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-   -   Government Loan to Virgin Australia (https://www.pprune.org/australia-new-zealand-pacific/631164-government-loan-virgin-australia.html)

Voz1 6th Apr 2020 22:53

Yes VA are shaky. Basically because of its debt and the close to zero turnover. Not here to bash any other operators, but ALL airlines are in trouble if this thing goes on, no one is immune. All that airlines can do is sell assets or refinance airframes in the hope that will see them through. The only difference between VA QF and JQ is how long it will take before the administrators will walk in. Stick together everyone, no point ripping into you comrades when the enemy is over the fence.

ampclamp 7th Apr 2020 01:24

Exactly Voz1. I want both airlines to survive.

It would be interesting if VA's big shareholders decided to chip in a few billion between them (as unlikely as that may be) the shoe would definitely be on the other foot in the "war of attrition" some seem to promote.

Gnadenburg 7th Apr 2020 01:42


Originally Posted by longjohn (Post 10741460)
I have a lot of good mates in VAH, many ex AN who really don’t deserve this twice....

But.. I’ll call a spade a spade. It was DJ that, along with Impulse started the pilot race to the bottom in this country. Bit rich to suggest they are now the buttress against low pay...

Oh yes. The initial Virgin Blue cadre. Training Captains paid less than incumbent F/O's at AN & QF. Sure pay rises came; only after AN's demise. And the behaviour of "some" of the VB staff when the door shut at Ansett ranged from spiteful to immature. Now this was all long ago and Virgin is loaded up with great folks and I wish them well.


I'm not sure of a bail-out of a business failing anyways? I''m flabbergasted at the cost to government and we are really just past the beginning and will now face further unknowns that may resonate towards national security.

Will nations on our doorstep fail? What will China do in the region? Will the disaster unfolding affect the US military budget? Forcing nations to have to pay more for their own security?

We are going to need a plan as a nation coming out of this pandemic and there will be expensive considerations including health care and national security- along with targeted stimulus. How can government prop up failing business that were going to fail anyways?

Led Zeppelin 7th Apr 2020 02:47


........How can government prop up failing business that were going to fail anyways?
Simply, they can't.

TBM-Legend 7th Apr 2020 04:01

Be careful of what might happen in Indonesia if this creates panic and lots of refugees headed our way...

-41 7th Apr 2020 04:24

in the current Clown world that outcome would not surprise anyone, stuck at home with the threats of $ fines.

Gnadenburg 7th Apr 2020 04:33

Indonesia is a little more complex than that historically. Not an unlikely scenario; though far more unsavoury domestic issues and medium term security issues likely to arise. PNG could require expensive assistance and most smaller island nations too ( devastated in 1917 flu ). You'd like to think China would help without strategic motive though their move into the region another scenario commanding government funds for security.

Australians need to back up Australians in the future more so than in anytime in recent generations. Not wishing ill on Virgin employees. I hope some logical and less painful outcome can emerge. I recall a shrunken Ansett operation with A320's in administration and Fox-Lew consortium seeking government guarantees. It was a bit of a con though something along these lines will no doubt be considered by the current government.

ExtraShot 7th Apr 2020 05:13


You'd like to think China would help without strategic motive
I donít think China does anything these days without Strategic motive. Particularly in the territories surrounding Australia.

Icarus2001 7th Apr 2020 05:22


I don’t think China does anything these days without Strategic motive. Particularly in the territories surrounding Australia.
Do you think any country helps another without a strategic motive?


I hope some logical and less painful outcome can emerge. I recall a shrunken Ansett operation with A320's in administration and Fox-Lew consortium seeking government guarantees.
I do wonder what a 50% cut to the VA operation would look like. Can leased aircraft be returned without too much penalty? Or simply sell the owned airframes? The idea is to reduce the cash burn rate and be ready to increase domestic capacity when demand is allowed to rise. Whether that is enough to stave off administration who knows.

DanV2 7th Apr 2020 05:33


Originally Posted by Icarus2001 (Post 10742121)
Do you think any country helps another without a strategic motive?



I do wonder what a 50% cut to the VA operation would look like. Can leased aircraft be returned without too much penalty? Or simply sell the owned airframes? The idea is to reduce the cash burn rate and be ready to increase domestic capacity when demand is allowed to rise. Whether that is enough to stave off administration who knows.

Surely a "VA mk II" (minus the Virgin name) would be using the owned VA 737s as the administrators such for a buyer of what's left of VA in a post-administration scenario.

On a related note: VAi has 4x owned 777-300ERs (registed to Virgin Blue Leaseco (VB Leasco Pty Ltd)), those 777ws will eventually have to be sold off (with the returns sent to creditors) as it will be likely that VAi as a whole will be folded up and dissolved if the "mk II" post-administration operation is basically a domestic-only replacement for VA.

ExtraShot 7th Apr 2020 05:43


Do you think any country helps another without a strategic motive?
No, but an Authoritarian Ruled China with expansionist desires is certainly not the country Iíd ever be remotely expecting it from.


piston broke again 7th Apr 2020 07:33

Led Zeppelin, VA 737 domestic op's are profitable under normal circumstances. These are not however normal circumstances. QF will be bleeding much faster than VA, but they can sustain that bleeding for longer. There's a reason QF had to immediately pull the 1.4 billion injection card.

Arctaurus 7th Apr 2020 08:29

PBA - The problem is that Virgin is bleeding cash with fixed overheads, and according to the last downgrade:


a default or distressed exchange appears increasingly likely over the next 12 months, absent timely government or other support and/or a swift reversal of the COVID-19 outbreak

Buster Hyman 7th Apr 2020 08:34

So, if they do go into Administration & a VA Mk II is on offer, beware who you sign on with.

From the Ansett Mk II experience, the employees would've worked for Ttesna & the assets would've been owned by a company called Queenscross. Sydney Airport Corp. were the only ones who baulked at that arrangement & it fell over like a house of cards. People will still try & take advantage of you!

Arctaurus 7th Apr 2020 08:45

A low cost VA mark II would still be more preferable than the existing debt ridden company. It would be a formidable competitor to Jetstar. The Virgin name would probably disappear though.


krismiler 7th Apr 2020 10:50

Unfortunately, comparisons are unavoidable with the last days of Ansett.

Structural problems within the companies being brought to a head by a major world event, though this time it's far more serious.
Both were losing money however Ansett were more encumbered by unions and high staff rates of pay.
Calls for government bailouts, though this time QF are included.

If history repeats, then the next step would be to restructure into a smaller operation with reduced aircraft types, numbers and routes. Even then the consortium trying to rescue Ansett wanted government guarantees of profitability, when these weren't forthcoming they pulled the plug.

However Virgin is a much leaner operation than Ansett and the problems aren't as deep routed, given that the government will want to maintain a competitor to QF they will probably back a reduced sized and heavily restructured operation limited to B737 domestic flying. Done correctly this could be profitable, and a convincing argument made for a rescue package on the basis of sweeping changes leading to profitability in the medium term.

All previous projections are now out the window and any forecasts will need to be made based on the basis of a vastly changed operating environment in the short to medium term.

One factor heavily in favour of Virgin is that if things reach the stage where Qantas has to be nationalised, the government would want a counter balance to any demands from the QF unions for excessive pay increases from what would be an all powerful monopoly airline, capable of bringing Australia to a stand still if its demands weren't met . Divide and rule.

Ken Borough 7th Apr 2020 12:05

This article is well worth reading. A devastating take-down!

https://www.anthonyklan.com/aviation



Paragraph377 7th Apr 2020 13:12


Originally Posted by Ken Borough (Post 10742468)
This article is well worth reading. A devastating take-down!

https://www.anthonyklan.com/aviation

Great article. Klan has been reporting on aviation matters for some time and his reporting is usually unbiased and factual while being brutal as well. Virgin have tried to ride on QFís coattails for years. Always copying the opposition airline. Always sulking when they think they are being hard done by. Scurrah is simply copying that mentality but it isnít working this time around. The Government is right, why bail out a company with taxpayer money when the company hasnít paid tax for years while at the same time itís executives have raked in millions for themselves each year? And, it is mostly foreign owned!! I feel sorry for the staff who are not, and never been part of the executive management group. But your bosses at the top are the ones who have failed you. CEOís, Board members - all abject failures that have brought the airline down.






coaldemon 7th Apr 2020 20:31

It will be interesting to see what the Government does but it would be a surprise if they bail them out. If the shareholders won't do it then I can't see the Government being levered into doing it to keep the air fare. Next will be Airports, Travel Agents, Cruise Ship companies and other businesses that consider themselves essential services and critical to the economy. Post Ansett it took about 12 months for there to be a reasonable presence from VB at the time but at no stage did they provide any real competition to QF particularly in Business Class.

In regards to not being like Ansett lets see they have:
  • A complicated and mixed up fleet which evolved for VB out of a single type - Tick
  • Shareholders that don't want to foot the bill - Tick
  • I think if you do a comparison on the Pilots pays they will be very similar although the AN Pilots were far more flexible on work rules than the VA ones are. - Tick
  • And lastly they both put out stories on why they should keep going once they lost the customers confidence. AN through the 767 Fiasco and VA through putting in the media that they need $1.4 B to survive- Tick
  • Both had trigger events to complete the fall. AN had 9/11 and VA has COVID-19 - Double Tick
All in all it will be interesting to watch. The issue now is that COVID-19 is here to stay so the opening up of borders may not take 3 months which VA needs to keep going it looks more like 9 months to a year. Overall a bleak time for the world's economies. So much for retiring for most of us anytime soon.

TimmyTee 7th Apr 2020 21:33


Originally Posted by Ken Borough (Post 10742468)
This article is well worth reading. A devastating take-down!

https://www.anthonyklan.com/aviation

He copy and pasted that random Michael West piece under "companies". Chance are he wrote it, yet you're presenting him as another "devestating" source.
I asked earlier on if Qantas employees or beneficiaries would declare their position in this thread about Virgin Australia, and choked on my wheeties at the suggestion they all would by a known Qantas pilot

So after seeing you conitnually sling mud at VA, I ask you Ken Borough, you wouldn't happen to have a stake in Qantas would you..?


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