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

RodH 14th Apr 2020 02:29

Looks like we are in for a long wait before we hear anything.
When we eventually hear let’s hope there’s some good news for VA , it’s employees and the travelling public.
“ Stay around Virgin, we need you “

wheels_down 14th Apr 2020 02:30

If the Government does not come to the party, what is next? Probably 800m left.

Can they position toward a Domestic only operation with 40-50 737s? With the cash that they still have.

normanton 14th Apr 2020 02:46

Hopefully something comes good of it.

Double_Clutch 14th Apr 2020 04:42


Originally Posted by Toruk Macto (Post 10749185)
Good luck to Virgin employees today .

Whats happening today for the employees @ VA?

wheels_down 14th Apr 2020 05:01


Originally Posted by Double_Clutch (Post 10749277)
Whats happening today for the employees @ VA?

Well if they possibly have a job or not?

Government Support = Continued Operations
No Support = File for Administration

DanV2 14th Apr 2020 05:05

VA basically just told their shareholders, you can either cough up or we'll either take the debt restructure option and/or send the joint into "voluntary administration".

Either way, whatever the path VA takes, the shareholders will have the stakes diluted either way. SQ, EY, HNA et al will get "sacked" from their roles as shareholders if VA files voluntary administration.

https://www.news.com.au/travel/trave...adf77c1a5f7d92

machtuk 14th Apr 2020 05:11


Originally Posted by Toruk Macto (Post 10749185)
Good luck to Virgin employees today .

DITO.....all the best guys/gals -:)

The Bullwinkle 14th Apr 2020 05:14


VA basically just told their shareholders, you can either cough up or we'll either take the debt restructure option and/or send the joint into "voluntary administration".
Is that what actually happened?

Buster Hyman 14th Apr 2020 05:42

Can't see Administration helping them, just like '01, the industry is in turmoil & it's no time to invest in airlines.

krismiler 14th Apr 2020 06:18

If Virgin does go into administration it gets instant protection from creditors and if there is $800 million or so in the bank that should allow for a period of operation whilst the future is worked out. The administrators won't allow it to run at a loss so basically it will just be the peak hour flights between main centres with the dear tickets that continue. Every employee's job gets looked at and those deemed unnecessary are laid off. Costs are ruthlessly cut as the administrators are on the hook for every debt incurred by the company once they take over, if there isn't enough in the kitty it will be down to them to pay the bill themselves.

The administrators run the show and the creditors will make the final decision. I previously worked for a company which went into administration and can still remember walking into the GM's office and finding him sitting at a small table in the corner whilst the new appointee made himself comfortable behind the main desk.

During this period a creditors committee is formed and they get to decide what happens. Basically the two options on offer are:

1. Wind things up, sell off the assets and get back a percentage of what's owed.

2. Restructure the company so it's profitable which generally involves cutting out loss making areas and reducing staff numbers. Also debts are examined and proposals made which involve writing off a percentage of what's owed and/or more favourable terms for the balance, eg write off 20% of the debt, defer payments for a year and extend the repayment period with a lower interest rate. This is a very good time for a potential purchaser to come in as all the difficult work has been done and they are seen as a saviour, backs are up against the wall and substantial losses or redundancies are the next step. Negotiations are very one sided to say the least as they only need to pay the creditors a bit more than they would receive in a fire sale, and can take on the employees they want on the terms they want.

The purchaser gets to take over a company which is restructured into going concern on their terms, rather than moving in early, being liable for debts and having to negotiate with the unions.

halas 14th Apr 2020 06:33

Krismiler. You forgot to mention that the administrator pays themselves first. Handsomely.

halas

wheels_down 14th Apr 2020 07:25

It’s hard to see where this is going.

The Treasurer just now spoke that they (airlines) need to speak to specific shareholders about its financial needs.

But then these comments that popped up today around the debt/equity, reeks of a deal being done in some form.

Etihad won’t chip in a cent. I mean they will just dispose of the stake, won’t mean much to them, past management errors.

PS is a finance man inside out. If the numbers don’t align he won’t drag it on. He will make the closedown call fairly quickly.

It seems it’s up to Singapore. The silence in their involvement in the last few years is the problem.

Toruk Macto 14th Apr 2020 08:14

Would have been a nice project for someone over Easter , talking to the Emirates , Beijing and Singaporeans , asking for more money or walk away from their investment.

blubak 14th Apr 2020 08:14


Originally Posted by Toruk Macto (Post 10749185)
Good luck to Virgin employees today .

Couldnt agree more,its so sad for all that turn up & give their all every day to keep this airline going.
Shame on the majority shareholders who now are in hiding & basically hiding from their responsibilities after stripping every $ out of the company & now crying poor.


krismiler 14th Apr 2020 08:32


Krismiler. You forgot to mention that the administrator pays themselves first. Handsomely.
KordaMentha did pretty well out of Ansett and certainly strung the process out long enough. Administrators fees make lawyers jealous, and even secretarial staff are charged out at hourly rates approaching a Captain's overtime pay. With $700-800 million in the bank and the creditors behind a wall, the administrators would have a fair bit of working capital to play with and not have to worry about loans or asset sales to keep things going. Potential investors might be waiting for a restructure in their favour before committing any money.




DanV2 14th Apr 2020 08:37

Virgin Australia considers going into administration as Labor calls for government rescue

The grounded airline is in a trading halt after hiring insolvency and turnaround experts amid the coronavirus crisis



It is believed administration, under which control of the company would be handed to insolvency experts, is at one end of the range of options being considered by Virgin Australia.

Administrators have powers not available to company directors, including the ability to force all creditors to take a haircut under a deed of company arrangement. Administrators are also able to disclaim uneconomic contracts, freeing the company from onerous obligations.

To succeed, a deed of company arrangement requires support from half the creditors, by number and amount owed.


Source: https://www.theguardian.com/business...ernment-rescue

virginexcess 14th Apr 2020 09:06


Originally Posted by blubak (Post 10749395)
Couldnt agree more,its so sad for all that turn up & give their all every day to keep this airline going.
Shame on the majority shareholders who now are in hiding & basically hiding from their responsibilities after stripping every $ out of the company & now crying poor.

The only person that ‘stripped’ anything out of this airline is John Borghetti. His major skillset was facillitating the transfer of large sums of money from gullible investors into his pockets.

DanV2 14th Apr 2020 09:15


Originally Posted by virginexcess (Post 10749444)
The only person that ‘stripped’ anything out of this airline is John Borghetti. His major skillset was facillitating the transfer of large sums of money from gullible investors into his pockets.

Hogan (EY) and SQ are just as responsible for being "yes" men to JB's CapEx spending, even rolling in the money themselves willingly for little return.

The then-management of EY and SQ are now gone (IIRC Hogan jumped before he got pushed from the EY job), and the current management of both entities could not care less about VA thse days as they shore up their own balance sheets.

EY and SQ both have a dismal record at overseas investments, so why people still consider SIA as a "so-called saviour" for airlines despite SQ's mediocre record overall is beyond me.

T-Vasis 14th Apr 2020 09:41

Of the atrocious $5b debt that VA carries - $3b is secured to aircraft and $2b is secured to bonds. VA's current market cap. is ~$700m. A pittance. They're currently in talks with their 'shareholders'. They better get some cashola out of this - otherwise, they're toast. Simple as that.

Double_Clutch 14th Apr 2020 10:34

Has the board reduced their pay further for the foreseeable future?

Last I hear was a 15% reduction but given what is transpiring, wouldn’t a larger sacrifice be forthcoming?


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