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

George Glass 9th Apr 2020 11:38

Sunfish , you need help.
Where does youíre resentment come from?
Upset that the Chairmans Lounge wont recognise your petty bourgeoisie status?
Cant get an upgrade?
Meanwhile there are much bigger issues at stake. The privatisation of the CBA , Telstra and Qantas were ideologically based decisions by the Hawke Government from 1991. The quid pro quo for the average punter was low wage grow compensated by increases in the social wage. Plus the promise of a growing economy and cheaper services. And cheap airfares.
Now its coming unstuck.
We have been riding the tiger.
Nowhere else in the world would you expect to have two premium carriers and two low cost carriers at each otherís throats in a market of 25 million.
It always was delusional. Its no coincidence that Virgin dumped Tiger as soon as it could.
Governments all over the world will be re-evaluating privatisation and globalisation.
This is a once in a hundred year event.
Sorry Sunfish , howl at the moon all you like . Your day is done.

Sunfish 9th Apr 2020 11:53

The problem George is not me, it’s the tens of thousands who won’t get real jobs because of the cost to the community of protecting Qantas.

To put that another way, we let the car industry go, we should let Qantas go for exactly the same

We can’t afford you.

600ft-lb 9th Apr 2020 12:10


Originally Posted by Sunfish (Post 10744755)
The problem George is not me, itís the tens of thousands who wonít get real jobs because of the cost to the community of protecting Qantas.

To put that another way, we let the car industry go, we should let Qantas go for exactly the same

We canít afford you.

10000 jobs is not worth 5 billion dollars of debt and another 1.4 billion on top of that. There is no way any private investor would pump money into a multi year loss making entity without taking ownership and the debt being forgiven so why should the taxpayer?

The simple fact is virgin is owned by foreigners, if they won't save it then it says something. Put the company into administration, do a deal on the debt and sell the operation as a going concern otherwise wind it up and start again. I'm sure someone will buy a bargain aoc with bargain planes for sale around the world to run some of the most lucrative routes in the world with skilled staff waiting to be employed. They wouldn't save Ansett.. Virgin in it's current form will go the same way unless you believe in miracles.

itsnotthatbloodyhard 9th Apr 2020 12:16

monomania
[ mŏn′ə-mā′nē-ə, -mān′yə ]

n.

Pathological obsession with one idea or subject, as in paranoia.

Blueskymine 9th Apr 2020 12:26


Originally Posted by Sunfish (Post 10744687)
My interest is the development of the australian economy.

ĎIt is axiomatic that this requires Australian companies to be outward looking and internationally competitive to grow and prosper for the benefit of the Australian economy. To be clear, that term benefit means investment, international sales through competitiveness and resulting jobs and prosperity.

To achieve the above requires seamless and efficient international travel capability, inbound and outbound, from Australia.

Qantas does not provide anything like a service that supports the rest of the Australian economy.

To put that another way, your Ď30,000Ē jobs are at the expense of maybe 500,000++ Australian jobs because you act as a gatekeeper or parasite, preventing fast seamless access for Australian business to the rest of the world. In addition, your international services are biased towards Sydney which gives NSW a larger share of inbound investment than it warrants.

You and your management are quite capable of strangling any economic recovery post Covid - 19. Therefore it would be better for Australia to either nationalize you or let you go to the wall so that we can have true unfettered competition.

To put that another way, Qantas monopoly is a disaster for the Australian economy.

Nothing personal. You are just an economic pest.

Sunfish, Qantas didnít kill ansett. Ansett did a pretty good job of it itself. With the help of our friends across the ditch. And probably your touch managing some of its engineering. Howíd your 767 oversight go again? Oh yes thatís right. What a Ďcrackerí of a tale.

Qantas has also focussed itself on your beloved Melbourne via Jetstar. Thatís itís hub and head office. And it serves your demographic down there very well.

Qantas is a Sydney based airline and obviously focuses its head office operation there. Basically because Sydney is Australiaís biggest city, and where itís been for most of its history. Longer than youíve been alive. Itís also the place most visitors want to fly into before dispersing across the domestic network.

Qantas is also flying around empty planes burning cash to serve as an essential service. Because itís what it does as Australiaís national airline for 100 years. The competition doesnít want to burn its cash for the good of Australia. Because itís cash is better suited to its shareholders country of origins. And to keep it going for a little longer. Which is fair enough. PS is actually doing a great job. Perhaps if the cards were a little different, Iíve no doubt Virgin would have come good on his watch. It still may.

To put it another way, would qantas sell the silverware to keep 3k going? Itíll punt it in a heartbeat.

So love it, hate it, whatever. I donít care. But itíll be here in another 100. Because itís an Australian company that does what it does pretty well.

George Glass 9th Apr 2020 12:30

“Real jobs” ?????

Do you actually know anybody who has worked the industry?
Or do you just make it up in your head?
There has been a relentless chase to the bottom across the industry , including Qantas, for the last 30 years.
The people suffering the most right now will be either on casual contracts or EBAs with bare bones sick leave or personal leave entitlements.
Talk to a Tiger pilot . See how you go . Just don’t use the phrase “real jobs”. You might not survive the encounter.

There has been a hollowing out of the middle class and an abandonment of the working class for 30 years.
Now is the reckoning.
The challenge for capitalism is to prove that Marx wasn’t right after all.
He would have had you peg straight away Sunfish.

Icarus2001 9th Apr 2020 12:40


I'm sure someone will buy a bargain aoc with bargain planes for sale around the world
How many times....? You cannot buy an AOC, you must buy the company that owns the AOC, which then means you take on all of that companies' liabilities as well.

600ft-lb 9th Apr 2020 13:01


Originally Posted by Icarus2001 (Post 10744797)
How many times....? You cannot buy an AOC, you must buy the company than owns the AOC, which then means you take on all of that companies' liabilities as well.

As I said, let it go into administration, a savvy investor could buy a fully functional airline for a decent price and the debtors could get cents on the dollar instead of nothing. There is options, its not like we have to see the end of the Virgin brand in Australia. I believe another charter operation which is quite successful in Australian skies started out the exact same way..

Expecting any organisation to succeed in a post covid world with $5 billion in debt that hasn't turned a profit in 7 or 8 years when the rest of the aviation world has been literally printing money is pure fantasy.

krismiler 9th Apr 2020 15:30


However Jetstar will be Australia’s second airline if it all goes belly up (Virgin). The ACCC will mandate QF split it and that’ll be that.
That's a real possibility if Virgin go under and no one steps into the gap. In exchange for being the only premium airline QF might be happy to be rid of it and concentrate on the full service market with the higher yielding pax which is what they know. Jetstar don't really fit into the QF/EK/Oneworld mafia anyway.

Consolidation will be the name of the airline game in the post COVID-19 world and whilst Singapore Airlines are likely to come through because of strong government backing, their traditional premium and business traveller market will be decimated. Picking up an established Australian low cost operation at a depressed price and merging Jetstar Asia into Scoot would give them a strong showing in the Asia Pacific low cost arena which is likely to be the only growth area for a long time. Singapore lacks a domestic network which its rivals enjoy, this ultimately caps Scoot at around 50 airframes. A combined Scoot+Jetstar+Jetstar Asia fleet would be around 140 aircraft and quite capable of taking on the currently much larger Air Asia and Cebu Pacific competitors. Call the whole thing Scoot and effectively Australia would be Singapore's domestic backyard.

Buying an established operation, which already complies with Australian rules, operates the same types as your subsidiary and isn't encumbered with billions of dollars of debt like Virgin makes more sense than a new start up like Tiger Australia did. There is already considerable Singaporean investment in Australia, and with QF and SIA being major rivals, the ACCC should be satisfied that competition would be maintained. Sometimes strange partnerships emerge such as SIA, Virgin, Etihad and Air New Zealand.

The above scenario may seem a little imaginative but isn't outside the realms of possibility in the interesting times that we are currently in.


wheels_down 9th Apr 2020 23:21

More likely Qantas would spin JQ off. I donít know why it has not been done already, but even if Virgin remains which is more likely, there is a very high chance that JQ is going to be spun off in some form. Financially they will need it, would be a big cash grab to assist funding upcoming Airbus orders and market downturn. A minor to medium share would remain, I canít really see them disposing of it all together.

Doing this post a Virgin collapse, well the value would soar even more and would be a very attractive offer.

A Jetstar Asia and Scoot merger would make sense. The only issue would be the asking price for it. Jetstar Asia lease the whole fleet and is loss making, overlap many routes with Scooter so effectively the business is worth $0. They are facing the future prospect of going up against Scoot with a Fleet six times. That is only a few years away. Just piss it off.

cloudsurfng 9th Apr 2020 23:25


Originally Posted by Sunfish (Post 10744755)
The problem George is not me, itís the tens of thousands who wonít get real jobs because of the cost to the community of protecting Qantas.

To put that another way, we let the car industry go, we should let Qantas go for exactly the same

We canít afford you.

but you keep telling everyone you can afford everything.

DanV2 9th Apr 2020 23:54


Originally Posted by krismiler (Post 10744929)
That's a real possibility if Virgin go under and no one steps into the gap. In exchange for being the only premium airline QF might be happy to be rid of it and concentrate on the full service market with the higher yielding pax which is what they know. Jetstar don't really fit into the QF/EK/Oneworld mafia anyway.

Consolidation will be the name of the airline game in the post COVID-19 world and whilst Singapore Airlines are likely to come through because of strong government backing, their traditional premium and business traveller market will be decimated. Picking up an established Australian low cost operation at a depressed price and merging Jetstar Asia into Scoot would give them a strong showing in the Asia Pacific low cost arena which is likely to be the only growth area for a long time. Singapore lacks a domestic network which its rivals enjoy, this ultimately caps Scoot at around 50 airframes. A combined Scoot+Jetstar+Jetstar Asia fleet would be around 140 aircraft and quite capable of taking on the currently much larger Air Asia and Cebu Pacific competitors. Call the whole thing Scoot and effectively Australia would be Singapore's domestic backyard.

Buying an established operation, which already complies with Australian rules, operates the same types as your subsidiary and isn't encumbered with billions of dollars of debt like Virgin makes more sense than a new start up like Tiger Australia did. There is already considerable Singaporean investment in Australia, and with QF and SIA being major rivals, the ACCC should be satisfied that competition would be maintained. Sometimes strange partnerships emerge such as SIA, Virgin, Etihad and Air New Zealand.

The above scenario may seem a little imaginative but isn't outside the realms of possibility in the interesting times that we are currently in.

While an interesting scenario, let's keep in mind that SIA has a dismal record at operating in Australia overall through equity.

Strike 1: Air New Zealand group (including Ansett). 25% stake in NZ after then-Chairman & MD Selwyn 'Borghetti' Cushing used his veto rights to block SQ from buying News Corp's 50% stake in AN. SIA's stake in NZ ended during the Ansett bankruptcy debacle

Strike 2: Tiger Airways Australia. Even with SIA owning that former subsidiary through Tiger Airways Holdings, they still managed to screw that up with the maintenance debacles, "selling to VA for $1" to save face on their own incompetence.

Strike 3: Virgin Australia. Participating in the Capacity War & CapEx failures in cahoots with Etihad and Borghetti. Air New Zealand also played a minor role through participating in the Capacity War before then-CEO Luxon realised the situation, tried to change the situation but was outnumbered by EY and SQ, and subsequently decided to sell out of VA while NZ had the chance.

If SIA couldn't get their 3 goes in Australia right, there's very little chance of SIA getting a "4th go" right.

krismiler 10th Apr 2020 01:59

The Qantas Pan Asian strategy doesn't seem to have worked too well either, and Jetstar Pacific (Vietnam) would probably be up for the chop if Jetstar Asia goes. Ten aircraft up against the likes of Vietjet Air and Bamboo Airways wouldn't be a serious proposition, especially without access to a wider network. Tiger Airways tried expansion in Indonesia, Taiwan, Philippines and Australia without success. Going up against large, well established local airlines on their home turf with a considerably smaller fleet and hoping to gradually build up hasn't worked for foreign airlines.

AirAsia (Malaysia) and Cebu Pacific have grown strongly from a small size, but they were operating in their home countries and their only competition was an inefficient and expensive national airline which they could easily undercut with the proven low cost business model. They got in at the right time and filled the gap.

Jetstar Hong Kong never got off the ground, QF are a minority shareholder in Jetstar Japan and could decide to sell out to Japan Airlines and leave it to them to run as their own rebranded low cost subsidiary.

Singapore Incorporated won't step in to prop up a loss making, billions in debt with profits years away, Virgin Australia in its present form. Keeping the SIA group going is already a big drain on government resources.

Stemming losses and making consolodations will be the new order, profits will be difficult enough, even without capacity and price wars.

QF would probably be happy with its 65% line in the sand domestic share together with the regional and international network. They are one of the few airlines that we can be reasonably sure will still be standing at the end of the current pandemic. News reports have now stopped referring to a recession and are talking about a depression instead.

The question is who will fill the remaining 35% of the domestic market. A Virgin mark 2 with 40 B737s or a Lion Air Australia operation with similar numbers would enable QF to retain JQ though they would probably restructure it into a smaller size without the B787s and Asian subsidiaries.

Virgin going under without a replacement to fill the gap could require QF to divest itself of Jetstar. A spun off JQ with 35% market share and no competition within that sector would be a more attractive proposition for investors than bailing out Virgin and having to compete with QF at the top and JQ at the bottom.

There could be an unspoken, cosy arrangement where QF set fares which maintain profitability and shareholder return for them, the competing set up are about 15% less ie not enough to make QF customers trade down but too much to make the bogans trade up. Occassional snap sales of a few seats at 50% off by both airlines and you have the impression of competition which keeps everyone happy. Passengers pay higher fares but services are maintained and both operators make money.

wheels_down 10th Apr 2020 02:27

Well itís another reason why Alan wants Virgin out. Effectively would double Jetstarís value.

Jetstar total group EBIT is around 350-400m. This contains all the loss making ventures of Pacific, Vietnam, Japan, so this could be anywhere up to 100m in loss, capex.

Offloading 50% would be a multi billion dollar deal. Offloading half without Virgin, would be eye watering.

To please regulators, and selling say 75%, well you can see why Alan wants Virgin gone. Would give the parent business enormous firepower for the next few decades. Netting many billions from a sale will put off any competitor even contemplating arriving down under. It would become the worlds strongest carrier, debt free, high margins, and full control of the majority of slots, property.

Much work would be done around securing as many East Coast Virgin slots and terminals as possible, to enable any other entrant an impossible task of building a network. The entire WA charter operation would be picked up almost the next day.

I would expect QF to ramp up the noise around Virgins funding as time goes along. If QF promises to replace every Aircraft that Virgin had in the market, like for like, with a large chunk of tech, cabin, engineering crew, well that could pose problems for any Virgin funding attempt.

Turnleft080 10th Apr 2020 02:39

I want to say this because it's been building inside me. If I had a flame thrower I burn this whole [email protected]#*ing web site down to the ground.
You play with people's minds, people's livelihoods, nothing but disrespect. It's bullying. I'll stop now before I get really depressed.

Led Zeppelin 10th Apr 2020 02:51


Much work would be done around securing as many East Coast Virgin slots and terminals as possible......
You can bet that these very scenarios have already been examined in microscopic detail by Qantas in case of VAH ceasing operations.

As much it is unlikely, it's in everyone's interest if VAH, or a version of it, keeps operating domestically.

Keep the bastards honest.

ampclamp 10th Apr 2020 02:56


Originally Posted by Turnleft080 (Post 10745343)
I want to say this because it's been building inside me. If I had a flame thrower I burn this whole [email protected]#*ing web site down to the ground.
You play with people's minds, people's livelihoods, nothing but disrespect. It's bullying. I'll stop now before I get really depressed.

Please, stop reading it for your own good. I've been down the same path with Ansett. It's horrible I know.

It's all speculation and posturing here. Nobody is playing with livelihoods here as the decisions that matter are being made elsewhere, so best tune out. There is no useful info here as far as your career is concerned.

neville_nobody 10th Apr 2020 04:14



Jetstar total group EBIT is around 350-400m. This contains all the loss making ventures of Pacific, Vietnam, Japan, so this could be anywhere up to 100m in loss, capex.

Offloading 50% would be a multi billion dollar deal. Offloading half without Virgin, would be eye watering.
Assuming that is technically possible. Jetstar is very opaque in its structure and operation. Noone knows what the real figures are and how it benefits QF. It is possible that it cannot be separated or QF may not want it to be separated for a myriad of reasons.

Colonel_Klink 10th Apr 2020 04:18


Originally Posted by wheels_down (Post 10745340)
Well itís another reason why Alan wants Virgin out. Effectively would double Jetstarís value.

Jetstar total group EBIT is around 350-400m. This contains all the loss making ventures of Pacific, Vietnam, Japan, so this could be anywhere up to 100m in loss, capex.

Offloading 50% would be a multi billion dollar deal. Offloading half without Virgin, would be eye watering.

To please regulators, and selling say 75%, well you can see why Alan wants Virgin gone. Would give the parent business enormous firepower for the next few decades. Netting many billions from a sale will put off any competitor even contemplating arriving down under. It would become the worlds strongest carrier, debt free, high margins, and full control of the majority of slots, property.

Much work would be done around securing as many East Coast Virgin slots and terminals as possible, to enable any other entrant an impossible task of building a network. The entire WA charter operation would be picked up almost the next day.

I would expect QF to ramp up the noise around Virgins funding as time goes along. If QF promises to replace every Aircraft that Virgin had in the market, like for like, with a large chunk of tech, cabin, engineering crew, well that could pose problems for any Virgin funding attempt.

Isnít this the whole reason people are arguing for the government not to let VA fail....?

TBM-Legend 10th Apr 2020 05:49


Originally Posted by Colonel_Klink (Post 10745376)
Isn’t this the whole reason people are arguing for the government not to let VA fail....?


The Federal Govt is not bailing VA. I know from an internal source that they a. don't see any of the current owners ponying up with any support and b. they are afraid that any cash splash will wind up in the hands of the shareholders and other preferential creditors leaving the cupboard bare again. The VA accumulated losses are massive and no one will go anywhere near them.


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