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

ozbiggles 12th Apr 2020 10:26

It will be interesting to compare peoples posts when we are back here in 6 months talking about bailing Qantas out with Government money.

t_cas 12th Apr 2020 10:35

To be balanced.... both QF and VA have cash reserves aside to weather some financial emergencies. The median for airlines in the Asia Pacific is 1 months cash reserves.

so my opinion.... both Australian groups are placed well on the stage when compared globally.

This event is not something any business can ďplanĒ for. Being regulated out of the market is not something you would expect.

Put the knives away, let this play out as it should.

The groups and as many businesses as possible should be assisted as if the government had not shut the doors on the economy and the market in which they freely competed in prior to this war on Carona.

RodH 12th Apr 2020 22:33

This news item is from the Executive Travellers web site and just posted a short time ago.
Good news for everyone.
In a message to staff on a private Virgin Australia Facebook group posted this evening, and seen by Executive Traveller, CEO Paul Scurrah noted "I am aware that Qantas communicated to their people that they had been 'directed' by the Australian Government to operate a 'minimum domestic network'."

"Upon hearing this I immediately contacted the Deputy Prime Minister, who denied any such deal was in place and that both airlines will be treated equally."

"The good news is that he called me tonight to say we will be offered the opportunity to operate a 'minimum domestic network' subsidised by the Australian Government," Scurrah continued. "We will be in discussions with the Australian Government tomorrow to work through the detail.

The Bullwinkle 12th Apr 2020 23:06


Originally Posted by RodH (Post 10748120)
This news item is from the Executive Travellers web site and just posted a short time ago.
Good news for everyone.
In a message to staff on a private Virgin Australia Facebook group posted this evening, and seen by Executive Traveller, CEO Paul Scurrah noted "I am aware that Qantas communicated to their people that they had been 'directed' by the Australian Government to operate a 'minimum domestic network'."

"Upon hearing this I immediately contacted the Deputy Prime Minister, who denied any such deal was in place and that both airlines will be treated equally."

"The good news is that he called me tonight to say we will be offered the opportunity to operate a 'minimum domestic network' subsidised by the Australian Government," Scurrah continued. "We will be in discussions with the Australian Government tomorrow to work through the detail.


Unfortunately the WA Premier didn’t get the memo it seems......


The Western Australian government may underwrite flights to get people stranded due to COVID-19 back home and residents home.

Premier Mark McGowan is looking at options to fly out about 650 passengers from the Vasco Da Gama cruise ship who have completed their 14-day quarantine period in Perth.

Most are from the eastern states while a few are from overseas.

The passengers finished their quarantine on Friday and have been moved to a Perth hotel, until they can fly home.

Mr McGowan told reporters on Sunday that the state may have to work with Qantas to underwrite flights to get people home, and Western Australians back in the state.

"Getting them home is not easy... Virgin has essentially stopped, Qantas has wound back its flights so much that it's very difficult to get flights home for these people," Ms McGowan said.

"It may mean the state needs to work with Qantas to support flights or underwrite flights to get people from the east home but also to get West Australians back here."

cunnamullafella 12th Apr 2020 23:31

When McCormack was asked on AM Agenda yesterday on Sky if VA would be given funding he was non commital and said all options were being looked at. I donít work for VA but it definitely wasnít a NO.

Transition Layer 13th Apr 2020 00:11

The communication about the Govt ďdirecting QF to operate a minimum domestic networkĒ came from the head of Domestic Cabin Crew. Hardly what I would consider an authoritative source and he may indeed have been getting his terminology wrong.

On the other hand, here is what the QF Chief Pilot had to say about the matter as recently as Friday:


TEMPORARY NETWORKS

We continue to work with the Australian Government on temporary International, Domestic and Regional networks. This is about maintaining some level of connectivity where there is little commercial demand.

While there is no update on the Domestic and Regional networks yet, we have had to delay the first International flights due to the governmentís decision to remove the quarantine exemption for operating crew.
I know which source Iíll believe. Looks like the head of cabin crew may have been jumping the gun a bit and hopefully gets more than a rap on the knuckles for it.

Progress Wanchai 13th Apr 2020 00:17


Originally Posted by VH DSJ (Post 10747310)
There's your answer. Print more money! LOL. Why do they even bother to tax us when the government can print more money at will?

Because printing money doesnít fix the problem as money then loses its value. When money loses value it affects those that rely on it the most. ie, savers (generally retirees) and the working class who live pay check to pay check.
Who it benefits is the asset owning class as inflation pushes up the price of assets. In affect printing money transfers wealth but doesnít create it in the same way tax doesnít destroy wealth but transfers it.

Imagine what would happen to the price of gold if the government declared house bricks painted yellow had the same value as gold bullion. Itíd be to the benefit of those with lots of bricks and yellow paint and to the detriment of those who have gold stashed under their mattress, but it will be of no benefit to the country as a whole. This is no different to printing money.

The government has two methods to pay its bills.
Tax, which affects the rich disproportionately to the poor.
Print money. Which affects the poor disproportionately to the rich.

RodH 13th Apr 2020 01:00

This is another pice of news from the ABC news website.
Looks like it’s credible information and that it does look good.


Federal Government is in talks with the major airlines about subsidising domestic flights in a bid to keep Qantas and Virgin Australia in the air.

Key points:

  • The Deputy Prime Minister spoke with the bosses of the major airlines at the weekend
  • Michael McCormack says there are ongoing talks about subsidising domestic flights
  • It comes as the Government urges Australians to stay home until restrictions lift


Deputy Prime Minister Michael McCormack told the ABC he spent the weekend speaking with the bosses of both airlines, in the wake of Virgin Australia's decision to suspend all domestic flights except a daily return service between Sydney and Melbourne.

He said it was vital that flights around Australia continued to ensure people returning from overseas could get home after serving their mandatory 14 days of quarantine.

"We also need, of course, to transfer people around from capital city to capital city. So we'll be looking at that," Mr McCormack said.

"We'll be looking at what we can do in conjunction with the airlines, who are cooperative."

Rudder Sir 13th Apr 2020 01:01


Originally Posted by Progress Wanchai (Post 10748173)
Because printing money doesnít fix the problem as money then loses its value. When money loses value it affects those that rely on it the most. ie, savers (generally retirees) and the working class who live pay check to pay check.
Who it benefits is the asset owning class as inflation pushes up the price of assets. In affect printing money transfers wealth but doesnít create it in the same way tax doesnít destroy wealth but transfers it.

Imagine what would happen to the price of gold if the government decided itíd paint house bricks yellow and declare they now had the same value as gold bullion. This is no different to printing money.

The government has two methods to pay its bills.
Tax, which affects the rich disproportionately to the poor.
Print money. Which affects the poor disproportionately to the rich.

I think you may have missed the sarcasm. Of course printing money is not a long term fix, no one would argue it is.

Progress Wanchai 13th Apr 2020 01:04


Originally Posted by Rudder Sir (Post 10748193)
I think you may have missed the sarcasm. Of course printing money is not a long term fix, no one would argue it is.

Haha.
Cheers.

Unfortunately the RBA/Government have made noises about QE and think they can get out of this hole by digging.

normanton 13th Apr 2020 01:18

It's great Virgin are going after some of the government subsidised flying. But be careful what you wish for Virgin, you are playing right into Allan's hand.

If Qantas get x, we want x as well. Just remember Mr. Scurrah, you are asking for xx from the government for a bailout. Don't expect Qantas not to get xx too.

That alone is even more ammunition for the government to reject your bailout request.

RodH 13th Apr 2020 01:49

Firstly VA are not asking for a bailout, they are asking for a loan.
Secondly it would appear that BOTH VA and QF are going to be subsidised to allow some operations to commence again.
Given the above how can you say it’s playing into Alan’s hands when they are getting equal treatment at this stage?
I think it’s great to see the Government helping out such a vital Industry which is suffering at this time because of no fault of its own making.
Sure VA was not doing as well as QF for quite a while but it was improving fairly quickly and it’s correct that they do not have a big a reserve as QF or what is needed to see them through this horrible time but that is not any reason to abandon them.
Theres a hell of a lot of people who depend on VA continuing operations quite apart from its employees so there’s one hell of a lot more at stake than meets the eye.
We should all be pleased to see a helping hand being offered and not put them down all the time.
For the record I am not and never have been employed in any way by either VA or QF , I’m just a happy passenger who really enjoys flying.

TBM-Legend 13th Apr 2020 02:06


Originally Posted by RodH (Post 10748220)
Firstly VA are not asking for a bailout, they are asking for a loan.
Secondly it would appear that BOTH VA and QF are going to be subsidised to allow some operations to commence again.
Given the above how can you say itís playing into Alanís hands when they are getting equal treatment at this stage?
I think itís great to see the Government helping out such a vital Industry which is suffering at this time because of no fault of its own making.
Sure VA was not doing as well as QF for quite a while but it was improving fairly quickly and itís correct that they do not have a big a reserve as QF or what is needed to see them through this horrible time but that is not any reason to abandon them.
Theres a hell of a lot of people who depend on VA continuing operations quite apart from its employees so thereís one hell of a lot more at stake than meets the eye.
We should all be pleased to see a helping hand being offered and not put them down all the time.
For the record I am not and never have been employed in any way by either VA or QF , Iím just a happy passenger who really enjoys flying.



When you go for a loan, the first question the lenders ask is about your credit history followed by a look at your accounts including assets and liabilities. No lender will give you a loan if you don't pass the credit check. VA has few, if any, assets that they can pledge to support a loan. Income is another meaningful item to clearly see how you can repay a loan over and above your existing commitments and so it goes on. A "Phoenix solution" after administration with fresh capital could be a solution. The Government is not the source of that capital otherwise every struggling business in Australia would be eligible!


ECAMACTIONSCOMPLETE 13th Apr 2020 02:13

If I go to the bank and ask for a $1 million dollar loan on my $500,000 house, Iíll be laughed out the door.

Thats essentially whst virgin are asking for ($1.4 billion loan with $700 million market value).

Des Dimona 13th Apr 2020 02:27


If I go to the bank and ask for a $1 million dollar loan on my $500,000 house, I’ll be laughed out the door.
Thats essentially what virgin are asking for ($1.4 billion loan with $700 million market value).
Also, just the "small" issue of debt servicing with little or no income - doesn't add up.

crosscutter 13th Apr 2020 02:28

Virgin have a market value around $700M. A request for double their market value might be framed a loan, but I’m afraid that’s where reality ends.

What is very real is industry job losses. It’s devastating and no one wants our colleagues and friends to suffer. So how should job losses be ‘allocated’ amongst the pilots? Should QAN and VAH share the load. Is that fair? I hope the government helps further to minimise the damage. Just don’t expect junior QF pilots to be jumping up and down with excitement as they lose their job for the good of duopolistic idealism. It’s not unreasonable self interest. It’s just a matter of either it’s you or me.

Finally, the situation isn’t playing into anyone’s hands. Not Alan’s or Paul’s or Tom, Dick or Harry’s. Everyone is playing the hand the situation has dealt. Survival hasn’t been secured by anyone. I do smile when some capitalistic heroes who have made their wealth crushing the competition, advise government a philanthropic holistic approach should be followed in our industry.

RodH 13th Apr 2020 02:30

Whether a loan is justified or not is not can be debated at a later date as the Airlines look like being subsidised for a limited operation at this time.
That may well be expanded but at least things look like starting up again before too much longer.
Great for passengers trying to get home from interstate and great for staff and businesses connected with the Airlines .
Indeed a small step but it’s a start.

Toruk Macto 13th Apr 2020 02:31

Quote:
If I go to the bank and ask for a $1 million dollar loan on my $500,000 house, Iíll be laughed out the door.
Thats essentially what virgin are asking for ($1.4 billion loan with $700 million market value).



Would you not first look at the $500 k house , see itís location , see if itís run down ? Could it be renovated into something that one day might be worth $5m ? Be a good loan to give if you look past the current state ?

The Bullwinkle 13th Apr 2020 02:49


Originally Posted by ECAMACTIONSCOMPLETE (Post 10748230)
If I go to the bank and ask for a $1 million dollar loan on my $500,000 house, Iíll be laughed out the door.

Thats essentially whst virgin are asking for ($1.4 billion loan with $700 million market value).

Either you've got a bad credit rating or you need to change banks!!!

ECAMACTIONSCOMPLETE 13th Apr 2020 02:51


Originally Posted by Toruk Macto (Post 10748241)

Would you not first look at the $500 k house , see itís location , see if itís run down ? Could it be renovated into something that one day might be worth $5m ? Be a good loan to give if you look past the current state ?

Well thatís the question the credit market seems to have answered.

Even Norwegian and Caribbean cruise lines have been able to obtain loans, whereas it seems virgins final roll of the dice is with the government, which also appears set to reject them.



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