Other Post ... Virgin Australia

[colin traveller]

Has gone into Administration


whilst its super rich shareholders let it sank ....

To view this content we will need your consent to set third party cookies.
For more detailed information, see our cookies page.

Accept third party cookies

 

[Flagg]

I’m not sure Richard Branson so much let it sink than scramble to avoid having the entire business network drown.

With the sole exception of Virgin Care, every single business unit in Virgin Group is massively vulnerable to COVID-19.

Every.

Single.

Business.

Unit.

ALL of them are effectively shut down, or at minimum, dramatically hindered.

All of their costs remain, but with none of the revenue and cashflow.

On top of that, Virgin Voyagers is just about ready to launch with brand new cruise ships targeting Millenials using another $2 billion in debt load with zero cashflow.

Branson is probably the worst positioned high profile paper billionaire on the planet.

It’s unknown how interlinked all the companies in the group are in terms of banking covenants as well as Branson’s personal holdings.

But I think it’s very safe to say Richard Branson is a hipper, more successful version of Donald Trump with similar business veneers.

I would guess Branson needs $500m+ cash a month just to keep the lights on, possibly as much as $1bIllion a month depending on creditors and bank loans.

Every month.

Branson has very little liquidity

I don’t see his business units recovering quickly.

I suspect Virgin Group could be one of the first high profile casualties of this crisis.

I’d guess 75-80% risk of total failure.

 

[Gaz]

^^ Don't doubt anything you just said there but my understanding is that Virgin Group are actually the smallest shareholder in Virgin Australia with about 10%. The rest is about equal between Singapore Airlines, Etihad, HNA and Nanshan who are presumably all facing the same crappy conditions affecting Virgin Australia with their own airlines in their own countries so I guess any kind of lifeline from them is also unlikely.

 

[Flagg]

^^ Don't doubt anything you just said there but my understanding is that Virgin Group are actually the smallest shareholder in Virgin Australia with about 10%. The rest is about equal between Singapore Airlines, Etihad, HNA and Nanshan who are presumably all facing the same crappy conditions affecting Virgin Australia with their own airlines in their own countries so I guess any kind of lifeline from them is also unlikely.

I reckon Virgin Australia is just the start.

 

[colin traveller]

One of the Shareholders of V.A H.N.A Airlines [ HNA Group ] is reportedly going to be taken over by the Chinese Goverment which they intend to sell off all the Airline assets . HNA Group owns and they also have a 25% stake in the Hilton Group .

And Etihad isn't short of money as they are owned by the ruling family of Abu dhabi ..people like that happily sit back take there cut of the profits .. but when money is needed .. they won't cough up ..


And as for Virgin cruises .. i can't see that lasting . And the review they got on youtube .. by a traveller that took her 15 mins to find the light switch that was in the wardrobe .

 

[Gaz]

I reckon Virgin Australia is just the start.

Yep - and I don't imagine the knock on effects to smaller companies will be pleasant either. The cleaners that service the aircraft.. the catering company that supply the meals... the car rental desk in the airport..., the vending machine supplier in the empty airport hotels... The cleaning equipment supplier to the closed airport bars...

 

[Euroamerican]

Don't forget the guy who makes the deliveries of the urinal cakes!

 

[Connaught Ranger]

So finally, the Virgin has had her cherry popped!

 

[Flagg]

Yep - and I don't imagine the knock on effects to smaller companies will be pleasant either. The cleaners that service the aircraft.. the catering company that supply the meals... the car rental desk in the airport..., the vending machine supplier in the empty airport hotels... The cleaning equipment supplier to the closed airport bars...

It’s going to get worse before it gets better.

Velocity of decision making was(and remains) critical.

In a number of respects, we’ve been too slow.

And western economies have been focused too much on efficiency and not enough on adaptability.

The lockdown is easy.

The hard part is jump starting the economy, reinforcing success, and amputating failure as quickly as possible.

To be honest, there was a big chunk of western economies only marginally alive.

CV19 may have technically killed them, but only like a 96 year old dying of cancer gets hit and killed by a cement truck.

A lot of this is inevitable.

It’s kind of like hitting the fast forward button on an old VCR, for vulnerable lives and vulnerable businesses.

The good news is 2nd hand Gulfstream GIV will be the cheapest ever to buy, fly, and fill with hookers.

Cash is king.

 

[colin traveller]

It does beg the question why put money into flybe .. when V.A was going the same way . They surely had to have financial issues long before .. Chinese virus played havoc

 

[Flagg]

It does beg the question why put money into flybe .. when V.A was going the same way . They surely had to have financial issues long before .. Chinese virus played havoc

”The best way to make a small fortune in the airline industry is to start with a large one. “

Some airlines have defensible business models and/or franchises(monopoly routes).

Others are just marginal and mediocre.

Right now would be a good time to own a desert aircraft parking lot and storage service.

 

[digrar]

^^ Don't doubt anything you just said there but my understanding is that Virgin Group are actually the smallest shareholder in Virgin Australia with about 10%. The rest is about equal between Singapore Airlines, Etihad, HNA and Nanshan who are presumably all facing the same crappy conditions affecting Virgin Australia with their own airlines in their own countries so I guess any kind of lifeline from them is also unlikely.

The other 9 or 10% is Australian share holders.

Australia is about ready to let them sink, it's only the 15000-16000 staff and contractors, those share holders and the unwelcome prospect of a Qantas monopoly that are eliciting any charitable feelings towards them.

 

[Gaz]

^^ Completely understandable - I wouldn't particularly want my country offering a bailout to a company where 90% of the ownership is paying taxes to another countries government.

 

[colin traveller]

There is posts by Virgin employee's defending Branson of opinions people have said about him .. but they have stopped short of mentioning anything with regards to the collapse of the Australian side of the Airline .

 

[colin traveller]

It seems Virgin Atlantic will go the same way .. Delta can't inject cash

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=23&cad=rja&uact=8&ved=2ahUKEwjKgaHI2v7oAhWqQkEAHapoCoIQ0PADMBZ6BAgIEAk&url=https%3A%2F%2Fwww.telegraph.co.uk%2Fbusiness%2F2020%2F04%2F22%2Fvirgin-atlantic-left-fighting-survival-delta-snubs-rescue%2F&usg=AOvVaw3afzGKkWpuUzzFZaGN_Ur8

 

[Euroamerican]

He can sell his island.... ;-)

 

[Junglejim]

The first of many to come.... the golden age of travel has returned. Along with the high price of airfares.
This pandemic will kill off most budget airlines.

 

[digrar]

Bain Capital To Take Over Virgin Australia

Bain Capital is expected to take over Virgin Australia. What does this mean for the future of the airline?

onemileatatime.com

Bain Capital To Take Over Virgin Australia
JUNE 26, 2020 BY BEN 18
VIRGIN AUSTRALIA

In April Virgin Australia entered voluntary administration, after the carrier’s request for government aid was denied.
At the beginning of the month potential buyers for Virgin Australia were narrowed down to Bain Capital and Cyrus Capital Partners. Well, Cyrus Capital Partners has withdrawn from the process due to a “lack of engagement,” claiming that Deloitte (the administrators) stopped returning phone calls and emails. This leaves Bain Capital as Virgin Australia’s prospective buyer.
In this post:

• Bain Capital to take over Virgin Australia
• What will Virgin Australia look like with Bain?
• Bottom line

Bain Capital to take over Virgin Australia
Deloitte has entered into a sale and implementation deed with US private equity firm Bain Capital to sell and recapitalize Virgin Australia. The parties are now working closely together on their vision for the business moving forward.
At this point no return is expected for shareholders, and it’s not yet known how much of a return creditors will get. Soon there’s going to be a key meeting with creditors, who are owed billions of dollars and may want to see that debt converted into equity.

Bain Capital says it’s committed to preserving as many jobs as possible, honoring previous tickets, and to see Australians have access to competitive, viable aviation services for the long term.
As Virgin Australia CEO, Paul Scurrah, describes the development:

“This is a great day for Virgin Australia and a huge milestone as we move forward with Bain Capital.
Bain Capital has spent many hours over the past weeks speaking to us and getting a deep understanding of our business and working to secure a deal with our administrators. We know they are committed to investing in the airline and we are thrilled to be working with them into the future.
It was always the goal to bring our airline out of administration as quickly as possible in a stronger financial position and this announcement brings us a step closer to that. Bain’s investment will cement our future as a major Australian carrier, secure thousands of direct and indirect jobs, and ensure we can continue to bring competition to millions of customers for many years to come.”

What will Virgin Australia look like with Bain?
Bain Capital’s vision is for the new Virgin Australia to be more of a mid-market airline that focuses on its core strengths, with a smaller and simpler fleet. That means the carrier’s primary focus will be on domestic flying, with international flying possibly being limited to New Zealand and other nearby South Pacific islands.

While no final decision has been made, we could see Virgin Australia discontinue long haul flights as a result of this, at least over the coming years. Bain Capital isn’t completely opposed to Virgin Australia offering long haul service down the road, but that doesn’t seem like a priority.
In a way the intent almost seems to be for the airline to come full circle. When the airline first launched in 2000 it was known as Virgin Blue, and was a low cost carrier primarily serving domestic routes. Then it was rebranded as Virgin Australia, the airline became more premium, and long haul service became a priority.
To me the vision for the new Virgin Australia sounds more like Virgin Blue than Virgin Australia, though perhaps not as low cost.

It’s worth noting that this would be a huge blow for Delta. Delta and Virgin Australia have a transpacific joint venture, and that becomes significantly less useful without Virgin Australia operating any transpacific flights.

Bottom line
With Cyrus Capital Partners withdrawing interest, Bain Capital is left as the only potential buyer of Virgin Australia. On the one hand, I’m happy that Virgin Australia has a path forward. On the other hand, I’m kind of sad that Bain Capital is the winner here, given the company’s vision for Virgin Australia.
I get that might just make the most financial sense, but it’ll be sad if Australia goes down to having just one long haul full service airline.
Regardless, this ownership structure seems significantly simpler than Virgin Australia’s current mess, as Etihad Airways, HNA Group, and Singapore Airlines, all own about 20% of the airline.
What do you make of Bain Capital’s potential takeover of Virgin Australia?

 

[BCNTM]

two words I thought I would never see in a heading