Mwenenzi

news.com.au April 15, 2020 10:31am ---> Virgin Australia threatens to go into administration due to coronavirus, reports

serfty

Of course, VA's 10K workers pay taxes, as well as the $5B in annual revenue VA put though the economy.

mikalee

Just because you think it might never happen doesn't mean it should not happen. If the result is three profitable airlines in one large market that will beat out any tax consequences for governments. The public policy benefits would be immense.

ANstar

4 out of 5 shareholders won't put in more cash and Virgin Group are a maybe.

https://www.afr.com/street-talk/virg...0200415-p54jwg

mikalee

Most of those 10k workers will get a job elsewhere - perhaps only 8k of them so whoever is around gets a return on investment. The bulk of the travelling public still need to be transported from A to B be it on Virgin or whatever other transport operator steps into the gap.

CPMaverick

Or QF has a monopoly and charges so much more that less people fly. This is a more likely scenario. A lot of travel is optional; and based on cheap fares.

mikalee

Are these the same people saying our carbon emissions are too high?

markis10

Thats not necessarily true, Qantas paid its first tax bill in nine years just over a year ago, and the amount paid after declaring a $1.6b profit , just $4M
Thats company tax of,course, both airlines are significant contributors elsewhere as was shown by the refund the government made a few weeks back, the fact is Qantas and Virgin are a lot closer than you think.

CPMaverick

Not in the slightest bit relevant to the discussion

moa999

A lot more than that in FY19. And they also paid a bunch of other taxes in FY18
https://www.qantas.com/content/dam/q...eport-2019.pdf

And while the OP laxes about Scurrahs cost cutting it is the current management and Board that only very recently bought back most of Velocity for double what they sold it a few years ago, funded entirely by debt - not a cent from shareholders. That's a lot of $s that they may otherwise have access to now.

OZFLYER86

of course Virgin Australia will survive. They, like many airlines will shrink initially.

The golden triangle BNE-SYD-MEL is where the money is & to a lesser extent to CBR & PER.

I think in a month or 2, pre corona schedules over golden triangle will almost be back to same. Virgin international might shrink, along with some thin routes, which will either be dropped completely, or have frequency reduced dramatically.

Not sure how many B737s VA actually owns, but think they own 4 X B773s, which must be worth something.

mikalee

I see my beloved state government is trying to put a band over gaping wound by 'giving' $200m to VAH on the condition the other states contribute and VAH remain headquarted in QLD. Seems like a poor solution but typical of a Qld labour government, don't solve problems just throw money at it.

As much as it goes against my grain if QLD Labour is serious they should fund the whole $1.4b with equity on the conditions I laid out earlier including a debt haircut and take control of the airline and its Board and put in place some very strong commercial people in place (including Scurragh) to run the thing with a QLD centric commerical focus plus other markets where they are viable ie golden triangle and east-west - they must ensure it is cashed up, can compete with JQ and provide what QLD industries need ie toursim, mining. Cut out routes and international operations that bleed money. JV with SQ and Delta and others that hate QF and OW for inbound and outbound traffic.

At the price of government debt this would be a sure thing if properly run with huge benefits for QLD and subsidury benefits for the country.

CPMaverick

That's a bold statement. if they can't service payment on their debts (over $3B), then it is impossible for them to survive. It's not as simple as shrinking to a competitive size when you have the debt of a large airline.

Will EY and SQ prop up an airline that just serves the golden triangle when they already have direct flights to all those cities?

I hope you are right but I think you are overlooking the fundamental problems VA faces.

They own about half of their 737 fleet. Which is quite a bit, but they can't borrow against their fleet like QF did because they already have too much debt.

OZFLYER86

not 100% sure of what exactly happens if VA go into admin, but assuming they can tell owners of all leased aircraft they no longer want them.

Then if VA concentrate on golden triangle + PER & CBR, they can make some money.

In admin, don't think they have to pay any redundancy payments.

At same time, they have to keep some faith with all those who have frequent flyer points. Maybe just restrict ff seats initially & say there will be no expiry on them.

They need to preserve cash & reduce spending.

Staff EBAs
They might have to renegotiate much lower EBAs. Some staff might not like that, so they might be the ones to leave.

davistev

I really hope Virgin Australia will not get one red cent from the Australian taxpayer. This airline will not issue refunds to passengers (a voucher is not a refund). They should at least give the money back to customers before asking the government for a bail out. Many Australians need their money back. They had no right to keep our money. They did not earn it.

Plus, it is a foreign airline. I understand that the virus is a unique situation that was not contained properly at the very beginning for whatever reason, but two of the major shareholders are Chinese corporations with strong ties to the Chinese Communist Party. These ties allow favourable government loans for expansion. I really do not want our taxpayer dollars to support assets of the CCP.

We need to call it what it is and not be blinded by the name just because it has "Australia" in it. It is in no way Australian and our tax payer money should never go to bail out foreign interests. We are being taken for mugs.