Finding a buyer for Virgin Australia is a job worth $30 million

The vultures are circling the carcass. Perth Airport have seized Virgin Aircraft. Virgin have been collecting fees from passengers in their ticketing and not passing the fee on ..... what a surprise. No doubt the fanatics on this site will keep defending them blindly but they cannot escape the fact that Virgin have taken the award of the worst run airline in Australian Aviation history and as the administrators keep uncovering things it is only going to get worse ... I hope at least the employees gets paid their entitlements when this airline is put to rest.

And the point of this comment Mitch is what? I do recall Qantas anda plane impounded in Canberra no? There was some media articles with Qantas refusing to pay suppliers and airports to preserve cash flow recently. I do hope Virgin relaunches and is successful with large cost advantages and maintains a fantastic product - including best business seat and best staff, service, including best Cabin crew.

If you believe predatory behaviour and bullying during a pandemic whilst a competitor is down, will be rewarded by the Australian public please continue, I believe the contrary will happen and Australia's don't like to see that behaviour, and it will backfire.

Mitch, Qantas is now $6-$7 billion in debt too. They won't be making as much profit for a while, with 40% of their profit coming from international services. With no government funding, they too will require to take another $1 billion loan in 2 months (like they did recently) as their fixed costs equate to over $400 million a month.

If Virgin Australia manage to successfully restructure their debt and move forward, hopefully they're run better and become a profitable operation. With at least 12 buyers showing interest, it's clear it has the potential to operate profitably, but its current debt structure was killing it.

Mitch, creditors are a normal part of business. Qantas would have in excess of 35,000 creditors likely. Most of these numbers, and the numbers you quoted, are staff.

@Steve24

The big difference between VA having a 7b debt and QF having a 6-7b debt is that QF have made approximately 8b profit in about the last 5-6 years, where as VA have miserably failed at every turn. How many of those “saviours' will abandon VA when the full extent of how bad VA are is fully revealed.

And it gets worse - Virgin tapped the trust that runs the Velocity program as a separate business entity for a $200m loan and the administrators have concerns just how much cash that program has ..... if you have a lot of Velocity points they are probably not going to get you what you thought they were now if you see any value at all. As each day passes more of this is just going to be exposed and we should all be thankful that the government kept away from this.

More DESPERATION trying to top competition returning, all Business travellers should ask what's the PURPOSE of trying to cast Virgin in a negative manner. also are these “reports” even contained in this article - no (normally that's against the sites policy) (a news article may not even be truthful by the way). Monopoly just repeat that to yourself and if $750 one way fares MEL-SYD sounds ideal, that's the outcome. Once Virgin re launches as the “little guy” support them that's the Australian way, Thats the spirit of Australia on Anzac Day, let's get behind and support Virgin and competition.

@ mitchsydney ffs we know you hate Virgin. It's clear. It's an awesome Airline and there will be a Virgin Mark II of some sort. If not you'll be the first to bitch and whinge at the prices Qantas & Jetstar will charge Australians to fly.

Mitch your repeatedly negative posts, drawing random UNCONFIRMED and UNSUBSTANTIATED reports of Virgin and it's state created during a pandemic and world Crisis are all designed to rattle travellers and serves no positive or reason other than to limit competition. It displays desperation and intent.

Virgin will resume and it will be a fantastic airline that offers competition and deserves generous support.

@DownSouth

Make no mistake, Covid-19 has nothing to do with VA being in the state that's it's in, it's been dying for a decade, Covid-19 in purely highlighting to the world.

Hi mitchsydney

Your comment: "Virgin tapped the trust that runs the Velocity program as a separate business entity for a $200m loan and the administrators have concerns just how much cash that program has" is very significant, so would you kindly please provide a link to where this has been documented by the Administrator. Thanks.

I can't find it in the affadavit. Please advise the clause number.

Capitalism is currently dead, ACCC has approved competitors working together through the current crisis, the government are printing money so how the hell can anyone be blamed at the moment considering if this goes on long enough Qantas will be in the same boat.

@mitchsydney can you tone it down a bit mate and keep the comments on topic. There's no need to be so hostile to other members here, even those that disagree with you.

Interesting reading these posts...no doubt Australia needs and can sustain two airlines. Reality is Virgin is a good airline that was badly run. It has a diabolical share register with no free float, 90% held by vested and conflicted shareholders. They had huge debt because (i) they didn't run profitably; (ii) had conflicted shareholders who didn't want to reach into their own pockets...Virgin was headed for this train wreck, COVID-19 just accelerated it. The one good thing is equity holders are about to get wiped out. Remember these were the same shareholders who refused to put $ in on 8% coupon subordinated notes...

I think Paul Scurrah had them starting on the right track, but didn't have the balance sheet. Administrators should (i) dump the Virgin name, re brand and make it truly Australian; (ii) build a share registry that is normal for any business - give them the flexibility to raise capital through all means; (iii) simplify the fleet; (iv) dump all international and focus on core Australia trunk routes. Get strong, get profitable and build incrementally. Get an independent Board and driven management. Don't try to be everything to everyone.

perhaps to be a viable 2nd full service airline in Australia it takes a great deal of investment to compete against the incumbent with a well established war chest.

QF benefits from being the AU flag carrier, decades of investment from the government prior to the float and legacy which sometimes are beneficial sometimes not so (union bargaining).

Creating a network, plus a compelling alternative offering to business looks like a huge chicken-egg situation. I feel like it is so easy to say that virgin burnt cash trying to be competitive. Well it had to.

Second its been easy to have Godfrey come out and say he did a great job at being profitable, I think he would have found it far more difficult to compete with Jetstar. Lets remember Virgin Blue necessitated Jetstar from QF.

Lets also look at trans-tasman fares... i'm pretty sure with no VA and the code share of QF and ANZ pricing is going to continue to be competitive......

I agree $27000 of Government tenders is a totally pitiful amount. The lack of balance in allocating government work allows one airline to aggressively seek commercial accounts as vast sways of seats are already filled. Virgin is at a commercial disadvantage and this should have a audit conducted and future work allocated with more balance to enable a more profitable Virgin, that benefits all Australians and ensures winner and losers aren't picked.

I'm sure that government tenders would have not been the silver bullet for the situation. But if you do not have the network frequency and product, then you can't be competitive in the business/government sector.

So what remains, price pressure leisure where you have a well financed Jetstar to compete with.

I'm just unsure how people believe it is so easy.

I'm sure Virgin could sit in between leisure plus and business. Honestly I enjoyed VA more that QF because i knew what I was getting, it wasn't the best but they never promised it. Cheaper and close enough to QF.

With QF the domestic product its good but is it better? or are there so many rusted on QFF that can skirt the corporate travel policy to keep ticking off points in the slight chance they might get to platinum that can justify the 30.00+ price differential. I know thats how it works in my business.

QF feels much the same as VA (maybe QF had better meals) i have dietary requirements and surprisingly my last flights on VA they knew them before i boarded they provided them to me before all the other snacks.

QF international - well I would much prefer SQ or the ME3 or even JAL to europe and often pricing on these options were far more competitive and direct.

I dont fly to the US.

Thanks AM. In the 35 or so minutes between my post going up, and the time it took you to carefully consider, compose and then write yours, perhaps you should have re-read mine, at least once more? The premise in your opening paragraph, as provocative as it was no doubt intended, wouldn't have seen the light of day. Clearly I've struck a nerve (for which I'll respectfully decline to apologise).

But more importantly, your reply says much about your knowledge of the airline industry. I really enjoyed reading it (twice), as I do your other observations (some to which I've clicked green arrow in agreement!). I look forward to reading many more.

Clearly your knowledge of the airline industry, as demonstrating in your highly articulate reply, is profoundly extensive (certainly much more so than mine) and far, far more detailed than many others blogging here in loyalty to Qantas. And I glean you're much, much more than just a 'casually interested flyer'.

But I think you'll find that well over 80% of sectors flown by Government employees are domestic. And just like media broadcasting rights for football codes, there are different business streams that can be tendered separately and awarded to the best party in that sector. And if football codes can do it in a way that extracts the maximum benefit, I wonder whether similar principles could apply here?

But with some modesty AM, I will plead mea culpa to having some experience with customer loyalty programs, how they're structured (operationally and legally), credits priced, patronage rewarded and plan valued. For the benefit of others reading here, I'm neither an employee or past employee of Qantas, a Qantas service provider, business partner or one of its contractors. The same goes for Virgin Australia Holdings Limited and its wholly owned subsidiaries. Nor are any of my family.

Am just a punter, AM, with his own business that pays its own airfares when flying domestically and internationally. And, again, thank-you for your reply.

Hi Boeing Tragic

Thanks for your words. I don't mind a bit of provocative debate. It's all healthy.

I am more than a casual observer (although I do admit to being QF Platinum and immediate past Platinum One). As a matter of record I am not a Govt employee. I have worked for the QF Group (QF and JQ) and before that 10 years at Ansett (I very much empathise with what the VA employees are going through right now). Any comments I make in no way are directed at them and their skill and professionalism. I do reserve that comment for VAs past executive and its Board Members. My profession is airline revenue management so I have a heightened understanding of the commercial realities of making an airline work. I've spent the last 10 years working with airline RM departments around the globe and have seen both the best and worst of airlines. Hopefully that gives some weight to my comments.

It is good you attempt to bring some facts into the debate. The $27000 is interesting. And yes maybe 80% of sectors flown by the government are domestic. However the 20% of International does probably incur around 50% of the spend. It therefore has a disproportionate weighting in decision making. And you may be right their may be better ways to divvy up the pot. This kind of decision making probably gets all the way to Cabinet and The Prime Ministers Office so the details are probably lost. Australia and its Government fair very well on international rankings for non-corruption (Google - Corruption Index). I think it fair to say VA got beaten by a superior competitor that have decades of experience in winning these contracts.

Lastly I'd be interested to hear your thoughts on the reports that Indigo Partners is in the hunt for VA. Their possible ownership raise a few interesting outcomes.

Afternoon AM, thanks for your candid honesty about your interest in this debate. I wish others did the same. The quality of your comments satisfied me that you weren't on a Government pay-roll. I'm fully acquainted with Revenue Management as a discrete profession (in other industries), though I've never worked in it, purely collaboration. I personally think the title is disingenuous to the skill, cunning and insight needed to work in it successfully. It's a 'dark art' left to superior intellects and insights than mine. That you've done so for so long is comforting (in terms of comments you make - partisan as they are).

I think I share your feelings about the current Board members, particularly the Australian ones, and the immediate past CEO at VAH. As for its executives, all too often they're hired in the image of the decision maker, although there are some outstanding exceptions. But I fully understand the disdain that can arise when you see a competitor clumsily making the same mistakes over and over and over again. As W.C. Fields once wrote "Never give a sucker an even break". But as we're a long way from the rest of the world and more in need of airlines, I can overlook his comment (as I've done with regards to children and animals).

I'm not in the caper and can't comment on Indigo for that reason and no other. Sorry.

Dear AM, just did some desktop research on Indigo. If they take Virgin and return it to a LCC like Jetstar and Frontier, my QFF account will get a hiding when flying resumes. No way - no how - I'm too old for that crap.

I've never hid from the fact that I'm a promiscuous flyer, not a loyal flyer.

Asked and answered. Adios Amigo!

AM, you're a cruel, cruel person! :-) Didn't know that, but it won't matter. 95% of my flying is on business, I can't afford the broad range on inconveniences typically associated with LLCs. Sorry, but Tiger and Jetstar fall into that category.

If Indigo & Co take out Virgin, I'm gone - not even going to try them out, I'll leave it to others and revisit in 12 months. I'll regain Platinum on Qantas well within 6 months. Whilst my personal preference is that VA does a better inflight service in Business, I suppose I can live with what Qantas has to offer (that's another story I'd share with you privately if there was a PM service on this web site).

FYI, I'm not anti-Qantas, just anti-AJ and his puny, tiny little jibes at Virgin. Goyder should take him out behind the woodshed and give him a thorough hiding, a 'come to Jesus moment'. Not publicly in front of others, except the rest of the Board. AJ's behaviour was un-Australian for the CEO of an iconic Australian airline. Not even a brash, New Yorker would have said what he said. He and Borghetti, what a pair of total bloody tools. I'm sure we could do a better job (smirk).

Honestly AM, being serious for a minute, if another party presents a winning offer in conjunction with Delta, I'll be un-weighting Australian airline shares in my portfolio (held since October 2012 and pay the CGT bill). Interested to get your thoughts on the implications for Q if Delta takes out Virgin and integrates Delta Miles and trans-pacific flight schedules, putting all US flyers into a Virgin code-share across the pacific and then on-wards throughout Australia. Reason for asking: some Delta FF in Business on VA23/24 had to play hardball with Delta to get LAX-MEL with Miles because of the Australian Open and were dumbfounded that Delta didn't promote the route (to MEL, not SYD) better. As they confided over drinks at the bar, distance aside, they'd prefer to visit and travel around AUS because they feel so safe down here (they even knew how to crack good natured jokes about Collingwood supporters!).

Awaiting your thoughts, with interest.