc into the future.

All they have to do is provide knock down bids that won't satisfy anyone and the show is finished.

The sooner this is rolled over and a fresh new entrant can get up, the better. It won't provide jobs for everyone, but it's a start.

The only doubt in my mind is who will the new owners be ?
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Old 31st May 2020, 08:05
  #117 (permalink)  
 
Join Date: Nov 2005
Location: US
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With the Administrators telling the bidders this afternoon to "cool their jets" for another 24 hours, the suspense must almost be too much for Carla who will by now be frothing at the mouth to find out if she'll get the gig.
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Old 31st May 2020, 22:19
  #118 (permalink)  
 
Join Date: Dec 2001
Location: Australia
Posts: 196
According to the AFR, if Bain did get up, Hrdlicka may be the Chairman, rather than CEO. If Scurrah did then stay on as CEO, it would be an interesting dynamic between the two.
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Old 1st Jun 2020, 00:56
  #119 (permalink)  
 
Join Date: Sep 2002
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Originally Posted by Arctaurus View Post
According to the AFR, if Bain did get up, Hrdlicka may be the Chairman, rather than CEO.
Wow!!! If that happens I wonder how long it would take before the administrators are called in again.
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Old 2nd Jun 2020, 21:53
  #120 (permalink)  
 
Join Date: Jun 2020
Location: Sydney
Posts: 9
Angry

Originally Posted by Denied Justice View Post
This from a post re the expected British Airways redundancies:



Employees are nothing more than a cost centre for any of the bidders. No one should be under any illusion that there is benevolence in their minds.
Iíve listen to every company podcast and whatís pathetic are their noses growing each time, and by shear coincidence VA have moved into the same building the administrators own! Come on, are you all that blind?

Our managers had sent out surveys over the last 5 yrs and for what? OUR negative responses have done absolutely nothing, your still steered us onto the reef, well done flight ops, well done and I bet youíll still keep your jobs whilst those who warned you get the chop. I can holy hope you join us all in the dole queue where you belong.
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