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Virgin in Trading Halt

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2 minutes ago, The_Big_M said:

 

The rest of the major shareholders are also foreign airlines - which have the same funding needs and limitations due to government restrictions, so are in no position to give money. It has been fully examined already.

 

It was not "bleeding money" prior, although not profitable. However, it was quite viable and only got more funding a few months back. 

 

I read it was struggling prior to COVID19. Not making a profit is not a viable long term solution. Can't just keep throwing money. I bet they have tons of liabilities. Is there enough money to pay out all the staff entitlements?

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1 minute ago, icat2000 said:

I read it was struggling prior to COVID19. Not making a profit is not a viable long term solution. Can't just keep throwing money. I bet they have tons of liabilities. Is there enough money to pay out all the staff entitlements?

From ABC.

"Virgin now has $5 billion of debt that no one — including its own foreign shareholders — wants to touch"

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Just now, By The Bay said:

From ABC.

"Virgin now has $5 billion of debt that no one — including its own foreign shareholders — wants to touch"

All the more reason for the Australian taxpayer to run in other direction. 

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13 minutes ago, MMDown Under said:

If there is no risk of not being repaid why wouldn't the current owners lend them the money, or increase the % of ownership.

 

 

Because the current owners don't have funds as they have to commit them to their own operations. As said earlier they are airlines in other countries, also affected by lockdown and needing all the cash they can for themselves.

 

It costs a lot to keep an airline operating, especially when there is no income. 

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11 minutes ago, icat2000 said:

I read it was struggling prior to COVID19. Not making a profit is not a viable long term solution. Can't just keep throwing money. I bet they have tons of liabilities. Is there enough money to pay out all the staff entitlements?

 

It wasn't struggling - that's just people throwing emotive terms to suit their own preferences. As said, it had gotten a very large loan a few months back (late last year) as evidence of that and that was achieved very quickly as the lenders had no concerns - in a normal market.

 

They certainly don't intend to not make profit as a long term solution; they made many changes in the latter part of last year, and were still in the process of that to both cut costs and increase viability. The loan they got was in support of that as they restructured themselves.

 

They likely do have enough to pay out as they still had a large cash balance - but administrators come in as it is not a going concern with shutdowns predicted for 6 months further or through to next year per the government. If services restarted tomorrow it wouldn't be an  issue - but to have no income for the rest of the year is another matter entirely.

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Posted (edited)

I await to see the administrator report into the actual status of Virgin Australia. That will paint the true story of what sort of state its in. 

 

Not saying this is the case of VA. But Administrators have been appointed to companies before and the picture has been very bleak. 

Edited by icat2000

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37 minutes ago, The_Big_M said:

 

Because the current owners don't have funds as they have to commit them to their own operations. As said earlier they are airlines in other countries, also affected by lockdown and needing all the cash they can for themselves.

 

It costs a lot to keep an airline operating, especially when there is no income. 

I wouldn't expect our Government to be flush with funds following the record levels of unemployment and extra funds being spent trying to manage the spread of the corona virus.  I can see our Government researching ways best to increase its income.

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2 hours ago, MMDown Under said:

I wouldn't expect our Government to be flush with funds following the record levels of unemployment and extra funds being spent trying to manage the spread of the corona virus.  I can see our Government researching ways best to increase its income.

I would bet my life on the government researching ways best to increase its income will be at the tax payers expense. What is that saying, give with one hand and take back with the other.

My thoughts are with the 16000 people who worked either directly or indirectly for Virgin who have now lost their jobs. 

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50 minutes ago, jland said:

I would bet my life on the government researching ways best to increase its income will be at the tax payers expense. What is that saying, give with one hand and take back with the other.

My thoughts are with the 16000 people who worked either directly or indirectly for Virgin who have now lost their jobs. 

Agree. The government does not have any money of its own, it's our money and if some sort of tax needs to be brought in in the future, to pay for keeping the economy moving after all the spending to keep people fed and in jobs, then so be it.

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5 hours ago, The_Big_M said:

 

Not really. Once it's under administration, control is lost. The outcome cannot be determined, so it's not the best solution for anyone but those wanting to pick selected assets cheaply. They're the only winners from that. Meaning the rest of Australia is vulnerable. Also financially, it's quite likely to cost Australia more, aside from the responsibility angle.

Don't believe propping up Virgin with subsidies without a detailed financial examination is the answer.

Agree the outcome can not be predetermined but I don't accept that the only winners can be those looking to pick selected assets cheaply. A restructure involving all relevant parties is the only prudent way forward.

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1 hour ago, bazshirl2 said:

Don't believe propping up Virgin with subsidies without a detailed financial examination is the answer.

Agree the outcome can not be predetermined but I don't accept that the only winners can be those looking to pick selected assets cheaply. A restructure involving all relevant parties is the only prudent way forward.

 

That's what happens when you have administration. You have no option to continue, so it's only those who are picking the leftovers, and you're desperate to get whatever you can.

 

Sure, in a great market you might be lucky to get a bidding war. Here, where every airline operator in the world is in need of funds, nobody is going to be bidding up. They all need to cut costs, so will only look to get a bargain if they can. Most won't even have funds to get anything that's not essential (and when planes aren't operating, very little is 'essential').

 

Saying that is prudent is from a financial perspective, in a time when nobody has spare funds except for great opportunities (which never describes airlines). This needs to be looked at for the benefit of the country, when things have recovered.

 

It's never good to be a seller in a down market. That isn't prudent... but that is the approach being taken by our government.

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3 hours ago, lyndarra said:

Agree. The government does not have any money of its own, it's our money and if some sort of tax needs to be brought in in the future, to pay for keeping the economy moving after all the spending to keep people fed and in jobs, then so be it.

 

Totally agree, we will endure debt for years but at least we have made every effort to look after our fellow Australians in this very trying times

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Posted (edited)
13 hours ago, By The Bay said:

I don't agree with my taxpayer $$'s being used to support a private company that is over 80% foreign owned with $5 billion debt and hasn't turned a profit in the last 5 years. This company will not be the last to get into trouble during the COVID-19 virus crisis. A question to ask yourself is, would you buy shares in Virgin?

 

I agree. 

Edited by Fletch1

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I am reminded once again of a comment by finance guru Warren Buffet-

If you want to become a millionaire ,

start off as billionaire

and buy an airline .✈️✈️✈️

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Plenty of small business 100% Australian owned are going under, surely if anyone is going to get assistance it should be them, after all they are our nations biggest employer by far.

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Posted (edited)
21 minutes ago, GUT2407 said:

Plenty of small business 100% Australian owned are going under, surely if anyone is going to get assistance it should be them, after all they are our nations biggest employer by far.

Totally agree. The Government, with our money, cannot support all companies that will struggle to survive in this crisis.

Edited by By The Bay

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16 minutes ago, GUT2407 said:

Plenty of small business 100% Australian owned are going under, surely if anyone is going to get assistance it should be them, after all they are our nations biggest employer by far.

That is true but governments are notoriously selective about who they will support, often favouring those with businesses that find party coffers.  Many of those small businesses are reliant on big business, airlines are just one example. The big one goes under and the small businesses are sucked down with it.

There are large foreign corporations that hold shares. If the shareholders were superannuation funds and private mum & dad investors would they be expected to bail out the company they invested in? Superannuation finds are big investors in many companies local and international.

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Yes, far more wide effects from the collapse of just one airline. Not only the employees, but so many suppliers are affected, and their employees, plus customers such as all the other hotels and travel providers who have less customers, down to the rest of the economy from fewer and more expensive domestic flights.

 

And of course all those small businesses referred to who sent their consultants and staff travelling intra and interstate now have to pay more, whether directly on flights, or indirectly when there are fewer services so it takes more time and on extra hotel and food costs because of longer connections travelling.

 

A big difference from some small business going down where the impact is minimal aside from the direct impact.

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"Richard Branson is seeking a buyer for Virgin Atlantic Airways Ltd. as he struggles to secure a 500 million pound ($618 million) government bailout, the Telegraph reported."

 

I guess he will not be helping out Virgin Australia.

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5 hours ago, By The Bay said:

"Richard Branson is seeking a buyer for Virgin Atlantic Airways Ltd. as he struggles to secure a 500 million pound ($618 million) government bailout, the Telegraph reported."

 

I guess he will not be helping out Virgin Australia.

Branson won;t bail out the company he started, but I am expected too. Mmmm interesting concept.

 

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4 minutes ago, GUT2407 said:

Branson won;t bail out the company he started, but I am expected too. Mmmm interesting concept.

 

Concept??  In this neck of the woods it’s pretty common practice for people (and companies) to stick their hands out when governments start offering ‘financial assistance’.

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Just because someone puts the initial investment in, it doesn't mean it's their company from then to eternity. 

 

In fact, it's pretty normal for others to take over companies over their life.

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I read where Perth and Adelaide airports have impounded Virgins planes. I presume they will accept responsibility for these craft so that should save Virgin a bit of money and upkeep. 

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Not sure about Adelaide, but Perth isn't doing anything to take over responsibility for them. They're just blocking them from leaving, but maintenance and everything else still remains the responsibility of Virgin.

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