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MIAMI – The COVID-19 pandemic has taken a significant scalp out of the Australian aviation industry as Virgin Australia today files for administration. The airline has done this voluntarily after recording around £2.55bn in debt as well as having a £714m bailout request from the federal government being rejected. On top of this, the Queensland Government had offered A$200m to help bail the airline out but came on the conditions including such federal backing, debt restructuring, shareholders contributing, its headquarters remaining in Brisbane and ongoing regional flights to be secured. The Australian carrier also had to shut down its New Zealand operations on April 4, sacrificing 600 jobs in that region. Virgin Australia had also suspended trading on the Australian Stock Exchange late last week amid its deteriorating financials. April 16 then saw the Australian government announce it would subsidise rescue flights for the carrier and Qantas. It is understood that 10,000 direct and 6,000 indirect jobs will be affected by this move. All seemed to be fine with the carrier on its social media, with it announcing limited scheduling until June 7 around four days ago to bring home stranded passengers. The airline has not released an official statement as of yet, but Gavin Coote at ABC News has received confirmation of accounting firm Deloitte that it has been appointed the administrators in this insolvency process. MPs in Australia have already come out and criticised the country’s leader, Scott Morrison for not doing enough to help the airline. “Scott Morrison has let Virgin Australia fall on his watch. His failure to act sees 16,000 workers out of a job. This avoidable outcome is devastating for those workers and their families, and our regional economies,” Catherine King said, the Shadow Secretary of State for Infrastructure Regional Development and Transport. The CEO of the carrier, Paul Scurrah, will keep his job while the administrators does its work. The Guardian had also reported that there has been one bidder from the airline previously, dubbed BGH Capital, who believes that the assets can be salvaged to transform the debt out of the stricken carrier. With the airline filing for administration, it also means that the 23 Boeing 737 MAX aircraft that had been ordered are certainly under jeopardy. MORE BOEING 737MAX ORDERS GONE With the airline filing for administration, it also means that the 23 Boeing 737 MAX aircraft that had been ordered are certainly under jeopardy. The deal, valued at $2.19bn, was placed in 2012, before expanding to 38 later on in the decade, and then cut down back to 23, with some order deferrals into 2021. It could be suggested that these deferrals were as a result of negative financials in the company as well as the ongoing 737 MAX crisis taking further effect. A BUMPY FEW YEARS FOR VIRGIN AUSTRALIA In 2018/19, the airline reported a A$349.1m loss, with it decreasing ever so slightly to A$315.4m for 2019/20. The group had to also spend A$152.6m in 2019/20 on the asset impairment of Virgin Australia and Tigerair’s international businesses. There was some level of hope in the last financial year, with its cash balances increasing to A$1.7bn from A$324.5m, but obviously was not enough to deal with its ever-increasing debts. It was the same with revenues, with the carrier recording a 7.5% jump to A$5.8bn and had recorded 25.5m passengers in 2019, up from 24.9m in 2018. WHERE IT ALL BEGAN The airline was just shy of its 20th anniversary, having commenced operations in August 2000 as its previous name of Virgin Blue, which commenced with two aircraft on a single route. Following the collapse of Ansett Australia in September 2001, its market share domestically began to rise. In order to have any level of growth going into the start of the next decade, the airline had decided to begin codesharing agreements with United Airlines. It had also signed domestic deals with Regional Express Airlines. The next big codeshare came from Garuda Indonesia in November 2007, beginning its Asian expansion. In the same year, Vietnam Airlines also approached the carrier and signed an agreement with the firm, thus solidifying more Asian connectivity. In 2008, Virgin Australia implemented a premium economy class throughout its entire fleet, with it being installed in the first three rows of the cabin, offering priority check-in, larger baggage allowances, lounge access, increased legroom, and all-inclusive flight services. December 2010 saw the Virgin Blue name enter into alliances with Etihad Airways and Air New Zealand, before seeking approval with Delta for co-operation on trans-Pacific services. This was later rejected by the U.S. Department for Transportation at first, before being approved in June 2011. In 2011, the airline began to get into the duopoly of the Australian market by introducing a new aircraft livery, new uniforms, and new onboard menu options. And thus, Virgin Australia was born. On top of this, aircraft such as the Airbus A330 and Boeing 777-300ER were acquired in order to compete with Qantas. During the rebrand, it was at that point that the Virgin Blue name would have been scrapped so then it could attract more business travelers away from Qantas. In that same year, it had also rolled out the use of a business class product across its entire network. Air New Zealand had also announced at the time that it would take a shareholding stage, valued between 10 to 14.99% of the carrier. As the years passed, other firms such as Singapore Airlines, HNA Group and others began investing money into the carrier, with Air New Zealand eventually dropping out in 2016, selling its remaining 2.5% stake to the Nanshan Group. The airline has since grown to a fleet of 98 aircraft, serving 56 destinations from its hubs of Brisbane, Melbourne and Sydney. What remains clear is that even in the wake of negative financials in a pre-COVID19 environment, Virgin Australia was still able to function. It is when there is a huge widescale disruption to the very infrastructure that has kept the carrier afloat is when we begin to see more carriers go under. The general theme for last year was volatility, especially with so many airlines like Thomas Cook and others going under. It seems that 2020 will now begin to continue that trend as we approach what is seen as the peak of the virus. Only time will tell how the industry will survive, and how. https://airwaysmag.com/airlines/virgin-australia-administration/
https://blueswandaily.com/qantas-to-be-worlds-first-a321p2f-operator/ August 12, 2019 Qantas announced (10-Aug-2019) plans to introduce up to three A321P2F aircraft to operate for Australia Post. The first aircraft is due to enter the fleet in Oct-2020 and Qantas stated it will be the first airline to operate an A321 freighter. The A321P2Fs will provide nine tonnes of additional capacity, an increase of nearly 50%, compared to Qantas’ existing Boeing 737 freighters. Qantas and Australia Post signed an expanded seven year domestic and international airfreight agreement valued at more than AUD1 billion (USD677 million) to provide Australia Post customers with access to Qantas Freight freighter aircraft, priority access to cargo capacity on Qantas and Jetstar Airways passenger services and capacity on Qantas’ partner airlines worldwide.
https://blueswandaily.com/sydney-south-america-options-for-corporates-improve-as-latam-airlines-adds-nonstop-services/ May 15, 2019 SANTIAGO SYDNEY LATAM Airlines has unveiled plans to launch three weekly nonstop flights from Santiago to Sydney in Nov-2019. The Chile-based airline group currently serves Sydney with a daily flight via Auckland and plans to continue to operate Santiago-Auckland-Sydney four times per week after the new nonstop option is launched. Highlights: LATAM Airlines plans to upgrade three of its seven weekly Sydney flights from one-stop via Auckland to nonstop from Nov-2019; Corporates will now have the flexibility of nonstop Sydney-Santiago flights every day of the week virtually year-round when also factoring in the existing nonstop service from LATAM partner Qantas; Santiago is the only nonstop destination in Latin America from Sydney – as well as from Melbourne – but connections are available throughout the region using LATAM’s hub. Qantas is currently the only airline operating nonstop services between Santiago and Sydney. It operates the route with three to five weekly flights depending on the time of year. As Qantas and LATAM are codeshare partners, the new LATAM-operated nonstop service will provide customers a daily product most of the year. This is particularly important for corporates, who appreciate the flexibility of a nonstop flight every day of the week. Sydney-Santiago is not a huge corporate market but Santiago can act as a gateway to rest of Latin America including economic powerhouse Brazil. Santiago is LATAM’s main hub, resulting in quick one-stop connections from Sydney to destinations throughout the region. LATAM has not yet set a launch date or begun tickets sales for Santiago-Sydney nonstops but has stated the new service will launch in Nov-2019. While the new nonstop Sydney flights will increase its nonstop seat capacity from Australia the increase will be relatively minor because the airline is reducing capacity to Melbourne. The airline is cutting Melbourne-Santiago from five to three weekly flights in Aug-2019. It is further reducing Melbourne-Santiago capacity in Oct-2019 as it downgauges the route from 313-seat 787-9s to 247-seat 787-8s. LATAM launched Melbourne in Oct-2017 and initially operated the service three times weekly with 787-9s. It added two 787-9 frequencies in Dec-2018, resulting in five frequencies and 1,565 weekly one-way seats. The new thrice weekly 787-8 schedule for Santiago-Melbourne will generate only 741 weekly one-way seats, representing a 53% reduction compared to the current schedule and a 21% reduction compared to the first year of the Melbourne-Santiago operation. LATAM uses a mix of the 787-8s and 787-9s on the Santiago-Auckland-Sydney route depending on the time of year. It currently deploys 787-8s (based on May-2019 schedules) and the last couple of years has deployed -8s in the off-peak southern winter months and -9s the rest of the year. Qantas currently uses 364-seat 747-400s on its Sydney-Santiago flights. However, Qantas is phasing out its 747 fleet in 2020 which will likely result in the route being downgauged to 236-seat 787-9s in the next year, but it could add frequencies to Santiago as it switches to the smaller twin-engined type. It would be sensible for Qantas to at least introduce a fourth weekly flights during the off-peak winter months of May, June, August and September instead of the current schedule of three frequencies during this period. The additional flight would give Qantas and LATAM a combined daily schedule for this period and hence a daily year-round product. However, LATAM’s launch of nonstop services on the Santiago-Sydney route could prompt Qantas to decide against adding a significant number of frequencies. A year-round 787-9 product of four weekly flights with a fifth frequency during peak periods would result in about a 30% reduction in Qantas capacity compared to the current schedule but Qantas-LATAM combined nonstop capacity would be up by over 20%. LATAM configures its 787-9s with 30 lie flat business seats and 283 economy seats, including 51 extra legroom economy seats. Its 787-8s also have 30 lie flat business class seats but only 247 economy seats. LATAM does not have a premium economy product. Its business product on the 787 is in a relatively tight 2x2x2 configuration while economy is in the standard 3x3x3 configuration. Qantas’ 787-9s have 42 lie flat business class seats in the more preferred 1x2x1 configuration. Its 787-9s also have 28 premium economy seats in a 2x3x2 configuration and 166 economy seats in 3x3x3 configuration. The 747-400 Qantas now uses on the Santiago route has 58 lie flat business class seats, 36 premium economy seats and 270 economy seats.