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

Virgin Australia is almost $7bn to debt, and could pay administrator Deloitte another $30m to find a owner.

By Bloomberg News , April 24 2020
Finding a buyer for Virgin Australia is a job worth $30 million

Virgin Australia's administrators Deloitte have revealed the airline owes almost $7 billion to an array of creditors, including $1.88bn in 50 aircraft leases, with the lessors being asked to forego payment while Deloitte determines if the new Virgin will need to count those aircraft in its fleet.

This includes around half of its Boeing 737s, all six Airbus A330s and one of six Boeing 777-300ERs.

In a note to creditors, Deloitte reiterated its intention "to seek to recapitalise the business and sell it", having set a timetable for the new owner to be in place by the end of June.

Read more: Virgin Australia Mk II could launch in as little as three months

Deloitte itself expects to be paid as much as $30 million to find that buyer for Virgin Australia, which has become the highest-profile airline to fall to the coronavirus.

The estimated remuneration for the voluntary administration, which took effect on Tuesday April 21, is $20 million to $30 million, with further costs in the event of a liquidation, according to a circular to Virgin Australia’s creditors posted on Deloitte’s website.

More than 10 parties, including private equity firms, have expressed an interest in taking over the airline, according to Vaughan Strawbridge, one of the four administrators.

Those prospective buyers have already begun examining financial information about the business, said people familiar with the matter, after signing non-disclosure agreements and starting due diligence in a so-called data room.

Additional material by David Flynn

Syndicated

This article was published under license from Bloomberg Media and the original article can be viewed here

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.

Qantas - Qantas Frequent Flyer

27 Nov 2017

Total posts 22

They have blocked 4 aircraft, none of which are in use (I think one even has its engines off). Virgin are still utilising about 15 aircraft a day (weekdays) for FIFO operations in WA, mainly F100s but a few A320s and 737-800s. Perth Airport wouldn't dare impact mining / O&G operations in WA - that is their lifeline.

Qantas - Qantas Frequent Flyer

29 May 2013

Total posts 50

mitchsydney, enough already. All I have seen from you is bitching and moaning how bad Virgin is. We get it, yes Virgin WAS run very badly but if you remember Qantas wasn't so great before Alan Joyce came on board. It requested govt assistance and was knocked back. I am not a huge fan of Alan but he turned it around and Qantas is now (prior to coronavirus) doing well. Virgin has been mismanaged for years and Paul Scurrah was in the process of trying to do what Alan did with Qantas and turn Virgin around before this pandemic hit and crushed any hope. I don't think you can tar Scurrah with the same brush as the previous management. Would he have managed to turn things around at Virgin, who knows, but now we won't really know as if he continues in his position he will be in charge of a different beast. If he is still there then lets see how he goes before we condemn him to the same damnation as the previous management.

23 Oct 2014

Total posts 183

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.

And another deflection to Qantas ..... are you sure you are not one of those Virgin executives responsible for throwing away billions of shareholder dollars? The difference is simple - Qantas refused to pay increased fees as they felt a responsibility to their shareholders not to put money into the pockets of the airport owners ... whereas Virgin took money from the Virgin customers that were for airport fees and they did not pass it on - one airline is still in business and profitable and the other is $6.8b in debt.

23 Oct 2014

Total posts 183

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.

Yet again needing to make it about anyone else but Virgin. And you are wrong about the public ... they really don't care as long as there is a second airline because one thing we all hate more than the behaviour you talk to is behaviour where high flyers don't pay working people .... and that is exactly where Virgin are with over 10,000 creditors.

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 288

This comment is both nasty and delusional. Spend your spare time plainspotting instead of dumping on the hopes of others. Thankfully, your comments reflect minority views amongst the other QFF I deal with, none of whom reJoyce in Virgins troubles.

13 Apr 2020

Total posts 12

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.

All business run a debt ... the difference between our 2 airlines is that one is capable of servicing that debt and the other one is not. There are now Australian companies in the position that they are going to go out of business because of Virgin's mis-management.

13 Apr 2020

Total posts 12

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.

Creditors you cannot pay are not part of normal business however ..... this continual blind support of a company that is going to fail to pay ordinary Australians who serviced them is unseemly.

@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.

23 Oct 2014

Total posts 183

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.

Nope, love competition, it just needs to be able to pay its way. Supporting a company that is not paying its debts, a company that is not paying its fellow small business Australians , a company that has duped those Australians that have flyer points ...... not of that is the Australian way - the Australian way is to pay for what you buy, the Australian way is look after each other and not abandon your employees because you over spend ..... nobody can cast Virgin in a more negative way than they have themselves. I get that you are desperate to get back into that lux Virgin business class seat that your ticket doesn't even cover the cost of but how about you have a little more Australian spirit and actually support those Australian businesses that Virgin are not paying instead ...

17 Mar 2020

Total posts 4

@ 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.

Because I have open eyes on a company that has squandered a unique opportunity doesn't mean I hate them at all - they could easily have been the #1 airline in Australia and they blew it because of an executive team that chose to throw money at a problem they didn't have. Flying Virgin before they changed strategy to try and take higher value customers from Qantas was joy - the fares were cheaper than today - I still remember getting on that first flight when they started giving away food and drink that I didn't ask for and didn't need and thinking "wow, this could go either way" .... I have very good friends that are flight crew and cabin staff at Virgin and they are extremely angry with the way the company has been run and even more so this week as the truth comes out from the administrator. Their finances have been a disaster for years but for a number of you on here it's ok because you get a comfy business class seat and a glass of wine ..... all at the expense of over 1,000 small local businesses that are now owed $166m that Virgin haven't paid them. If you conscience is clear on that then shame on you.

23 Oct 2014

Total posts 183

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.

This has nothing to do with the pandemic - it just caught them out playing musical chairs and the music stopped. As to unsubstantiated- read the affidavit from the administrator, it's all there, your sickening support for a company ripping off Australian businesses and employees is disgraceful.

@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.

05 Apr 2017

Total posts 11

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.

Material is all public domain as is the affidavit.

05 Apr 2017

Total posts 11

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

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 288

Don't wait for an informed reply, he's all venom and spit, but ask him to cite an authority (or do basic research) and its

crickets ... crickets ... crickets.

QF

11 Jul 2014

Total posts 467

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.

Qantas - Qantas Frequent Flyer

20 Mar 2012

Total posts 226

@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.

All comments are on topic. They all relate to Virgin. Please point out where the hostility is. If calling out the blind love of Virgin is hostile than I'll cop that on the chin. If there is anything that you believe crosses a line then feel free to report it and I'll cop it if the comment is deleted. I would hope that you tag the others in that have targeted me in a personal way, right?

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 288

Just for the record, @mitchsydney, are YOU (or is your immediate relative) an executive of Qantas, a service provider to Qantas or a contractor to Qantas? Am pleased to report I'm none - to any airline. @FrequentFlyer makes a fair and inoffensive suggestion, yet you seem somewhat ..... sensitive to questions of your motive? Why, some of your responses really do have a 'bullying' (if not 'hostile') tone, though I'm sure that's completely unintended by you (and happy to take your word on that), but assumed you would want to know.

I'll rely on Squire Flynn to correct me if I'm wrong, but this forum should, I believe, provide enjoyable reading to interested airline travellers only - partisan professional lobbyists have other media at their disposal. For sake of Full Disclosure, would you please be so candid as to clarify the extent (if any) of your relationship - or any of your immediate family, to Qantas.

As a courtesy to your obvious lack of knowledge of corporate administrations, and in the hope you avoid further embarrassment to yourself, please get acquainted - quickly - with Sub-sections 443A (1) and (2) of the Corporations Act, 2001. I'd include a link, except I imagine you'll want to do your own research?

31 Aug 2017

Total posts 16

People might not like it but @mitchsudney is spot on. The poi t is simple, VA has been a badly run business that traded a great cash flow and profit for red ink and debt over the last 10+ years. They were not forced into it, they chose that path. They're not in Administration for nothing. many Australian businesses are now suffering because they can't pay their bills. Why defend a bad business?

06 Feb 2014

Total posts 120

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.

31 Aug 2017

Total posts 16

Agree with everything you're suggesting.

Qantas - Qantas Frequent Flyer

29 May 2013

Total posts 50

maabbot, well said. The only point I would question is the dumping of all international. If a destination was profitable (say LA or Fiji - not sure if they were just using as an example) why not continue to service if planes are available? Why dump a profitable route for the sake of it (unless it was only marginally profitable)?

15 Mar 2017

Total posts 14

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......

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 288

All of your considered observations, Uqsthom6, make perfect sense. And not that your post needs supplementing, but I think it worth noting that from 2 Government tenders over the last 2 years, all but $27,000 of airfares went to Qantas! What a truly loyal club. Can there be an independent inquiry as to the cause? I don't think that could happen, too many 'stakeholders' would interfere with the process and report.

Either Virgin's BD team are beyond incompetent, or non-quantitative factors were taken into account. I find it incomprehensible, that with so many Government airline tenders, one airline gets less than one-third of the business? IMHO, this explains much.

I hope the Administrators report fully exposes how Virgin fared in ALL Government tenders over the last five (5) years - just the facts. We have a right to know about that.

I don't pretend to know the answer or best way forward, but I know the smell of a rotting fish without seeing one.

23 Oct 2014

Total posts 183

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.

15 Mar 2017

Total posts 14

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.

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 288

If Virgin had been awarded just one-third (33%) of Government tenders for air travel, that would have been a HUGE amount of recurring seats filled on the Eastern corridor over the last ten (10) years. Borghetti should have known that and been all over it. Just because Government regulates air travel does't mean they should get a free pass to favour one airline over another.

Though I'm in the private sector, I've worked in buildings where the major tenants were Government Departments (no names). I've always found it curious how so many, many people entering and leaving the building each were rolling a carry-on bag with a Qantas tag. Over time, I've accumulated acquaintances working in Government (C'lth, Qld, NSW and Vic), and during casual conversation most have said there was never a choice and there was never any internal canvassing of staff preferences, input on Qantas, etc.), that it was all done and dusted at senior levels. And they were somewhat annoyed/miffed about that, but not distracted by it. Some regularly mused that it was Government looking after 'old Government' airline, but at the time that was speculation. I'd naively assumed those cases were isolated and thought 'losers' of tenders would always get a 'consolation prize', somewhere between 20% and 40% of the business anyway (as generally occurs in other Government tenders, the losers get 'looked after' to keep them around for next time). $27,000 of air travel isn't a consolation prize, my business' annual spend is just over $30K.

Leaving aside the gross inequity/imbalance in favour of Qantas (which its CEO has quietly known all this time), given my (and your) taxes pay for those airfares, I'm annoyed that, somewhere, someone in Government is clearly enjoying a big 'Thank-you' that other Qantas flyers (including myself) don't get. And you won't find that largess disclosed in any Government financial reports, etc. - who would dare kill the goose laying the Gold egg (or Platinum Egg, or Platinum-One egg, or Chairman's Lounge egg). And those perks aren't free, their cost is embedded in the price paid for the earning airfares.

Going forward, there needs to be regulation of the 'perks' that civil servants get when travelling on taxpayer funded airfares. The introduction of Status Credits has circumvented the regulation of Frequent Flyer points - and it must stop (or the offending airline is banned from tenders for, say, 5 years).

31 Aug 2017

Total posts 16

Boeing Tragic, you are alleging endemic and systematic government corruption. If you have real evidence I suggest you contact your local member of parliament and make it official.

There are very good reasons why QF wins a disproportionate volume of government travel.

  • Larger domestic network. This includes intentionally flying on routes that are commercially not viable in order to satisfy government requirements. Many of these routes VA simply do not fly. However at the end of the day QF provides a network and schedule superior to VA for wider government needs.
  • Larger international network. Not only does QF fly to a larger volume of destinations, it is a member of a global alliance that extends its offering to also most anywhere government needs to travel. VA has a minor network and is not a member of a global alliance. It simp,y cannot satisfy government requirements in most cases.
  • QF simply out-bids VA on price. This is the single most important reason Qf wins contracts. The ticketed price is not what the government pays despite QF looking more expensive on face value. This is achieved by being more profitable overall. QF has the majority of high yield business overall. Also Jetstar runs more profitably at the low end of the market on leisure markets thus providing additional better cash flow to sustain higher corporate/government discounts.
  • QF offers a better end to end experience for those of us unfortunate to have to travel very regularly.

VA was never going to be gifted a certain share of the market just for turning up. They have to beat a well organised, financed and focused competitor.

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 288

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.

31 Aug 2017

Total posts 16

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.

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 288

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.

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 288

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!

31 Aug 2017

Total posts 16

But wait there's more. Boeing Tragic you will not like this in the least. Not only does Indigo Partners invest primarily in LCCs but a cursory glance will show all of their airlines operate Airbus only fleets. Indigo Partners also has one of the largest order books with Airbus (600+ A320/1 family) and it is their want to supply their airlines with said purchased planes. They obviously gain an economy of scale discount on the order which helps to lower costs for their LCCs.

So we could see VA convert to an Airbus fleet if Indigo Partners get the nod.

Virgin Australia - Velocity Rewards

24 Jan 2018

Total posts 288

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.

31 Aug 2017

Total posts 16

Agree with you on the LCC thing. They're all too painful when it comes to frequent travel. I have many thoughts on how LCCs have unnecessarily commoditised the product to the detriment of their own revenue potential. There is something plainly wrong when a taxi to the airport costs more than the airfare.

In terms of Delta. VA and DL have a Joint Venture in place. I'd be flabbergasted if many of things you point to aren't already done. Clearly however (at least anecdotally) neither VA or DL are reaping the most from the arrangement. It is interesting that Australia doesn't seem to garner the attention of American tourists as compared to many of their alternate options. Since the slide in the AUD Australia has again become very attractive from a purchase power point of view. Yet we are not seeing the kind of growth in American tourists as compared to say the way Australians embraced travel to the US when the AUD was near parity. I think this is mostly as Americans see Australia as a very-very distant location. Australian's are much more seasoned on long haul flying. This combined with Australia being a relatively small market means US airlines don't give it a focus which we believe they should.

Australia's handling of the Pandemic, its isolation (now a benefit not a retraction), relative safety, language and to some extent cultural similarities should present Australia with a big opportunity to grow the American market post crisis.

Lastly given the big US airlines are receiving substantial financial support during the crisis I'd be dumbfounded if they were involved in buying a foreign airline with a mountain of debt.


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