What will Virgin look like now?

17 replies

SteveCF

Virgin Australia - Velocity Rewards

Member since 15 Aug 2012

Total posts 67

Well it looks like VA is going into Voluntary Administration, so what is VA going to look like in the future? And is there a future for VA?

What do you all predict the future will look like?

jianga

Qantas - Qantas Frequent Flyer

Member since 07 Feb 2015

Total posts 140

However they will look like, I hope Virgin will survive this because we need two airlines in this country to balance the market.

mcs_095

Member since 06 Feb 2014

Total posts 6

It's hard to know, but what we all know is we need two strong competing airlines in Australia - not one. Even a shorter term 12-24 months in which there is only one would do immeasurable damage imho and should be avoided at all costs.

None of this is to say Virgin hasn't been optimally managed - that is clear. And Government support shouldn't come cheap or without substantial conditions. But I find it astounding how it seems the federal government is willing to justify the mess of administration and goodness knows what else to come out of that, just because they aren't a majority owned Australia airline. If that was such a critical condition, they should have enforced it long ago and never let Virgin develop the complex web of shareholders it has now.

One wonders if there aren't other issues at play - at the end of things, a 1.4 billion loan that they were asking for is chicken feed compared to what the government is handing out left right and centre for a range of other things. Its amazing how much loyalty some free access to fancy lounges can have in the mind - say what you want, but Qantas has been mightily effective at grasping strongly its grip on the political elite. And a chunk of that has been achieved through means completely unassociated with the product they actually provide in the skies, or its cost competitiveness.

StuParr

Virgin Australia - Velocity Rewards

Member since 01 Mar 2012

Total posts 191

Once VA goes through the required restructure of debt and equity, the government will most likely come in to support in some way. There was no use in its current state as it was still unstable and it wasn't politically a good idea to support what is seen as essentially a foreign airline. Administration was inevitable, Scurrah might have alluded to it when he said that the airline will come back but in a very different form 6 weeks ago. Interestingly an advisor to The airline told me a few weeks ago that they had recommended Administration some time ago as a way to save the airline. So now they can renegotiate leases, decrease costs, implement the route changes that the CEO wanted to implement and create a leaner airline that will compete heavily against QF. Let's see who takes it over. The Airline focused PE firms must be salivating at the opportunity to take it over. Not many decent sized deals around to keep the bonuses ticking over around at the moment, and if no one takes it, we will then know that it was too far gone, however I have a feeling that that isn't the case.

Last editedby StuParr at Apr 20, 2020, 07:08 PM.

mcs_095

Member since 06 Feb 2014

Total posts 6

Originally Posted by StuParr

Once VA goes through the required restructure of debt and equity, the government will most likely come in to support in some way. There was no use in its current state as it was still unstable and it wasn't politically a good idea to support what is seen as essentially a foreign airline. Administration was inevitable, Scurrah might have alluded to it when he said that the airline will come back but in a very different form 6 weeks ago. Interestingly an advisor to The airline told me a few weeks ago that they had recommended Administration some time ago as a way to save the airline. So now they can renegotiate leases, decrease costs, implement the route changes that the CEO wanted to implement and create a leaner airline that will compete heavily against QF. Let's see who takes it over. The Airline focused PE firms must be salivating at the opportunity to take it over. Not many decent sized deals around to keep the bonuses ticking over around at the moment, and if no one takes it, we will then know that it was too far gone, however I have a feeling that that isn't the case.

Last editedby StuParr at Apr 20, 2020, 07:08 PM.
Fair call stu- but I do think the Federal Government has been lax on this issue somewhat, and could have done a lot better than it has. Will be interesting to see what comes out the other end. A 51% Oz/49% one or maybe two foreign owner could be a far great improvement.


The complicated structure that VA has had for so long hasn't helped - especially when its had a range of those companies involve go up the creek as well.


mirantz

Virgin Australia - Velocity Rewards

Member since 20 Jun 2015

Total posts 2

I'm wondering what will happen to all our points. I've been saving them up for years hoping to use them next year (enough for 2x return Suites to SIN on SQ for 2 pax).


=(

Ourmanin

Singapore Airlines - KrisFlyer

Member since 08 Jun 2018

Total posts 136

Originally Posted by mirantz

I'm wondering what will happen to all our points. I've been saving them up for years hoping to use them next year (enough for 2x return Suites to SIN on SQ for 2 pax).


=(

There has been much comment on this site and elsewhere on points, and my own views are shared elsewhere on this forum, so I won't restate them here. Suffice to say that the value of points will be so far down the list of priorities that it isn't even worth considering. They aren't a currency and they have no protection. I am afraid that I suspect your best bet would have been to have spent them already. Depending on what the new airline that emerges looks like they may have some value, but new owners need cash generating bums on seats, not to provide 'free' travel for the benefit of customers of their predecessor.

StuParr

Virgin Australia - Velocity Rewards

Member since 01 Mar 2012

Total posts 191

Originally Posted by mcs_095

Originally Posted by StuParr

Once VA goes through the required restructure of debt and equity, the government will most likely come in to support in some way. There was no use in its current state as it was still unstable and it wasn't politically a good idea to support what is seen as essentially a foreign airline. Administration was inevitable, Scurrah might have alluded to it when he said that the airline will come back but in a very different form 6 weeks ago. Interestingly an advisor to The airline told me a few weeks ago that they had recommended Administration some time ago as a way to save the airline. So now they can renegotiate leases, decrease costs, implement the route changes that the CEO wanted to implement and create a leaner airline that will compete heavily against QF. Let's see who takes it over. The Airline focused PE firms must be salivating at the opportunity to take it over. Not many decent sized deals around to keep the bonuses ticking over around at the moment, and if no one takes it, we will then know that it was too far gone, however I have a feeling that that isn't the case.

Last editedby StuParr at Apr 20, 2020, 07:08 PM.
Fair call stu- but I do think the Federal Government has been lax on this issue somewhat, and could have done a lot better than it has. Will be interesting to see what comes out the other end. A 51% Oz/49% one or maybe two foreign owner could be a far great improvement.


The complicated structure that VA has had for so long hasn't helped - especially when its had a range of those companies involve go up the creek as well.


Yeah, the government might have in other circumstances done more however given that the PM is a political animal, focusing on the immediate issue of large amounts of unemployed has and should be the focus.

I think the structure will be simplified according to Scurrah's plan. This has just given him the perfect opportunity to clean it up with out all the issues of having an operating business. Never waste a good crisis as they say.


That said, my view on Mainstream media coverage just decreased some more with all the hysterical reporting of job losses etc. yes, there will be, however it is more likely than not that in 3 - 6 months the airline will exist. Just in a more efficient model, and that is better for everyone. I trust a logistics person to sweat the assets more than a marketing man.

Joe

Member since 03 May 2013

Total posts 101

About time someone cleans up the mess Virgin is. Covid 19 may have come as a blessing in disguise to an otherwise basket case Airline.

gavinbrightwell92

Member since 04 Oct 2019

Total posts 9

Sadly, the choices they made in regards to ownership are the choices they made and that is business. Businesses are allowed to find any owner they want in a free market. Qantas and Virgin are 2 different models. The only thing australian about Virgin is it is a registered australian business operating in australia. It originally was owned by an international mastermind, then went public, and along the way sold off to whoever would buy it. It is a different story and journey to QF and they shouldn't be compared. This said, why should the government bail it out? Monopoly or not, why? How is that fair? It's majority foreign owned. The end. Yes its sad, but that's the fact.

I think we all know deep down there WILL be a 2nd airline, we just don't know whether it will be Virgin trading under a whole new ownership structure OR will it be a whole new operating enterprise...

I am sorry about those who are affected by losing jobs and so on. That is never fun, but this is about business decisions that have been made. It hasn't been profitable for years and years and losing money. There were more issues than we knew.

It was a bit of a sinking ship, we have rescued those off it (albeit worse off) and we now need to leave it to the hands of the salvage crew who will let us know what the verdict is.

patrickk

Qantas

Member since 19 Apr 2012

Total posts 508

I suspect Virgin will continue but not owned by four foreign airlines. Branson may up his stake to 20% to avoid a loss of face ( and brand) and then one of the (up to 10) competing asset management companies take over the rest

otternz

Member since 04 Mar 2015

Total posts 4

Originally Posted by patrickk

I suspect Virgin will continue but not owned by four foreign airlines. Branson may up his stake to 20% to avoid a loss of face ( and brand) and then one of the (up to 10) competing asset management companies take over the rest

Branson will do whatever it takes to retain the Virgin name....

dm12

Member since 08 Feb 2018

Total posts 103

I don't know what Virgin will look like now, but if it was up to me I would get a right-size strategy. Stop trying to be teenage Qantas and find their own market niche and value proposition. Don't go head-head with Qantas unless a profit can be turned (i.e don't chase them to Haneda because they went there), and if they do try and make it a unique offering.

INTERNATIONAL -

1. Keep the 777's and fly to LAX and/or SFO from BNE and/or MEL. The route is profit making (I believe) and they own the jets so work them. Don't bother going head-head with QF out of SYD as well, they need a different approach.

2. Join Star Alliance and use them for most international connections. Use United over LAX/SFO to access north america. Air NZ can handle New Zealand for now, but for the unique routes like BNE-Dunedin, maybe try CBR-AKL to access a new market. Singapore/Thai/ANA for Asia and Euro connections.

3. If there's spare 777's then back to HKG. Star Alliance airlines (Air China/Shenzhen) for connections into China. Abandoning HKG was a bit short-sighted but not surprising given the financial pressures. If they can turn a profit on that route, and its a popular route needing a none-OneWorld carrier, then they should run it. They could make HKG into a Star alliance hub with connections on Egyptair, Lufthansa, SAS, Swiss and Turkish.

4. If they're still a Virgin brand (or even if they're not) connect with Virgin Atlantic at HKG/SFO/LAX for London flights, and SFO for Manchester (assuming VS is still around and flies there)

DOMESTIC

1. bye-bye A330's. Its a shame but they're leased and financially they have to go. They can bring back domestic wide-bodies in the future if warranted.

2. leased 737's back to the lessor, fleet size down to the 40 or so that they own. Sure they'll have a reduced network and frequency, but they should concentrate where they can make money and on city pairs not served by QF.

3. Do a JetBlue and come up with a top notch busi product for some 737's and put them on the transcon, longer haul and red-eye routes. Maybe some extra leg room economy seats too.

4. Regional - its a mess. They've scuttled the original regionals (Skywest etc) and spread them too thin across the country. Concentrate on QLD and WA i reckon. How are there only 8 ATR-72's left?!



rob01

Virgin Australia - Velocity Rewards

Member since 10 Nov 2011

Total posts 94

I know that the current ownership group means Star Alliance is a no go but I'd really like to see them join under a new owner. Given there are 10 Star Alliance airlines that fly to Australia it sure would make international flying as a Velocity member much more straightforward.


nix584

Virgin Australia - Velocity Rewards

Member since 10 Jan 2012

Total posts 102

Originally Posted by dm12

I don't know what Virgin will look like now, but if it was up to me I would get a right-size strategy. Stop trying to be teenage Qantas and find their own market niche and value proposition. Don't go head-head with Qantas unless a profit can be turned (i.e don't chase them to Haneda because they went there), and if they do try and make it a unique offering.

INTERNATIONAL -

1. Keep the 777's and fly to LAX and/or SFO from BNE and/or MEL. The route is profit making (I believe) and they own the jets so work them. Don't bother going head-head with QF out of SYD as well, they need a different approach.

2. Join Star Alliance and use them for most international connections. Use United over LAX/SFO to access north america. Air NZ can handle New Zealand for now, but for the unique routes like BNE-Dunedin, maybe try CBR-AKL to access a new market. Singapore/Thai/ANA for Asia and Euro connections.

3. If there's spare 777's then back to HKG. Star Alliance airlines (Air China/Shenzhen) for connections into China. Abandoning HKG was a bit short-sighted but not surprising given the financial pressures. If they can turn a profit on that route, and its a popular route needing a none-OneWorld carrier, then they should run it. They could make HKG into a Star alliance hub with connections on Egyptair, Lufthansa, SAS, Swiss and Turkish.

4. If they're still a Virgin brand (or even if they're not) connect with Virgin Atlantic at HKG/SFO/LAX for London flights, and SFO for Manchester (assuming VS is still around and flies there)

DOMESTIC

1. bye-bye A330's. Its a shame but they're leased and financially they have to go. They can bring back domestic wide-bodies in the future if warranted.

2. leased 737's back to the lessor, fleet size down to the 40 or so that they own. Sure they'll have a reduced network and frequency, but they should concentrate where they can make money and on city pairs not served by QF.

3. Do a JetBlue and come up with a top notch busi product for some 737's and put them on the transcon, longer haul and red-eye routes. Maybe some extra leg room economy seats too.

4. Regional - its a mess. They've scuttled the original regionals (Skywest etc) and spread them too thin across the country. Concentrate on QLD and WA i reckon. How are there only 8 ATR-72's left?!



I'd say 777's yes, for LAX. VA have looked at SFO and it wasn't going to work. They'll need A330's to stay for HND, and I'd guess SYD/MEL-PER. I don't see how reducing the 737's would be a benefit, they need to keep up capacity to be competitive against QF.

Joining (or initially, being invited into) an alliance may come down to the new investors and/or owners. Wouldn't be surprised to see Virgin Group increase it's stake.

Hi Guest, join in the discussion on What will Virgin look like now?

Attach Files