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

B772 5th Apr 2020 06:14

It appears any pilots that have been working outside of Aust and released to return home may be in for an extended stay on our shores regardless of who they worked for. One friend at 56 years of age who went to China 4 years ago is concerned he may have operated his last flight.

ECAMACTIONSCOMPLETE 5th Apr 2020 06:35

https://mumbrella.com.au/virgin-aust...n-skies-623773

Full page ads in the paper today.

Brakerider 5th Apr 2020 07:01


Originally Posted by ECAMACTIONSCOMPLETE (Post 10739981)

What a waste of money. Money that could be better spent paying staff the entitlements they deserve.

Rashid Bacon 5th Apr 2020 07:25

QF does indeed need a challenger - it just may not be Virgin.

Would the Australian government be quietly sounding out with other parties the possibility of another startup if VAH is unable to continue trading.

It's pretty clear at this stage anyway, that there is little appetite for a commercial bailout of a single operator.

Lookleft 5th Apr 2020 07:25

They must be getting desperate They will discover what most of us who work in aviation already know, that the public really don't care about aviation especially at this time when no-one is flying anyway. I once heard the statement "The Australian public will demand their union pilots in the flightdeck" Turned out they couldn't care less then and they will care even less now. .

altocu 5th Apr 2020 07:33

"Danielle Keighery, Virgin Australia’s chief experience officer"...

There's part of the problem right there and not just at VA either.

chookcooker 5th Apr 2020 07:40


Originally Posted by ECAMACTIONSCOMPLETE (Post 10739981)

wow,
mumbrella.com!!

a news outlet that, on the scale of Wall Street journal to my woolies receipt, sits a lot closer to the latter than the former

Led Zeppelin 5th Apr 2020 07:41

Virgin will not be very high on people’s priorities as they come to terms with massive job losses and a deep recession a real possibility.

What a waste of money.

normanton 5th Apr 2020 08:00

Advertising when there is no flying, and they are short of money. Disaster. They need some administrators in there to save what they can of it.

krismiler 5th Apr 2020 08:06


If your airline survives and you keep your job your contract is not going to change.
You'll simply be handed another contract for your employment with the "new entity" airline which your old one becomes. As fewer pilots will be required employment will probably be offered based on seniority and they will simply move down the list if anyone refuses to sign. Unlike 1989, there won't be many opportunities available overseas, in fact Australian pilots will be forced to return home instead as foreign employers look after their own citizens first.


Pilot wages and conditions in this part of the world have rarely been dictated by supply and demand.
Wages have been kept high by the unions who will have little ability to dictate terms if airlines are nationalised under an emergency rescue plan. Public sympathy won't be forthcoming for "over paid bus drivers who only work twenty hours a week" when millions will be living hand to mouth on welfare. Realistically, if and when we return to work I wouldn't expect to be pulling in much more than about 75% of my previous income for quite a long time.

Major cost cutting will be the order of the day in all sectors of the economy, long haul flights and premium cabins will be the most affected for the airlines. There could be a possibility of Jetstar/Scoot B787s completely replacing the parent company's aircraft on certain routes which become unviable for the full service product, however at the moment you're far more secure on an A320/B737 which are much easier to fill and cost less to operate. Today's generation of narrow bodies are far more capable than those of previous years and could replace A330/B787s on many routes if the pax numbers aren't there. Airlines such as CX and SIA which are geared towards the premium end of the market will need to slash costs in a new era were price rather than service will be the deciding factor when buying a ticket.

The GA sector has been decimated so even a C402 job won't be an option.

SOPS 5th Apr 2020 08:08

Iím starting to smell desperation.

TimmyTee 5th Apr 2020 08:17


Originally Posted by longjohn (Post 10739859)
With due respect, bias, so long as its recognised, does not invalidate an argument.

Hahahaha, really?
Alright, hands up if you are a Qantas driver/employee!

Rashid Bacon 5th Apr 2020 08:34

Maybe the Chief Experience Officer needs to get a bit more experience before committing to such an expensive advertising flop. What a meaningless title.

Yes - Part of the problem at Virgin and elsewhere

2020Balance 5th Apr 2020 08:48

Only after they have paid us at tiger and VAINZ our redundancies. PS, SA, MF and all those top end bottom feeding grubs can line up behind the rest of us on the dole queue.

B772 5th Apr 2020 09:09

Paying for advertising to sway a decision is just a waste of money and effort. Another example of either the Virgin mindset or lack of business acumen by Paul Scurrah.

Paragraph377 5th Apr 2020 09:13


Originally Posted by Rashid Bacon (Post 10740059)
Maybe the Chief Experience Officer needs to get a bit more experience before committing to such an expensive advertising flop. What a meaningless title.

Yes - Part of the problem at Virgin and elsewhere

Almost as stupid as the title Ďspecialistí. Safety specialist, Training specialist, Market, Brand and Research specialist, Alliance specialist and so the nauseating list went on.......
What a load of fluffy wank and one of the reason they were in the shit financially - too many overrated, unnecessary or excess positions that did SFA. The Viallge Idiots and executive tossers fostered this stupid culture where mates were rewarded with Ďspecialistí roles and titles and paid to do jobs that were not necessary for the organisation. Far too many layers at VA.




Rabbitwear 5th Apr 2020 09:34

I think Air NZ will step into domestic Australia as they will have idle Aircraft and crew ready to go especially whilst International is off limits.

Ragnor 5th Apr 2020 09:38


Originally Posted by Rabbitwear (Post 10740098)
I think Air NZ will step into domestic Australia as they will have idle Aircraft and crew ready to go especially whilst International is off limits.

Air NZ are looking at redundancy already, donít think OZ domestic is in their sights yet! If we are not back flying by June, Australia could very well be served by QF and JQ domestically for a while.

neville_nobody 5th Apr 2020 09:47


Wages have been kept high by the unions who will have little ability to dictate terms if airlines are nationalised under an emergency rescue plan. Public sympathy won't be forthcoming for "over paid bus drivers who only work twenty hours a week" when millions will be living hand to mouth on welfare. Realistically, if and when we return to work I wouldn't expect to be pulling in much more than about 75% of my previous income for quite a long time.
I'd argue that Unions have actually kept wages down in this country through the seniority system. If you had a true theoretical open market on pilot's labour (which includes no collusion between airlines, or backroom deals between Regionals and major airlines) in the last 10 years then you would have had much higher salaries at Virgin and Jetstar and Rex. The fact that people were going overseas and doubling to tripling their salaries would indicate where the real market was at. Not to mention people moving to the USA to fly for Regionals.

However now without Union interference you would also have a much lower average salary. Especially so if VA go broke then you will have all the ex VA pilots, all the returned expats competing for very few jobs. I would argue that pilot unions have probably dampened the swings in the pure open market salary rather than increased them

markontop 5th Apr 2020 09:49

There you go playing with other people’s money.
Virgin flare!
How’s that turnaround restructure working - children?

unexplained blip 5th Apr 2020 09:51

ANZ have already demonstrated an interest in this particular market. The reality won't be revealed for a while yet. They smart enough to say nothing, do nothing, until if and when VA dissolves. The debt is not tasty.

Lapon 5th Apr 2020 09:56


You'll simply be handed another contract for your employment with the "new entity" airline which your old one becomes
If your airline survives and you hold onto your job you merely go back to onto your existing contract.

I dont think merely closing a solvent airline and making your employees redundant in order to re birth itself as doing the same thing with reduced T&Cs is that easy in this part of the world.

If it was Qantas would have already jumped at the opportunity during its 'terminal decline', or Air NZ after they went under following Ansett/9-11

Lapon 5th Apr 2020 10:00


ANZ have already demonstrated an interest in this particular market. The reality won't be revealed for a while yet. They smart enough to say nothing, do nothing, until if and when VA dissolves.
They have demonstrated an interest three times in as many decades, and each failed. They are smart enough to say nothing, do nothing and leave it that. They have just been bailed out again are making redundancies. Any desire for a fourth attempt will be tempered by the means to do so.

I would rather see VA continue and return as a simpler version of itself, which is where I think they were trying to head under thier new leadership.

markontop 5th Apr 2020 10:06

Solvent? That’s to be determined.
Also you cannot take a company dissolve it restart etc. It’s called phoenixing. If it worked everyone would be doing it.


B772 5th Apr 2020 10:10

Air New Zealand will dip their toe in the water with PER-MEL-AKL and v.v or similar.

Berealgetreal 5th Apr 2020 10:44


Originally Posted by PoppaJo (Post 10739893)
Due to large oversupply of flight crew for the rest of this decade, Air Asia and Lion would be able to get away with paying Right Seat 80k and Left Seat 150k. Those numbers are being generous also. They contract the entire ground crew, and the cabin crew to third party operators. They already have the large scale low priced Jet orders coming.

Spot on. Would make working at Jq look like a tropical holiday.

Progress Wanchai 5th Apr 2020 11:03


Originally Posted by Berealgetreal (Post 10738895)
You must be pretty confident the situation will resolve pretty shortly. What if it drags out and starts eating away at the QF reserves.

The government had all the information to close the borders and fumbled there way to where we are today.

Youíre happy with the actions of the government?

What I canít get my head around is front line QF staff wishing the failure of friends and former colleagues.

This raises the very issue. Qantas is undoubtably in financial trouble just as every airline is. Without question if the government nationalizes VA, then it will definitely nationalize a failing Qantas. Then what? A conservative government owns the only two airlines in the country all in the name of competition? Neither of which are operating at 100% capacity and neither are commercially attractive to investors.

The logical option in such a scenario is do what NZ did to Ansett and wash the taxpayers hands of the debt laden entity, while restructuring the major airline.

Then thereís the issue of supporting the tourism industry. The domestic tourism industry produces no income, it simply transfers money from one region to another. So Victorians stop surfing in Queensland. And Queenslanders stop seeing the fairy penguins. What eventually happens is people spend less money by staying in their own backyard and saving, which is eventually what the most personally indebted people on planet earth were going to have to do one day.
And thatís being kind. By paying the fuel suppliers, aircraft makers, etc a lot of money leaves Australiaís shores to support a domestic tourism sector.

As for international tourism, itís debatable whether Australia is a net importer or exporter of the tourism dollar. Most first world countries export tourism while third world countries import dollars from it. The exception being NZ which definitely imports more tourist dollars than it exports, hence the NZ governmentís constant support of its national carrier.

Slezy9 5th Apr 2020 19:26


Originally Posted by Lapon (Post 10740124)
They have demonstrated an interest three times in as many decades, and each failed. They are smart enough to say nothing, do nothing and leave it that. They have just been bailed out again are making redundancies. Any desire for a fourth attempt will be tempered by the means to do so.

Air NZ have not been bailed out, the government have offered a loan, which as of today they have not taken.

Berealgetreal 5th Apr 2020 21:06

How about the government stops pretending it knows the outcome or knows better on everything. Their arrogance is incredible.

The beauty of being an island is that we had the answers to the test before it started yet, they still pretended they didnít. Breathtaking arrogance. Anyone watch four corners coronavirus episode? It shows Lewis Hamilton talking in a press conference for the Formula 1 in Melbourne where he says something along the lines of ďI just canít believe we are still sitting here doing thisĒ. Or even better, the comments from the non government doctors interviewed.

Regardless of which uniform you wear, your government didnít perform and have now left all of us with our arses hanging out when it could have been so different.

Government and business has been more than happy to have its snout in the aviation trough for decades, maybe the wheel can turn for a year or so while Airlines get through the period.

Italy, after a terrible start have locked down 60 million people and itís showing some early results. Having said that, there is already talk of relaxing the measures as the citizens are growing tired of the restrictions. I hope it doesnít lead to round two for them. I also noted yesterday, the Chinese leaders wearing face masks despite saying its all fixed. Yeah right.

The sad truth is that it only takes one infected person to enter a country that has ďsolvedĒ the problem to start it all over again. Times have changed, until there is a vaccine. Even with a vaccine it takes time to distribute it and then there is the issue of either Antivax or inability or lack of carefactor to access the vax. I think International travel could be the ultimate victim of the virus.

What isnít widely known is that in some cases a recovery isnít really a recovery. Patients live but are left with scarring and reduced lung function for life. Thatís one has been kept quiet along with the percentages of young in ICU.

Dragun 5th Apr 2020 21:32


Originally Posted by markontop (Post 10740126)
Solvent? Thatís to be determined.
Also you cannot take a company dissolve it restart etc. Itís called phoenixing. If it worked everyone would be doing it.

Incorrect. Not all phoenixing is illegal, in fact it's a perfectly legal practice depending on the circumstance.

https://asic.gov.au/for-business/sma...enix-activity/

See half way down that page.

markontop 5th Apr 2020 21:59

Fair enough.
However your position on other people’s money? Correct or incorrect?

anawanahuanana 6th Apr 2020 01:17

I don't know why people are talking about the government nationalising VA. They have asked for a loan. You're blind if you can see the game QF are playing. It's exactly the same one British Airways are playing. Talk up the fact you don't need a govt loan. After all, the government can't pick winners and losers in this can they? Let your competition fold. Then go cap in hand to the govt for a bailout. They're now the only major airline left in the country. You think the govt won't then have to help them financially? And just like that, they've played the govt to pick a winner and a loser.

I fully agree that the way VA has been managed in the past (by JB et al) is utterly atrocious. However I really do feel like PS was taking the airline down the path it needed to travel to turn things around. The situation should be judged on how things are now, not the past. Otherwise we should refuse recently unemployed people the dole if they have made poor choices in their past lives, regardless of what changes they have since made. "Sorry madam. I know you've been working hard to pay off the debts you accumulated during your previous relationship with your abusive partner. We understand that you have become unemployed due to covid-19, through no fault of your own. But your ex built the debt in your name so why should the govt help you out? Best you file for bankruptcy..."

As for people moaning about govt bailout money being sent overseas to the foreign airline owners of VA. Well bearing in mind for the last however many years a load of foreign airline money has been invested in VA which has then flowed in to 10,000 Australian taxpayers and countless other suppliers to VA, hotels, car hire companies etc etc, all for no return to them, I don't think that argument holds much water.

The govt should offer VA a loan, with the option to take a stake in the company if not repaid as required.


krismiler 6th Apr 2020 01:18

Whilst I'm definitely not an expert on company insolvency, once an administrator is appointed all debts are put on hold and a creditors committee is formed. Those who are owed money get to decide if the company is wound up or if they will accept settlement of their accounts at X cents on the dollar and the business continues, usually in a restructured form. If the financial difficulties were the result of a one off event and the company is otherwise viable this might be acceptable to all concerned especially if future business would be important eg Boeing, whilst not in administration have their suppliers working with them as they simply can't afford an important customer to go broke. If there is little chance of the business returning to profitability then it gets wound up and creditors are paid out usually at a loss, from the proceeds of asset sales and anything in the bank.

Virgin have stopped the transfer of Velocity frequent flyer points to Singapore Airlines Kris miles and limited their use for purchase of gift cards to one per day. Those with longer memories might recall that Ansett Golden Wing members lost points worth around $700 million when the airline collapsed. It's similar to the foreign exchange market when traders get out of what they perceive as risky currencies and go for safe havens. Kris miles give access to the entire Star Alliance network and SIA are in receipt of a government bail out.

https://www.executivetraveller.com/n...ines-suspended

Virgin Australia has slammed on the brakes for Velocity Frequent Flyer members trying to transfer their points into the KrisFlyer scheme of partner Singapore Airlines.

Until earlier today, the partnership between Virgin and the Singaporean flag-carrier allowed the frequent flyer points of one airline to be converted into those of another, under an innovative arrangement launched in 2014.

However, the Points Transfer page on the Velocity website now carries a notice at "Velocity Frequent Flyer and Singapore KrisFlyer are temporarily suspending conversion of Points and Miles between the two programs. We're looking forward to providing you with this program feature once flight schedules return to normal."

The transfer facility opened the door for Virgin customers to obtain points-based award bookings and flight upgrades not only with Singapore Airlines but right across the Star Alliance with premium partners such as ANA, Lufthansa, Swiss and Thai Airways.

However, recent speculation on the fate of Virgin should the coronavirus crisis extend beyond six months may have sparked a rush to convert the airline's Velocity points to the perceived safer haven of Singapore Airlines.

Gift card transfers also limited

Less than 24 hours ago, Virgin clamped down on using Velocity points to purchase a gift card valid at major retail outlets, imposing a limit of one gift card per day.

The gift cards sell for between 3,000 and 35,000 Velocity points, with a redemption value of between $10 and $200 across some two dozen partners including Apple, David Jones, Dymocks, Endota Spa, JB Hi-Fi, The Iconic, Rebel Sports, Ticketmaster and Westfield shopping centres.

While gift cards don't represent the best value for Velocity points, they retain their value for upwards of a year and can be used to purchase goods on sale, which can increase the effective overall value of the Velocity points used to buy the card.

A six-month deadline?

Earlier this week, Virgin Australia confirmed it has approached the Federal Government for a $1.4 billion bailout in order to survive a prolonged coronavirus grounding.

The airline is said to have sufficient cash at hand to weather up to six months in the current COVID-19 lockdown scenario, which has gutted the travel market, with Virgin Australia CEO Paul Scurrah saying the airline was asking for "temporary support, not a handout."

"We want to work with government on how best to design this but it will be a repayable loan," he told ABC Radio. It's reported that if the airline was unable to repay the loan in full within two to three years, the government would take an equity stake in the company.

However, Deputy Prime Minister and Transport Minister Michael McCormack maintains Virgin Australia will not receive any special treatment.

"Whatever we do for Virgin we are going to have to do for other companies as well. We can’t just pick and select individuals and winners out of this," McCormack said, adding that Virgin should consider raising capital from its existing shareholders, which includes Singapore Airlines and Etihad Airways.

Dragun 6th Apr 2020 01:54


Originally Posted by markontop (Post 10738869)
I would say that post Carona there will be no need for the capacity from pre Carona from even one airline.
QF will have way more aeroplanes than the market needs.
Other peopleís money;
Creditors (please help, national interest, keeping the air fair- twenty years old now)
Tax payers (that would be Airnav charges)
Staff (leave without pay, that would be yours)
Playing would be the newspaper ads.
Finally do VA have the money to last for how long?

Sorry mate, totally missed this reply. Thanks for clarifying. I do somewhat understand the thinking in a roundabout way but in reality, engaging with any business as either a consumer, employer or creditor, you're taking a risk they won't collapse before the service is provided. For example, when you purchase a ticket to a football game, you assume the institution will be viable by the time the date of the game comes around. As a creditor, generally you provide a product or service and send an invoice for post-payment. Obviously there are plenty of examples like this as essentially all businesses work this way, even in the very short term (pay for a property report online and hope it lands in your inbox within 5 min for example). If this is playing with other people's money, then yes, sure. However, I think it's fair to say that it's the way free market capitalism works overall. We would have a very different system if it didn't.

I'd like to make another point for those reading and citing Virgin's losses over X amount of years as a reason not to bail them out. For essentially any business to grow, it's very hard not to operate at a loss during this growth - it's common, almost necessary and well accepted. This is why loss making businesses have value and why people continue to invest in loss making businesses (contrary to those asking why would anyone do it). This is because provided revenue is increasing, the business will reach a point where it transitions. This was happening at VA right before this mess and here are the numbers to demonstrate why:

1. Qantas - since 2008 on a total revenue of $168b, with a profit of $2.1b The dominant market player, over the twice the size of VA). Revenue since 2008 has increased by 15%
2. In the same period, VA has grown revenue by 135%.

The reality is that QF has barely grown while VA has had massive growth and I can tell you first hand that growth of a business costs money, and lots of it! Successfully managing the transition from growth to stabilization (breaking even then turning a profit) is where the management comes in and what PS was well on his way to doing this. Once again, very normal and generally part of a plan. Has VA perfectly managed the situation and made all the right moves and decisions? Probably not! However for anyone reading their balance sheets watching the cash balance steadily increase and observing the statutory vs underlying figures, it was reasonably clear on why the shareholders were not kicking up a big fuss.

Buster Hyman 6th Apr 2020 02:09


Originally Posted by altocu (Post 10740024)
"Danielle Keighery, Virgin Australiaís chief experience officer"...

There's part of the problem right there and not just at VA either.

Ahh, but when she writes her resume', she can put down CEO at Virgin Australia! :ok:

longjohn 6th Apr 2020 02:16


Originally Posted by Dragun (Post 10740846)
This was happening at VA right before this mess and here are the numbers to demonstrate why:

1. Qantas - since 2008 on a total revenue of $168b, with a profit of $2.1b The dominant market player, over the twice the size of VA). Revenue since 2008 has increased by 15%
2. In the same period, VA has grown revenue by 135%.

The reality is that QF has barely grown while VA has had massive growth and I can tell you first hand that growth of a business costs money, and lots of it! Successfully managing the transition from growth to stabilization (breaking even then turning a profit) is where the management comes in and what PS was well on his way to doing this. Once again, very normal and generally part of a plan. Has VA perfectly managed the situation and made all the right moves and decisions? Probably not! However for anyone reading their balance sheets watching the cash balance steadily increase and observing the statutory vs underlying figures, it was reasonably clear on why the shareholders were not kicking up a big fuss.

I see this from a quite different perspective.

VA, initially under BG and then accelerated under JB, has bought market share. Yes, you are correct, it costs a lot of money to buy market share.

Meanwhile, whilst VAH were booking massive losses as they bought market share (especially premium / corporate), QF were still maintaining profitability (FY13 excepted).

Clearly this strategy has failed.

Why should the Australian taxpayer fund VAís failure?

Lapon 6th Apr 2020 02:27


Originally Posted by longjohn (Post 10740857)
I see this from a quite different perspective.

VA, initially under BG and then accelerated under JB, has bought market share. Yes, you are correct, it costs a lot of money to buy market share.

Meanwhile, whilst VAH were booking massive losses as they bought market share (especially premium / corporate), QF were still maintaining profitability (FY13 excepted).

Clearly this strategy has failed.

Why should the Australian taxpayer fund VAís failure?

That depends whether you consider the $1.4B to be a funding of thier past failures, or funding of thier future prospects.
The past is in past, and I believe their future prospects were comparatively bright before the the goverment enforced lockdowns.

Why should the taxpayer fund a bailout? Because they will benefit more than it will cost (individual opinions will vary).


ECAMACTIONSCOMPLETE 6th Apr 2020 02:33


Originally Posted by Buster Hyman (Post 10740855)
Ahh, but when she writes her resume', she can put down CEO at Virgin Australia! :ok:

would you really want CEO of Virgin Australia on your resume? Nothing to be too proud of about that

Buster Hyman 6th Apr 2020 02:51


Originally Posted by ECAMACTIONSCOMPLETE (Post 10740865)
would you really want CEO of Virgin Australia on your resume? Nothing to be too proud of about that

They don't generally pay for their mistakes career wise so sure, why not?

Dragun 6th Apr 2020 03:18

Anyway, I think we're on a roundabout with this now. No hard feelings either way from me and there's been some good input and some questionable input, but at the end of the day it's out of any of our hands. There are lot of jobs at stake and the whole country is hurting right now. Whichever way it goes, let's hope the outcome is as positive as possible.

Cheers guys.


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