Virgin Trading Halt

Discussion in 'Markets & Economies' started by 66rounds, Apr 14, 2020.

  1. Ag bullet

    Ag bullet Well-Known Member

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    I can see it now...... qantas only domestic market.

    get your $800 brisbane to sydney deal now!!!!
     
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  2. wrcmad

    wrcmad Well-Known Member Silver Stacker

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    Jetstar aren't going anywhere, and bogans won't pay that much, so there is no way IMHO.
     
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  3. Ag bullet

    Ag bullet Well-Known Member

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    hope so
     
  4. Oddjob

    Oddjob Well-Known Member Silver Stacker

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    Refer Ipv6Ready's (re SP Airlines) post plus Air New Zealand was nationalised by the the NZ Govt in Oct 2001, so doing it again in need (given Air NZ is the only NZ carrier) is certainly not out of the question...and given the NZ Govt lent Air NZ NZD900m in March to keep the lights on...if the Air NZ / nee the NZ Govt was offered the second Australian slot (if Virgin Australia fail), I think both Air NZ and the NZ Govt would jump at it for the right knock down price & reduced debt load....that said the NZ Govt and Air NZ still have bad memories of buying the majority share in Ansett in 2000, only to cut it loose in 2001. Note: The NZ Govt bail out price of Air NZ in 2001 was circa 30% more than what Air NZ paid for majority control in 2000.
     
  5. Holdfast

    Holdfast Well-Known Member Silver Stacker

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  6. 66rounds

    66rounds Well-Known Member Silver Stacker

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  7. Oddjob

    Oddjob Well-Known Member Silver Stacker

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    Well, looks like Morrison blinked / partially caved in.

    https://www.smh.com.au/business/com...-backed-domestic-network-20200416-p54kk8.html

    Qantas and Virgin Australia to fly government-backed domestic network
    Patrick Hatch
    April 16, 2020 — 9.00pm

    The federal government will cover the cost of Qantas and Virgin Australia operating domestic flights on a limited network to maintain air connections between capital and regional cities, following sharp cuts to their networks amid the coronavirus lockdown.

    Transport minister Michael McCormack said on Thursday night that an initial $165 million package would underwrite flights to all capital cities and regional centres including Albury, Alice Springs, Coffs Harbour, Dubbo, Kalgoorlie, Mildura, Port Lincoln, Rockhampton, Tamworth, Townsville and Wagga Wagga.

    [​IMG]
    Planes have been grounded at airports around Australia due to travel bans and border closures.Credit:Wolter Peeters

    "We are ensuring secure and affordable access for passengers who need to travel... as well as supporting the movement of essential freight such as critical medicine and personal protective equipment," Mr McCormack said.

    He said the network also ensured repatriated Australians can get to their home city after spending the mandatory 14 days in quarantine in the city they fly into.

    The airlines will charge passengers for tickets on the flights and the government will cover any losses they incur on the services. The network will be reviewed after eight weeks.

    Virgin said the plan would see it operate 64 services each week, starting Friday, and allow some of its 8000 stood down employees to return to work. Qantas' network will increase from 105 flights per week to 164 flights each week.

    The announcement comes after Virgin last week grounded all domestic flying except for a single Sydney to Melbourne return service operating six days a week. Qantas and its budget offshoot Jetstar were flying to each capital city but at a significantly reduced frequency. Its Sydney-Melbourne service had dropped to five times a week compared to 50 times a day before the pandemic took hold.

    Amid a growing debate over government intervention in the hard-hit aviation industry, Mr McCormack said the investment to support a minimum network showed the government was commitment to maintaining connectivity during the health crisis.

    Labor has been pushing government to step in to save Virgin Australia from collapsing. The country's number-two carrier have asked for a $1.4 billion loan to see it through the crisis, as it tries to restructure its crushing $5 billion debt.

    The federal government has instead announced a $715 million worth of waived fees and levies for airlines. However, with carriers doing little flying it is not clear how much benefit that will deliver. Government has also pledged another $300 million to support regional air services.
     
  8. 66rounds

    66rounds Well-Known Member Silver Stacker

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    Just announced voluntary administration
     
  9. sammysilver

    sammysilver Well-Known Member Silver Stacker

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    If I were to buy it, I'd run on the Jetstar model plus Brisbane/Melbourne/Sydney and get rid of business class and the lounges. Mean and lean like the original Virgin Blue.
     
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  10. sammysilver

    sammysilver Well-Known Member Silver Stacker

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    Word on the street is that the Ruby Princess has offered to buy Virgin!
     
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  11. Oddjob

    Oddjob Well-Known Member Silver Stacker

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    Lets see if the bank's / plane leasing companies decide to :

    1) take a debt haircut under a Deed of Company Arrangement (DOCA) and keep Virgin flying (for lack of a better term at present) under existing mgmt, or

    2) take the full loss now and call in the liquidator to break up / liquidate Virgin in the hope of some form of return to creditors over time...a very long time (note: not sure who is and isn't a secured v unsecured creditor apart from thee aircraft leasing companies), or

    3) Agree to a "debt for equity swap"....(maybe with some Govt working capital loans??).

    In this current and foreseeable economic climate, there's not much value in calling in the liquidator as the asset values of Virgin (and other airlines globally) would be severely depressed if not near zero. So that kinda leaves the banks / leasing companies in a bind....take the full loss to balance sheet now and wind up Virgin with no real potential for any returns or do what bankers in Australia generally don't do and become equity holders.

    Back in 2001 Pasminco got itself into a world of pain due to low gold / commodity prices, way out of the money FX and gold hedges, high debt levels and just plain old bad management. In late 2001, Pasminco called in the administrators and owed it's banks / financiers circa AUD3.0bn across various debt / financial markets products. Usually a bank would write off their loss and move on but for those who remember, the banking / finance syndicate of 30+ banks did a debt for equity swap (I suspect given the commodity prices at the time put a depressed value on Pasminco assets...not dissimilar to Virgin's position today)

    I can see a "Pasminco" coming on re how the financers to Virgin will act. Not much of a choice for them anyway now. If some of those older bankers from Pasminco days are around they'll remember that the bank's made a decent profit in the end by agreeing to a debt for equity swap and holding that equity for a while. When Pasminco was re-constituted as Zinifex and IPO'ed on the ASX in 2004, the share price in April 2004 was AUD1.80 and rose to over AUD18.00 in December 2006 due to a better corporate operating structure and firmer commodity prices.

    As an aside, as a debt for equity swap would effectively wipe out existing shareholders....can't see a foreign entity buying into an Australian airline for years to come given the Govt didn't step in to save Virgin. Also, if Branson losses his equity in Virgin Australia, there's the chance that Branson won't re-licence the Virgin brand to the new entity or being the businessman charges a damn sight more than what he lost for a renewed "Virgin" brand license.
     
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  12. openeyes

    openeyes Well-Known Member Silver Stacker

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    The issue that Virgin has is the business model they have been running.

    It has operated as a distribution network for international airlines like Singapore Air. As such these partners/owners have never wanted a profitable airline. That was never going to work long term. As sammysilver mentioned they need to go back to their old roots of VirginBlue which was profitable as a low cost airline.

    So unless they can remodel the business then there will be no future success and we the Australian public will be the losers as there will be less competition. Having said that there is clearly too much competition as airline businesses must make profits to survive long term. It is in no ones interest for these airlines to run at a loss.
     
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  13. bubblebobble2

    bubblebobble2 Well-Known Member Silver Stacker

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    another poor [email protected]@rd! Where will he put all the virgins after the banks take his Island when the airline gone bust?

    "Branson, who has already pumped $US250 million ($391m) into Virgin Group companies in response to the pandemic, said he would offer his Necker Island estate in the Caribbean as collateral "to raise as much money against the island as possible to save as many jobs as possible around the group.""
     
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  14. sammysilver

    sammysilver Well-Known Member Silver Stacker

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    Where the airlines, including Virgin became unstuck were the billions of dollars in pre-bookings. No idea of the numbers but say 20 booked to every one flying. Those payed bookings hid a lot of sins, and that cash-flow is worth buying into.

    An investment firm buys in on a leveraged billion dollars. After the virus bookings build up, pay back the borrowed billion, go public and pocket another billion and leave the shit fight to the investors. A bit like the Dick Smith model. Perhaps the Stackeratti can self fund this model. I'll recruit the hosties and Julie can have the stewards, Shiney can be in charge of public relations.
     
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