Bain Capital have announced this evening a plan to sell 30% of Virgin on a partial IPO. I wish my coincidental timing applied equally positively to my skill in selecting which horse to back! Sadly a gift I am yet to acquire in good measure!

But, sounds like something may be happening now with Virgin.

The 30% is interesting. Read an article over the last week explaining why. Basically they have seen what GYG did and how by offering limited shares you can control the float and keep the share price high. Then slowly over time offload to the market. If you needed another reason not to touch airline stocks there is a bonus extra!

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No question about AQZ. Bought 32 E190's at $5m each at the bottom of the cycle - real value between $40m and $50m. Now QAN have extended their lease of 14 E190's to 18 on 3 year deals. Probably worth some $2m to EBITDA for a full year per plane. FY22 is a transitional year where they have been slower than expected in deploying the E190 fleet but they will really be skybound in FY23. The beauty of AQZ is that they are not reliant on RPT traffic and have a Lionshare of the FIFO market where they have lengthy contracts with the big miners.

Sadly as someone working in the industry, I think this half will be very hard for all the airlines. The "grand reopening" kicked off with a bang just before Christmas, with the number of flights peaking at this point and then the Omicron case numbers started to take hold causing cancelled flights and creating nervous travellers. From my experience seeing traffic numbers in the golden triangle (SY/BN/ML), traffic numbers are not back to other domestic peaks during COVID (such as pre-Christmas and April 21) but it is a significant improvement from pre-QLD border opening.

Competition is the toughest it has been for a long time with REX entering the golden triangle routes and Virgin and Qantas becoming leaner machines thanks to COVID (Virgin got to remove all the excess costs through administration vs Qantas which couldn't cut as hard). Oil prices are at record highs and there are a lot of cheap fares around due to the increased competition. To counter this I don't see the load factors so if every flight is full that will help profitability, however, Dec load factors for RPT network was only 55.7% which is very low. BITRE statistics for Jan/Feb will give a good indicator of how things are going for investors.

It will be a very interesting time ahead for the aviation sector. I would not be betting on a reopening play being as straight forward as many seem to think, the turbulence will continue...

@PortfolioPlus very smart business by Qantas. Leasing aircraft from a business which is 20% owned by Qantas.

Let's not forget that snazzy new low-cost airline Bonanza which is being launched in 2022 @Dominator !

https://en.m.wikipedia.org/wiki/Bonza_(airline)

@umop3pisdn I hope they can make it in the domestic market but I highly doubt it. They are using 180+ seat Boeing 737s between non-capital cities this has never worked before for any airline. For example, many of the destinations they have listed, Qantas uses Dash 8-400s or B717s/E190s for flights between that destination and a capital city. I don't know how they will fill the seats between two non-capital cities... Especially on an irregular schedule which turns off business customers which would like the direct flights.

The Australian domestic market has always only worked as a duopoly (ie Qantas vs Ansett, Qantas (Qantas + Jetstar) vs Virgin (Virgin + Tigerair) with regional being QantasLink vs REX.

Competition is great for consumers but I wouldn't want to be an airline owner over the next few years, I think there is zero predictability around profitability.