VAH Share Price History
05 Aug, 2020
High Court told the airline's finances are critically low and it needs approval for a rescue deal.
Virgin Australia Holdings Ltd plans to cut a third of its workforce as part of an overhaul to focus on being a domestic and short-haul international Boeing Co 737 operator under prospective new owner Bain Capital. Virgin Chief Executive Paul Scurrah said on Wednesday the airline was renegotiating costs with lessors and suppliers as it targets the value-for-money market for business and leisure travellers. "We have the opportunity to reset some of the onerous costs we had on us which gives us the opportunity to immediately lower that cost base without bringing the product downmarket," Scurrah said, referring to the airline's current status in voluntary administration.
(Bloomberg) -- Virgin Australia Holdings Ltd. will cut a third of its workforce and scale back its fleet under the ownership of Bain Capital as the buyout firm attempts to resurrect the airline during the industry’s worst-ever crisis.Under a plan announced Wednesday, 3,000 of the airline’s 9,000 jobs will go and long-haul international flights will remain suspended. After crumbling in April under A$6.8 billion ($4.9 billion) in borrowings, Virgin Australia will also get rid of all its long-distance Boeing Co. 777 and Airbus SE A330 jets and fly only Boeing 737s on short-haul routes.The proposals are the first glimpse of Bain’s plan to revive Virgin Australia in a market that shows little sign of recovery. Corporate aviation casualties are mounting up -- including Virgin Atlantic Airways Ltd. this week -- as carriers from Thailand to the Americas collapse or seek bankruptcy protection.“I applaud the courage of Bain to save an airline in the middle of a pandemic,” the airline’s Chief Executive Officer Paul Scurrah said Wednesday.A full recovery for the industry is unlikely before 2024, a year later than previously anticipated, the International Air Transport Association has warned. And even that might be optimistic, according to Scurrah.“Demand for domestic and short-haul international travel is likely to take at least three years to return to pre-Covid-19 levels, with the real chance it could be longer,” Scurrah said.A debt-burdened Virgin Australia buckled as the coronavirus pandemic brought business to a halt. Administrators fast-tracked an auction before the airline’s cash ran dry and agreed to sell it to Bain in June.Dim FutureSince then, Melbourne has retreated into full lockdown after a flareup in Covid-19 infections, and plans for a virus-free air corridor with New Zealand have been put on ice.Bain’s scaled back goals for Virgin Australia contrast with the airline’s previous and ultimately fateful ambition to compete with Qantas Airways Ltd. as a full-service carrier.That vision destroyed Virgin Australia’s balance sheet and ultimately led to a management shakeup. As the new CEO, Scurrah had barely started to cut costs, simplify operations and trim debt before he was overwhelmed by the pandemic.The airline will ditch its budget Tiger Australia brand and ensure travel credits are provided to customers on flights that were canceled due to the pandemic.Scurrah said the airline hopes to employ up to 8,000 staff as the market recovers.Qantas said in June it would cut 6,000 jobs and ground about 100 planes as it laid out plans to raise an additional A$1.9 billion to survive the downturn.Virgin Australia’s creditors, who include employees, are yet to find out how much money they will recoup. They’re due to vote on the proposed sale to Bain on Aug 26.The airline started as a low-cost domestic carrier in 2000. When it went under, Virgin Australia operated 144 aircraft. It had pushed back delivery of Boeing Co. 737 Max jets to July 2021, when it expected to receive the first of the 48 it had on order.(Updates with Scurrah comments, fresh details throughout.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
20 Jul, 2020
Bondholders in Virgin Australia Holdings Ltd , in administration since April, on Monday submitted an updated proposal to take over the struggling company that rivals the approach from Bain Capital selected by administrator Deloitte. The new proposal from bondholders Broad Peak Investment Advisers and Tor Investment Management is "substantially the same" as a recapitalisation pitch for Australia's second-biggest airline they lodged last month, a spokesman said in a statement.
10 Jul, 2020
(Bloomberg) -- Virgin Atlantic Airways Ltd. is closing in on a 400 million-pound ($504 million) rescue led by Davidson Kempner Capital Management after the U.S. hedge fund offered more favorable terms than other potential backers, people familiar with the matter said.Davidson Kempner has offered funding conditions that an alliance of Elliott Management Corp. and U.K. investment firm Greybull Capital declined to match, while Centerbridge Partners has stepped back after coming late to the process, according to the people, who asked not to be identified because the talks are private.Billionaire Richard Branson would also inject cash into the airline he founded and controls. Virgin Atlantic could announce details of the financing package as soon as early next week if it’s able to pin down final elements, said one of the people. The Virgin Group board will be updated on the situation Friday and could meet to sign off on a deal after the weekend if sufficient progress is made, the person said.As the deal stands now, the U.K. government, which earlier rejected a bailout request from the Crawley, England-based carrier on the grounds that its credit rating was too low, would have no role in the rescue, the person said.A U.K. Treasury spokesman declined to comment.Davidson Kempner and Elliott both declined to comment, while Centerbridge was unavailable for comment. Virgin Atlantic said it’s continuing to work on a comprehensive recapitalization.“We greatly appreciate the support of our shareholders, creditors and private investors and by working together, we will ensure that Virgin Atlantic can emerge from the crisis a sustainably profitable airline, with a healthy balance sheet,” the airline said in an emailed statement.New York-based Davidson Kempner, which has about $30 billion of assets under management, would provide about half the money, one of the people said. Branson has also committed to inject around 200 million pounds as part of a plan that wouldn’t affect equity holdings in the airline.An agreement isn’t certain, and Elliott could seek to rekindle negotiations on its own terms if final hurdles aren’t cleared, one person said.Remaining issues include freeing up about 200 million pounds in credit-card payments withheld by settlement firms in case Virgin Atlantic went bust, as well as discussions with creditors such as service providers and aircraft lessors, according to one person.Delta Air Lines Inc., which owns 49% of Virgin Atlantic, would also make a significant contribution by delaying outstanding marketing fees and other dues. Virgin Group also would waive some fees. Savings could total 400 million pounds, Bloomberg has reported.Bold ChallengerVirgin Atlantic was started in 1984 by Branson, then a 30-something music entrepreneur. The billionaire, now 69, has said he chartered a plane on a whim, after a trip to the Caribbean on a commerical airliner was canceled. He put the tab on his credit card and sold seats on the spot.In time, the company grew to become the only credible U.K. competitor to British Airways, positioning itself as an irreverent upstart taking on the stodgy national flag carrier. Branson’s airline, with more than 40 jets in its fleet, operates mainly trans-Atlantic routes between London and U.S. destinations like New York and Los Angeles.The carrier has had to park its fleet due to the coronavirus, and said it would cut 3,150 jobs, after restrictions on flying between the U.S. and the U.K. wrecked the lucrative North Atlantic trade. The London Gatwick operation has been shut down, while Virgin Atlantic is keeping its main hub at London Heathrow.Chief Executive Officer Shai Weiss pitched his recovery strategy to a dozen potential supporters in May after Britain turned down the bailout request. That led to interest from several parties, while Branson -- who is also contending with the insolvency of Virgin Australia Holdings Ltd. -- has raised more than $400 million to help his companies by selling shares of space venture Virgin Galactic Holdings Inc.(Updates with Airline’s founding from 12th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Virgin Australia Holdings Ltd bondholders plan to propose to creditors a debt-to-equity swap as an alternative deal to the purchase by Bain Capital agreed by the company's administrator, a lawyer for the bondholders said on Friday. Singapore's Broad Peak Investment Advisers and Hong Kong's Tor Investment Management plan to put forward an alternative deed of company arrangement (DOCA) to a vote at a creditor's meeting next month, the lawyer Ian Jackman said. "The administrators will no doubt put forward a DOCA that represents the Bain transaction at the second meeting of creditors," he said at a court hearing.
06 Jul, 2020
Virgin Australia Holdings Ltd bondholders have applied to the Takeovers Panel for approval to allow them to make an alternative proposal to creditors for the sale of the airline to private equity group Bain Capital, the panel said on Monday. Singapore's Broad Peak Investment Advisers and Hong Kong's Tor Investment Management are also seeking interim orders allowing them to access information including the terms of the Bain transaction, the panel said in a statement. Bain last month agreed with Virgin's administrator Deloitte to buy Australia's second-biggest airline for an undisclosed sum, banking on an aviation industry recovery.
26 Jun, 2020
Bain Capital to buy Virgin Australia in a bold bet on the recovery prospects of a shattered travel industry
Bain Capital will buy collapsed Virgin Australia Holdings in one of the biggest single bets on the airline industry since it was shattered by the coronavirus pandemic.The carrier's administrator Deloitte named the US private equity firm as the winning bidder in a statement Friday. Bain was left as the sole suitor after Cyrus Capital Partners withdrew its takeover proposal hours earlier. Deloitte didn't disclose the purchase price.Bain's investment is a bold bet on a sector facing its biggest ever crisis and the Virgin Australia business itself. The airline's larger rival Qantas Airways on Thursday depicted a bleak outlook, sacking 6,000 workers, grounding about 100 planes and raising A$1.9 billion (US$1.3 billion).While domestic travel is slowing recovering, Australia's government has said the country could keep its borders largely closed until 2021.Virgin Australia collapsed in April under A$6.8 billion in debt as the outbreak halted global travel. Deloitte's decision ends an auction process that initially drew interest from more than 20 parties.Deloitte had said that Bain's business plan envisioned operating a "smaller, single-branded domestic and short-haul international airline that also has growth potential."The announcement followed a fiery attack on the same process from Cyrus, which said Friday it was withdrawing its bid due to a "lack of engagement" by Deloitte since the US investment group submitted its proposal on June 22.Bain's deal faces a further challenge from Virgin Australia's bondholders who this week submitted their own plan to swap their debt for new shares under an independent board.Even before coronavirus-related restrictions nearly froze revenue, Virgin Australia had lost money for seven consecutive years.In April, Prime Minister Scott Morrison's government refused to give the airline even A$200 million to survive, tipping Virgin Australia in alongside UK carrier FlyBe as one of the world's highest-profile corporate casualties from coronavirus.This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.
(Bloomberg Opinion) -- What could possibly attract Bain Capital about an airline that hardly ever generates cash? Loyalty is almost certain to be the answer.Administrators for Virgin Australia Holdings Ltd. at Deloitte agreed to sell the second-ranked Australian airline to the private equity firm after it collapsed in April owing A$6.8 billion ($4.7 billion). In a sign of what a difficult path lies ahead of Bain, interest from 20 parties was ultimately whittled down to just two final bidders. Airlines, with their vast capital expenditures, weak competitive positions, and already-heavy debt loads, aren’t the most obvious places for private equity to invest. Most firms look for businesses that can consistently throw off cash before returning to market at an enhanced valuation a few years later.Virgin hardly fits that bill: The company has posted positive annual free cash flow just three times in two decades. It’s hard to see how a few years of business in the time of coronavirus is going to enhance its market value much. That’s particularly the case given that Qantas Airways Ltd., which spent much of the past decade demonstrating the power of its superior market share, has just strengthened its balance sheet through a capital raising.There is, however, one part of Virgin that’s perennially attractive to private equity — its Velocity frequent-flier program. It’s not unusual for airlines to be essentially loyalty programs with wings — Qantas’s is often the most profitable part of the business, and Air Canada’s spun-off program Aimia Inc. mostly traded at a higher multiple than its former parent until it was bought back a few years ago. Velocity has already been a winner for private equity. Affinity Equity Partners bought a 35% stake in the program in 2014 and sold it back last year at a A$2 billion valuation. That’s more than twice what it originally paid, and far more than the A$1.2 billion or so that the entire airline was worth before coronavirus struck, not to mention the zero value now put on Virgin Australia’s equity. The biggest challenge for Bain will be what to do with the main bit of the business — but that’s not an impossible task. While details haven’t been released of what a post-insolvency Virgin will look like, you’d expect the administration process to bring an end to many of the asset impairments and interest expenses that have weighed so heavily on earnings in recent years, giving an opportunity to spruce it up for selling back to the market. Australia’s stock investors are famous for buying dog-eared companies from private equity and repenting at their leisure.Bain has promised to “invest in and see closer integration” of the loyalty program and the core flying business, though it’s not clear that this amounts to a promise never to separate the two. Don’t be surprised if 18 months from now the next big IPO in Sydney is a seemingly-rejuvenated Virgin Australia, shorn of its lucrative loyalty program. Just don’t make the mistake of buying into it.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
U.S. private equity group Bain Capital said on Friday it has agreed with the administrator of Virgin Australia Holdings Ltd to buy Australia's second-biggest airline for an undisclosed sum, banking on an aviation industry recovery. Bain's bid was chosen over a rival offer from Cyrus Capital Partners and a recaptalisation proposal put forward by Virgin Australia bondholders, administrator Deloitte said. Deloitte said it was not yet possible to estimate the return to creditors and did not expect any return to shareholders.
25 Jun, 2020
(Bloomberg Opinion) -- You might not have thought it three months ago, when the spread of Covid-19 forced Qantas Airways Ltd. to halt international flights and drove its shares to their biggest percentage drop in eight years. But a global pandemic could wind up being good news for the company.Australia’s dominant airline is now something close to a monopoly player. Virgin Australia Holdings Ltd., its erstwhile local rival, went into administration in April. While limited flights are still operating, it’s unlikely to offer aggressive competition until a rescuer comes along, and possibly some time after that. That’s a fortunate position to be in. For carriers around the world, domestic operations tend to do better than international ones, since competition is usually weaker while shorter distances offer productivity benefits. This advantage is accentuated by the coronavirus, which has more or less shut down cross-border aviation on a global basis.Few carriers have as impressive a redoubt as Qantas can boast in Australia. Just a handful of domestic markets are larger in terms of passenger traffic. Of those, only India and Japan have an airline on a par with Qantas in terms of dominance, and most have suffered far worse from the virus.The company’s position is likely to be further solidified by a A$1.9 billion ($1.3 billion) capital raising announced Thursday. If you think this is some sort of desperate rescue move, have a look at the slim discount — just 3.3% or so to the previous day’s share price, once you account for dilution from issuing new stock.The advantage for airlines in the current crisis is that while the industry’s fixed costs are famously high, a lot of them aren’t nearly as fixed as the term would suggest. About 60% goes toward fuel, route and landing fees, as well as maintenance and depreciation, which is only incurred to the extent that flights are actually operating. The A$8.2 billion that Qantas expects to save over the coming 12 months amounts to about half of typical annual costs. Only A$600 million of the total will come from the difficult business of restructuring, with most of the savings resulting from simple expedients like burning less fuel.The international business that will be most severely hit accounts for less than 20% of profit in a good year, despite making up nearly half of Qantas’s seat capacity. Resisting the temptation of unprofitable overseas expansion is a strategy we’ve long urged on Chief Executive Officer Alan Joyce.Idling its gas-guzzling, hard-to-fill A380s — another measure announced Thursday — is also long overdue. Qantas shareholders have a habit of welcoming fleet writedowns, like the charge of up to A$1.4 billion that will result from that decision. In both areas, the coronavirus is providing the perfect opportunity to do what Qantas should have been doing anyway.Getting through the coming years isn’t going to be a cakewalk. Australia still needs international flights, but capacity on that front is expected to be half of typical levels in the year through June 2022. Even so, the country stands a good chance of returning to something resembling normal domestic aviation traffic sooner than any other major airline market, with the possible exceptions of China and Japan. Unlike Asian rivals that have been raising cash to make it through the pandemic, such as Cathay Pacific Airways Ltd., Korea Air Lines Co., and Singapore Airlines Ltd., Qantas has a substantial domestic market to fall back on while cross-border aviation is in hibernation. And unlike its U.S. rivals, such as American Airlines Group Inc., Southwest Airlines Co., and United Airlines Holdings Inc., it faces neither fierce competition nor a profound disease burden at home.No airline would wish the coronavirus crisis on itself, but Qantas is better placed than most to ride out this epidemic. “Qantas never crashed,” as Dustin Hoffman’s character once said in “Rain Man.” That looks to be as true now as it was then.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
24 Jun, 2020
Virgin Australia bondholders lodged a last-ditch offer for the struggling airline on Wednesday (June 24). They want to recover more of their investment and stop its sale to a U.S. private equity firm. The proposal would keep Australia's second largest airline a listed company, and comes two days after Bain Capital and Cyrus Capital Partners made final bids. The new bid involves a debt-to-equity swap among bondholders owed A$2 billion - or around $1.4 billion U.S. There would also be a fresh capital injection of just over A$1 billion. A source close to the deal said the offer would allow bondholders to recover around 70 cents on the dollar of their investment. Two sources also said the proposal would back the existing management team and honour full employee entitlements. The bondholder statement did not identify those taking part - it only said they included thousands of retail investors. Virgin entered voluntary administration in April owing nearly A$7 billion to creditors. The airline had struggled financially even before coronavirus hit travel demand. Deloitte declined to comment on the bondholder proposal. The administrator had said on Monday (June 22) that it hoped to select a preferred bidder by June 30.
Virgin Australia Holdings Ltd bondholders lodged a last-ditch recapitalisation proposal for the struggling airline on Wednesday, seeking to recoup more of their investment and stop its sale to a U.S. private equity firm. The proposal, which would keep Australia's second largest airline a listed entity, came two days after Bain Capital and Cyrus Capital Partners made final and binding offers to administrator Deloitte. "Our plan offers a sustainable capital structure underpinned by public ownership to provide certainty and support the strong operating plan for the airline," a spokesman for the bondholders said in an emailed statement.
22 Jun, 2020
Virgin Australia Holdings Ltd's administrator said on Monday that it had received final offers for Australia's second-biggest airline from Bain Capital and Cyrus Capital Partners and that it hoped to select a preferred bidder by June 30. Bondholders are working on a revival plan for the airline involving a debt-to-equity swap if they are not satisfied with the bid the administrator chooses, according to a person with knowledge of the matter. Virgin, which competes against larger rival Qantas Airways Ltd, entered voluntary administration in April and owes nearly A$7 billion ($4.80 billion) to creditors.