Virgin Australia Mk II to keep flying to Los Angeles, Japan?

No upgrades to Qantas planes after Ansett went under? Not sure what you would have wanted but I seem to recall Qantas introduced brand new 738's in a hurry, they were ordered just after Ansett MKI collapsed and entered service even before Ansett MKII has ceased flying, and in December 2002 the A330-200's entered service with domestic.

The older planes may not have received “upgrades” but frankly they didn't need upgrading.

Qantas got those 737s at very good prices off the back of a cancelled order from American Airlines just after 9/11, and got the A330s also at good prices as part of the A380 order, which allowed pilots to get experienced in Airbus cockpits and eventually do a much faster conversion from the A330 to the A380, rather than going from Boeing to Airbus, which apparently takes much longer.

And, when Qantas did start flying the A330s on domestic, they had those rubbish recliner seats up front with a plastic cocktail table jammed in the middle, kind of like Eurobiz. VA then came in with better seating, which eventually forced Qantas to get with the times.

suggest Rex could lease VA B738s for 1/2 or less than what QF got theirs back in 2001/2, which are now getting rather old btw.

Yes Qantas did get those 737's from the cancelled American order right after 9/11, but tell me when did Ansett MKI go under? Yes roughly the same time. So not sure your point.

Rumour had it that Qantas had actually signed on the line for A320's (the ones that now fly with Jetstar which had it's beginnings in Impulse that Qantas brought around the same time), but owing to Ansett going under and the need to rapidly expand capacity, they changed at the last minute to take up the AA 737's. From 'order' to delivery was a record 5 months, something that if it hadn't of been for 9/11 Qantas would not have been able to do. All to add capacity to cover for the failure of Ansett.

And yes the A330's were part of a sweetner deal for the A380's but again they arrived in the same year as Ansett MKII went under and were new product. And they didn't have Euro business seats, even now no plane in the Qantas fleet has a Euro business seat. The seat they had was a short haul business class seat. Euro business is an economy seat with (maybe) extra legroom and no one in the middle seat. But again what Qantas had was not Euro business it was a proper sit up business seat. The only issue it had for the time was the 2 3 2 layout on the A330. product. So seriously I would refute the claim that somehow Qantas failed to invest after Ansett went under. They invested heaps, some planned before hand like the A330's and some like the 737's brought forward and expanded. That was a time of rapid change for Qantas, Virgin Blue and the whole Australian aviation market.

As for Virgin coming with a better seat forcing Qantas to get with the times, Virgin at the time was a fledgling LCC named Virgin Blue, and it wasn't until some 10+ years later that Virgin Blue became Virgin Australia and started to introduce business class. Their 737's seat was actually the much maligned Euro business you talk of, then it became a bit better but still just catching the Qantas (AA) 737 business seat. Virgin's original A330 seat was woeful being ex Emirates aircraft with both Qantas and Virgin Australia then later introducing the A330 seats we see today around the same time as each other. So hardly being forced to get with the times.

That debt figure will be negotiated as part of the resale and administration process, so the new owners will not have that mountain to climb. The $6B+ debt could be halved along with the aircraft leases being reduced considerably.

It's in everybody's best interests (especially the employees) if Virgin can be the size they were in 2019 and planned to be in 2020 (i.e new international destinations such as Tokyo) but with a more streamlined cost base enabling the airline to make a profit.

I strongly believe Paul Scurrah was on the right track until Covid 19 come along. While he had a massive challenges ahead, he was certainly taking steps in the right direction.

think the only chance V2 has got now, that Rex has laid cards on the table, is to do domestic only with 1/2 the aircraft, no significant debt (administrators have to get rid of debt) & 1/2 the staff at much reduced pay, but many won't like working harder for less.

Think these ex virgin staff will have hard time finding any work anywhere. They need to get over the fact they were paid top dollar & that has ended.

BUT Rex plans to get the cream which is the golden triangle.

not sure the onboard staff are rolling in the cash, i believe the cabin crew salary can be from $45k- $65, depending on period of service.

well below the australian average of $85k based on ABS figures

How relevant is Rex really?

10 aircraft spread between Brisbane, Sydney Melbourne will not give them the frequency to properly compete with Virgin (assuming they survive and retain some semblance of their former timetable on the routes, operating ever 30 minutes or so), let alone Qantas (which was sometimes every 15 min I believe). Rex's current services are 33px max, not massive feeders for a 150+ seat jet.

If Virgin is liquidated, maybe Rex would provide a minimal service that is attractive for leisure flyers and connecting country passengers; but it would not be substantial in terms of overall competition with just 10 jets.

at stated earlier on other thread about rex ..............

so 10 aircraft can give you a lot of frequency when not flying to any regional centres.

For example, roughly 4 aircraft at SYD & 3 each at BNE, MEL (PER & ADL to be added later)

So at 6am & 6.05am 2 aircraft each depart SYD for MEL & BNE.

At 6am, 1 aircraft departs BNE for SYD & another for MEL & from MEL to BNE & SYD.

At 7am 1 aircraft depart BNE for SYD & another from MEL to SYD.

At 8am aircraft that left SYD at 6 & 6.05am could have turned around at BNE & MEL & be flying back to SYD.

Rex may even be able to do faster turns.

So yes Rex is VERY relevant. No one pours $200m into an airline unless they have a good business model & this one could kill QF.

What do QF do ? Drop fares in peak hours Mon-Fri BNE, SYD, MEL triangle ? Nope. Maybe offer free stuff like off peak seats, Qantas club membership free if you spend $5000 on flights, what else ?

"No one pours $200m into an airline unless they have a good business model & this one could kill QF"

What massive hyperbole. Also, they (Rex/potential equity partners) haven't signed off any anything yet.

How much will the debt be if it gets bought out?

that's the billion dollar question ? How much debt can the administrator get rid of ? Surely he can get rid of all leased aircraft to start with? Although it sounds like the administrator wants to get his huge fees & get out of there fast, not like Ansett.

A an aircraft lease is a liability not a debt. Cancelling a lease would lead to a penalty payment which would actually increase debt.

To reduce debt you need to sell something, like for example owned aircraft or an owned business unit etc. velocity for example.

if aircraft leases can be canned by administrator, then thats huge liability gone.

Yes it is a (possibly) reduced liability but you mentioned reducing debit not liabilities. They are two completely different things.

The thing with aircraft leases though, is as mentioned you just cannot simply hand a plane back and say I'm done. There will be penalty clauses, which as I said then would become a debt owed to the leasor.

Secondly there are three types of plane lease, there are the two that comes to most peoples mind, wet (with crew and some other things) and dry (plane only) which are operating leases, but there are also finance leases. With finance leases the leasor is a finance company/bank as opposed to an aircraft leasing company. Many of Virgin's 'leased' planes are actually on finance leases, if you look at the CASA register you can easily spot the ones that are dry leased and those that are on a finance lease.

The point being as anyone who has had a car or a house repossessed would know even though the lease company has taken that asset off you and sold it, you still have financial responsibility for the losses of the finance company from the sale of that asset and depending on contract for the loss of income.

So it ain't as easy as just handing back the keys.

normally you can't just hand back a leased aircraft to owners, but VA is in admin.

The administrator has powers that can't be used when not in admin, or am I confused with chapter 11 in USA ?

Lease liability not being debt? News Flash: it's effectively debt when the liability is put on the balance sheet under accounting standard AASB 16 - Lease Accounting. No exceptions - its fact.

The Administrator can do everything AJW says he can't (sorry mate). Administrator could offer $1/mile flown and if not accepted - hand back the keys and leave lessor paying storage costs. There would be no penalty applicable to the Administrator (sorry AJW).

The only problem for the Administrator is where to get replacement planes at reasonable rates - nothing to do with lease termination penalties or lease liabilities (sorry Pal).

So if Strawbridge doesn't know how to go about leasing planes (including base-load spare parts) and deal-in major maintenance/mid-life engine refurbishment, he's in a pickle. Hopefully he's listening to VAH's CFO, who should be all across these common matters.

On the other hand, if offering new business to Boeing (or Airbus) to replace the returned planes, they'd bend over backwards to cut their competitors throat. Why, I'd bet they'd rent 'loaners' while the leased aircraft were prepared for the new owners (i.e. Virgin 2.0, AJW Airlines, etc.).

This is the ruthless approach taken by Rex - which has worked very, VERY successfully.

I was thinking the same thing.

I completely agree with you. The articles being churned out (not just here but elsewhere too) are all just speculation at this stage.

Not to mention all the uneducated opinions from arm chair wannabe airline CEOs.....

Playing armchair CEO at VA 2.0 seems to becoming a favourite "national pastime" amongst some of the FFers and the many AvGeeks out there, ourselves included...

I completely agree, I fear some of these articles that have been churned out will age extremely badly when the dust settles on all of this. Just a personal view, and I acknowledge entirely that this is a travel site - but I have two suggestions.

1. Getting someone that actually understands Administration to write an unbiased article explaining exactly what the obligations and objectives of a receiver would be in this situation. Much of the commentary on this site has been (perhaps understandably) emotionally or morally charged, and relates to consideration of matters such as FF points, but has no basis in fact or the actual legal obligations that an administrator has to consider. It might help the quality of the debate if you tried to get someone to actually explain that.

2. Perhaps a little more criticism / objectivity rather than just the endless pieces churning out the latest piece of thinking that is little more than speculation, I appreciate there isn't much news at present (at least not much good news) but in the past ET (and it predecessor AusBT) have held the view they don't write articles on speculation, well being honest, that's all that large elements of the pieces regarding VA are.

The vast majority of the population won't be booking any flights with any airline, regardless of price, as they will want certainty around the Covid 19 virus before booking. The only exception to this would be NZ and The Pacific destinations subject to further discussion on lifting quarantine.

Provided V2 honours Travel Bank balances, it can be assured of six (6) LAX-return fares as soon as the deal closes and I can see who the new owner is.

but they already have your money, so what's in it for them ? (except PR)

No, the Administrator 'has my money', so to speak, but the new owner will want my business (for both cancelled flights now wanting to be flown and all of my future flights). New Owner knows that we flyers are 'fiscally promiscuous' and somewhat 'vengeful' when an airline tries to rip us off.

New owner will get Administrator to pay my fares BY reducing the business purchase price in return for new owner accepting 'liability' attaching to my Travel Bank balance. But of course these are early days and this is pure speculation. After all, the airline might be bought by an overseas party with deep pockets but not accustomed to a travelling public that enjoys freedom of choice.

Sorry, but this is pure speculation. You really think Australia would be happy to open borders only to NZ, if then NZ opens its borders globally?

Given the current situation - uncertainty over borders reopening the likelihood they won't be covered by insurance if they didn't, and the difficulty of getting refunds from airlines, only a goose would book international flights for Christmas 2020 at the moment.

everything is speculation, but 1 thing for sure, pressure is mounting on govts to open borders fast. Insurance prices may go up, but the insurance companies will work it out.

Am sure Joyce at qantas is harrassing scomo et al, to open things ASAP, saying otherwise another zillion workers will be on dole queue.

I would book a cheap flight to USA in December.

Sorry, but the politics of what you're suggesting is all wrong - Qantas / Joyce and the tourism industry can bang on all they want. But 1000x more people will be up in arms if the Government goes too fast especially if there are new COVID cases that come in - it will be the death of the Government and undo any good will from their positive handling so far. Infection rates in Europe and the US are still sky high.

LAX & HND ? With what aircraft ?

VA have too many types now B737/B777/A320/A330/F100/ATRs

& the last thing they want to do in a recession, is start leasing more B777s, assuming the current A330s are returned to lessors.

The owned B777 have dud freight cargo doors, which apparently doesn't allow container freight.

With 777's to LAX and A330's to HND until they go then they'll have to manage both with the 777's.

so new VA is going to need maybe 6 more B777s !!! & crews to fly them. Are you crazy ?

They need to reduce costs not spend more.

They can manage both with 4 777's. LAX won't be daily, HND can be daily. LAX is profitable for them and they made a big investment in HND and have a partnership set up with NH.

They've flown BNE and MEL-LAX less than daily for a while and it's worked. Even QF was 5-6x per week on BNE-LAX for a while at one time.

worked ? Don't think so. They didn't get much of Qantas demand. QF did fly 12 times a week BNE/LAX in January.

The midday flight out of LAX to BNE wasn't very popular, but filled because it was cheap, but lower yield.

You either go daily to LAX or don't go at all. So HND doesn't fit in without a lot more B777 aircraft.

It could go like this ..................

Businessman calls travel agent who tells them VA has a great fare to LAX (& commission is more than they get with higher QF fare). Businessman says ok, so they fly daily ? No only 5 days a week + midday flight & businessman goes, I'm a figjammer & I need daily as I might want to change flight by a day or 2.

Business types want daily - or public servants.

Unbelievable. Of course .... this could have been a Jackie Trad initiative only now discovered by Annastacia Palaszczuk when cleaning out Ms Trad's office. Not even Crazy Dan (Ivan) Andrews would step that far outside of his crease.

just on channel 7 & 9 news BNE

It's the QLD Govt through QIC and a consortium. Not a bad idea for them to bid.