Benchmarks

#BlackSkinMatters. J&J caves to the cancel culture mob

Now J&J is dumping hand whitening cream after social pressure surrounding racial inequality.

Perhaps sunscreen and tanning lotions should be banned by the company too? After all, those who want a darker complexion must be just as guilty of dermatological appropriation.

Or is J&J’s move really just a cynical attempt by the legal and PR departments to appear as a good corporate citizen amidst a criminal probe into whether the pharma giant lied to the public about the possible cancer risks of its talcum powder?

Also, did J&J ever think of the demand from similar products for coloured women?

Urban Rx deliberately targeted this space because of an absence of products tailored to their needs. Perhaps J&J should self-flagellate for not catering this area and apologize for racially insensitive product developers. Publicly sack them to appease the mob. Black Skin Matters.

Forbes says sales for UrbanRx are booming.

Urban Rx Founder Rachel Roff opened a spa in Charlotte, North Carolina 12 years ago and found that although 50% of the women in the south are African-American, Roff could not find products that provided adequate skin care for women with darker skin. Over time she developed a skincare technology she calls Cleartone Advanced Technology…Although she still operates the spa, that business is dwarfed by the skincare business, which continues to grow very rapidly.

See a need. Fill a need. We hope Roff continues to do well. After all, if coloured women care about removing blemishes surely they have exactly the same requirements as women of other skin tones. It isn’t racist. It is a choice.

Skin whitening products are extremely popular in Asian and Middle Eastern markets. Perhaps J&J should launch a targeted ad campaign shaming c.70% of the world’s female population for their dermatological privilege.

According to Grandview Research , the global skin lightening products market size was valued at US$ 8.3 billion in 2018 and a CAGR of 7.8%pa.

Didn’t J&J’s PR department study what happened to P&G when it targeted ‘toxic masculinity’ via the Gillette brand which wiped $8 billion in value?

From our perspective, J&J products are off our list. We never ask anyone to boycott companies but we are sick of being lectured to by sanctimonious businesses who want to morally preen.

These brands are totally within their rights to make commercial decisions about product lines.

However they don’t have an obligation to tell customers that their personal preferences with respect to hygiene, skincare or anything else are not in step with the times, especially in cultures that hold different views about beauty which are often centuries old.

Japanese skin whitening giants Shiseido and KOSÉ will be loving such corporate harakiri by J&J. J&J shareholders won’t.

Get woke, go broke.

Rasmussen Reports puts black support for Trump at 41%

Rasmussen Reports latest poll reveals that 41% of blacks and 43% of other minorities support Trump, record highs. This is up from 34% in December 2019. And a 5-fold jump on 2016.

All we can say is the left should be very concerned. Perhaps more blacks are waking up to the fact that the Democratic Party is the source of their oppression, especially as these riots play out. As Candace Owens says of her #Blexit movement, “more are leaving the Democrat plantation.

And it is worth pointing out those blacks who thought those that didn’t vote for Biden weren’t black came in at a paltry 27%.

No wonder the Democrats are pushing for mail-in ballots!

Twitter trolls Trump with a CNN fact checker link

Social media is alight with Twitter’s bold move to add a ‘fact-check’ link (to CNN of all networks) to President Trump’s claim that mail-in voting encourages electoral fraud. Twitter argued his comment was “potentially misleading.

Two points:

1) if it was consistent, Twitter should add fact checker links to around 99% of the unsubstantiated bile that is posted everyday. Why single out POTUS other than to indulge their utter hatred of him?

2) in 2005, former President Jimmy Carter and Reagan’s former Chief of Staff James A. Baker conduct a commission on election reform.

With respect to mail-in voting, the study noted:

“Absentee ballots remain the largest source of potential voter fraud.

The Carter-Baker Commission argued that national voter identification was needed to prevent real ballot fraud (especially as absentee voting could lead to double voting across states by submitting by mail and voting on election day) and to keep public confidence in the election process.

Trump has 80.9 million Twitter followers. We somehow think that fact-checking conducted by left-leaning social media platforms leaning on a reprehensible network like CNN is laughable given the shameless and glaring bias.

Note that Michael Moore’s documentary, “Planet of the Humans” has been taken down from YouTube after pressure from activists on the grounds of “copyright infringement”. Just like the two doctors that spoke out about coronavirus. That video was removed as well.

How wonderful we are able to rely on such platforms to tell us what we are allowed to think.

In conclusion, Twitter is walking on thin ice. If it starts to behave as a “media” outlet doling out opinions instead of being a mere provider of a social media platform, it may find itself wearing regulations that stifle its ability to operate. Bring it on. That would be a spectacular own goal.

ABC tells Australians to “Shut the F*ck Up”

We continue to scoff at the ABC’s leadership. It regularly guarantees us that it has learnt from previous egregious mistakes but turns around and allocates some of its supposedly limited $1bn+ in taxpayer funds to make a sanctimonious video during COVID-19 lockdown using renowned figures of the intolerant left to lecture the audience to “Shut the F*ck Up!” These people are absolutely the last people to be lecturing anyone on anything.

If the ABC and its acolytes want to tell us how invaluable it has been through the bushfires and COVID-19 which justifies more funding to carry out its good work, perhaps it can lead by example and stop producing rubbish like this. It is bad enough using ABC Kids TV to indoctrinate them about white privilege. Or allowing a bunch of radical feminists to openly call for the murder of men. Or provide a platform to a convicted terrorist or happily release a tweet on Q&A which suggested former PM Abbott liked anal sex. Or calling conservative politicians “c@nts.” If the ABC is so tight on funds, why does it continue to misallocate like this?

Guess we’re just not open-minded enough.

On page 94 of the 2017/18 Annual Report, the ABC Staff Engagement Survey showed that less than half were satisfied, down 6 points on the previous survey. This moved the ABC from the median to the bottom quartile when benchmarked with other Australian and New Zealand organisations.

Money is not the problem. Management is.

Am I a Despot or Not??

We have compiled a spreadsheet titled US State Governor Coronavirus Responsesto see who would appear to have the most despotic tendencies. We have broken down the categories by party affiliation, COVID19 infections, deaths and some choice quotes to express how some treat their minions. However there is one true standout governor that must be channeling former Albanian dictator Enver Hoxha for despotic tendencies.

Before we get accused of being partisan hacks, we note that in some states, governors have seemingly crossed their political ideologies in the opposite direction.

On balance, Republicans governors have been far more eager to open up their economies and remove restrictions. Arkansas, Iowa, Nebraska, North Dakota and South Dakota all resisted issuing stay-at-home orders, while Wyoming, Utah, Oklahoma and South Carolina have only issued such orders in specific parts of their states. All nine are Republican states. Most of these states encouraged “personal responsibility.

Infection rates in the aforementioned 9 rogue states stand at only 0.2886% and death rates are at 0.0096%. The relatively spread out nature of these states no doubt helped. Instead of the predictions that death rates would spiral out of control, 99.99% of the population in these states continue to function.

On the other hand, Democrat governors have had far harsher restrictions with respect to stay at home laws. Some may argue that the population densities of New York skew the figures.

Analysing the data, 178.7 million Americans live in the 24 (+1) Democrat-run states (districts). 149.5 million in 26 Republican-controlled states. COVID-19 infections in Democrat states is at 1.07 million with deaths at 70,652. Republican-controlled states have 456,000 infections and only 21,700 deaths. That means that Democrat states have a 0.5995% infection rate and 0.0395% death rate vs Republicans at 0.3049% and 0.0145% respectively, or effectively half. Stripping out NY for the Democrats would kick those figures to 0.4452% and 0.0262%. This would mean that infection rates were still 46% and death rates 80% higher relatively speaking.

The mainstream media wasted no time pointing out the negligence of GOP states and the shocking reckoning that would follow.

Partisan paper, The Kansas City Star, lambasted Missouri Gov. Mike Parsons (R) on April 1. They contrasted his failures to the successes of NY Gov Cuomo (D), Kansas Gov Kelly (D) & Illinois Gov Pritzker (D) by saying, “Only three other governors in the country have been as laissez-faire as Parson has in dealing with a crisis the likes of which no one alive today has ever seen — and one that will define the legacy of most every elected official now serving.” 6 weeks after this prophecy, 99.99% of Missourians haven’t succumbed to COVID-19 vs 99.994% in Kansas, 99.96% in Illinois and NY at 99.85%. Hardly a train wreck for Parsons!

Perhaps what is scarier is the “staged approach” methodology to removing restrictions which do not seem to be based on robust scientific evidence but copying thy neighbour’s homework. Take a look at some of the gradual loosening of Australia’s restrictions and it smacks of the same “one size fits all” approach in many states in the US. e.g. 10 people only in restaurants. Social distancing etc. Hardly inspiring to have such a lack of independent thinking. Especially when the coronavirus statistics to date are anything remotely as reported in the hysteric media.

Enough from us. Let’s get down to the approaches of these American states.

The most in your face comment during the coronavirus came from Indiana Republican Rep. Trey Hollingsworth.

It is policymakers’ decision to put on our big boy and big girl pants and say it is the lesser of these two evils…It is not zero evil, but it is the lesser of these two evils, and we intend to move forward that direction…We are going to have to look Americans in the eye and say, ‘We are making the best decisions for the most Americans possible,’ and the answer to that is to get Americans back to work, to get Americans back to their businesses

We wonder why data means nothing to Hawaiian Gov David Ige (D)?

Hawaii has a 0.0012% COVID death rate, one of the lowest in the country but Democrat Gov. David Ige pushed the stay at home order to the end of June. Furthermore, in the first month, the Honolulu Police Department handed out 4,600 warnings and 353 citations for breaches of the executive order.

What on earth was Tampa Bay, Florida Mayor Castor (D) thinking?

Tampa Bay, Florida Mayor Jane Castor (Democrat) released 160 prisoners from Hillsborough County Jail over concerns of COVID-19. One prisoner ended up killing a civilian the day after being released.

New Jersey Gov. Murphy (D) & Kentucky Gov. Beshear (D) showed little or no care about the constitution. 

In an interview with Fox NewsTucker Carlson, Democrat Gov. Philip Murphy (D) uttered the words “the Bill of Rights is above my pay grade.” He then went on to confess that he had not considered the effect of his restrictive executive orders on the Bill of Rights.U.S.

District Judge William Bertelsman ruled in May that Kentucky Gov. Andy Beshear’s (D) restrictions on out-of-state travel were unconstitutional.

We were surprised to see Colorado Gov. Polis (D) adopt seemingly Republican style freedoms to his constituents.

Democrat Gov. Jared Polis spoke of Coloradans taking “personal responsibility“. Instead of imposing draconian police state penalties like most of his Democrat colleagues he left it to local authorities to sort out.

Mayor Hicks (D) of Grants, New Mexico decided to take a potshot at his Democratic Governor accusing her of adopting Nazi Germany style tactics. 

Hicks criticised Governor Michelle Lujan Grisham’s Public Health Orders saying, “What the governor is doing is wrong” He allowed small business and golf courses to open before state police intervened and shut him down. He likened the New Mexico State Police behaving like the Gestapo.

It wasn’t just Democrats either. Republican primary candidate Daniel McCarthy took a swipe at Arizona Gov. Doug Ducey (R) saying, “No empathy! Dictator Ducey tacked on another 15 days of shutdowns, leaving Arizonans wondering why our own governor is so comfortable letting lives and businesses be crushed under the weight of our new regime.

Rhode Island Gov. Gina Raimondo (D) took the technology initiative much like Australia’s COVIDSafe app.

An app, called “Crush COVID RI” will be used by state health experts to conduct contact tracing and better understand the spread of the virus across the state.

South Dakota Gov. Kristi Noem (R) is the standout in terms of constituents openly pouring out love to her. 

Gov. Noem was presented with a surprise parade by her constituents thanking her for her considered actions in response to putting the responsibility back on them.

Texas Gov. Greg Abbott (R) slammed the judiciary for its pettiness. 

After a Texas hairdresser was jailed for not apologizing to the judge because she reopened her salon during lockdown, Gov Abbott said, “Throwing Texans in jail who have had their businesses shut down through no fault of their own is nonsensical, and I will not allow it to happen.” She was released.

Gov Cooper (D) of North Carolina copped a slap on the wrist from the judiciary

A federal judge blocked enforcement of a portion of Cooper’s order preventing churches from holding indoor services attended by more than 10 people.

Virginia’s Liberty University used the Bible to criticise Gov Ralph Northam’s (D) criticisms.

We invite Governor Northam (D) to come and see our compliance for himself, rather than making false accusations in press conferences from Richmond. As the Ninth Commandment says, “Thou shalt not bear false witness against thy neighbor.””

Democrat-controlled Wisconsin Chief Justice Patience Roggensack probably could have chosen her words more carefully. 

Roggensack was blasted for her remarks saying the uptick in coronavirus cases in Brown County was due to meatpacking employees testing positive and not “regular folks.” Take that you lowly educated Trump-voting deplorables.

There were many governors channelling Enver Hoxha for despotic tendencies. The reality is that more mayors were enjoying their newfound powers. 

We had LA Mayor Eric Garcetti (D) proudly champion he would have the water and electricity cut off for any businesses that didn’t comply with the lockdown. He also proudly banned sunbathing on dry sand, citing Australia as his benchmark.

We had Chicago Mayor Lori Lightfoot (D) justify having a haircut (considered non-essential to everyone else) because of her regular TV appearances despite berating Chicagoans like children with the threat of the heavy hand of the CPD to anyone who violated stay-at-home orders.

NY Mayor Bill De Blasio had his failed, “dob in your neighbour hotline“, his use of the gym (considered non-essential to everyone else) and the threat to fence off the beach at Coney Island were the peons to misbehave.

Washington DC Mayor Muriel Bowser (D) threatened to get compliance from her minions by “exercising the full force of our MPD, FEMS, DC Health and ABRA and the emergency authority to achieve it.

NY Governor Andrew Cuomo extended the stay at home directive called PAUSE—which stands for “Policies Assure Uniform Safety for Everyone” til June 13th. As most know, NY has had the highest incidences of infections and deaths throughout the country. The high density of NYC compounded the problem.

He ordered that infected patients be sent back to the nursing homes they came from which caused a huge spike in deaths. There are now reports that the data was fiddled to cover up the scandal. He has since stopped sending people back to nursing homes. He said, “Older people, vulnerable people, are going to die from this virus…That is going to happen. Despite whatever you do.

Michigan Gov. Gretchen Whitmer (D) pandered to racism and many other issues from the identity politics playbook to disguise the fact she is being sued by other state legislators for extending the executive orders without their approval. Protestors that descended on Lansing complained they were sick of being treated like small children. 99.5% of Michigan residents haven’t been infected with coronavirus. 99.95% haven’t died.

Alas, Gov. Katie Brown (D) of Oregon has shown herself to be the most despotic leader. Despite 99.92% of Oregonians not being infected and 99.997% not having succumbed to the virus she had no compunction ramming her rule of law. Oregon has less than 4% of the infection rate and 2% of the death rate of NY State yet Brown has kept an “indefinite” stay at home order in place.

An Oregon judge declared that the coronavirus restrictions enacted by Gov. Brown were “null and void” because her emergency orders were not approved by the state legislature after 28 days. The judge agreed with the lawsuit launched by 10 churches against the State of Oregon which argued that the emergency powers only lasted for a month and that to lengthen them required legislative approval which she did not seek!

Not to be outdone, Gov. Brown went to the State Supreme Court where she has a pending review. The Governor praised the Supreme Court action by saying, “There are no shortcuts for us to return to life as it was before this pandemic. Moving too quickly could return Oregon to the early days of this crisis when we braced ourselves for hospitals to be overfilled.

A bit of an odd statement when the number of people hospitalised in Oregon with COVID19 has fallen 63% in the last month to May 12th to 57 people.

Worst of all was her treatment of hair salon owner Lindsey Graham who was fined $14,000 for opening her store because it was a non-essential business. She was further threatened with the prospect of having her lease terminated as she operated out of a building owned by the State of Oregon. The final straw was the dispatch of child protection services to Graham’s home to interrogate her 6-yo stepson and check if bathroom sanitation (aka the cleanliness under the toilet seat) was up to standard.

No one questions the tragic loss of life from this pandemic. We just question the heavy-handed tactics of governors and mayors who have a twisted version of data which is completely at odds with reality. This is all about politics.

A tale: Today vs 600BC

dollar bomb

As a lover of ancient history, this story in ZeroHedge is an interesting parallel on the dangers of debt forgiveness today using the tale of releasing the commoners from debt slavery by Solon in 600BC. In short, everyone ends up paying the price.

We think the sensible solution is to let individual landlords negotiate their own deals. Let them live and die with the consequences of their actions. Undoubtedly every landlord has a unique position where a one-size-fits-all strategy won’t work.

Parker surprises positively

Parker Hannifin, the global industrial hardware store for all the major metal bashers like Boeing and Caterpillar reported results this morning. In a word – impressive.

All we care about is the orders trend. Parker supplies to global top tier firms around the world in pneumatics, hydraulics, pumps, solenoids, valves, actuators, linear motion, factory automation controls and so on. Think of it as a Bunnings Warehouse for multinational industrial corporations. Parker’s order book is a great read across on the state of global industrial production.

Orders for the quarter ending March 31, 2020, compared with the same quarter a year ago were as follows:

· Orders decreased 2% for total Parker

· Orders decreased 7% in the Diversified Industrial North America businesses

· Orders decreased 2% in the Diversified Industrial International businesses

· Orders increased 12% in the Aerospace Systems Segment on a rolling 12-month average basis.

Given COVID19, that is a pretty strong result on orders. Having said that, the next quarter maybe slightly more challenging and the company has pulled 2020 guidance.

At first glance, this is a pretty good outcome. The shares have retraced 50% from the recent lows.

Harley’s horrible huffing contains plenty of puffing

HDQ1US

When companies won’t give guidance, we must find ways to see where we were relative to history to get a picture of the future. Harley-Davidson (HOG) makes a good case study. Coronavirus may be one factor but the company has already produced results that have undercut the worst levels experienced during the GFC. We have long criticised HOG for fuzzy maths under the disastrous leadership of the recently ousted CEO Matt Levatich.

While there are strictly no direct apples for apples comparisons on the timing of coronavirus and the GFC (the latter requiring no lockdown), we note the weakness in Q1 2020 unit sales in the chart above.

This is what the trend of Q2 looks like.

HDUSQ2

If we assumed a similar slowdown for April and May then theoretically the company would comfortably breach the Q2 2009 unit sales level of 58,179 which is only 18.6% below the Q2 2019 level. Q1 2020 global sales fell by 17.7%, even though the company made a very misleading statement which we’ll get to in a moment.

One thing that struck us was the steadily rising value of quarterly inventory as a percentage of quarterly non-finance revenues since Q1 2014. While the former value is a balance sheet item and the latter P&L, Q1 is generally a period where new models are rolled out ahead of the busiest Q2 & Q3 seasons to ensure the distribution network can move metal.

HDQ1Inv

Shipments reflect this. The inventory metric drops off into Q2 although exhibits a similar type of trend to Q1. Given Q2 2009 was the beginning of the tough times post-GFC, will we see the high watermark breached or will the slowdown in production offset it? How badly are revenues affected such even flat inventories lead to a deterioration of this measure?

In Q4 2019, inventories to motorcycle revenues surged to 69.1%.

We note that Q1 2020 shipments equated to an inventory of 12,534 units (+29.0%YoY).

HDq2Inv

Here is where it gets interesting. By HOG’s own admission in the quarterly investor presentation pack (p.7), it noted that Q1 2020 US retail sales were on target to be one of ‘the strongest quarters in the last 6 years through to mid-March‘, until COVID. 6 years ago US Q1 unit sales hit 35,730 units. US sales in Q1 2020 ended up at 23,732.

By deduction,

In Q1 2014, over 90 days HOG shifted on average 397 bikes per day. (35,730/90 = 397)

In Q1 2020, over the 74 days to mid-March, HOG was moving on average 321 bikes per day. (23,732/74 = 320.7027).

If we assumed that HOG was to hit that magic target over the 16 days stolen by COVID19, it would have had to punch out 750 bikes a day. (11,998/16 = 749.875).

We would love to see the order book for these magical beasts that were waiting for a home…it would seem the sales and marketing department cherry-picked one strong day and multiplied it over the quarter to create such a questionable statement.

Here is a chart of motorcycle related revenue for Q1 since 2008. No wonder the shares have underperformed since 2014, even with a small fortune squandered on share buybacks.

HSQ1rev

The Q2 revenue book doesn’t look too flash either if April is wiped out. At present 50% of dealers are shut since late March. Is the market prepared for a sub Q2 2009 print? The share price has rebounded strongly after the Q1 results even though there is no guidance to speak of.

HDq2Rev

But it gets worse. So poor has the Q3 season become for HOG that its unit sales have missed the Q3 2009 post-GFC low for seven out of the last 10 years. Are we to believe if the world is out of lockdown by Q3 that there will be a miraculous surge in new bike sales when unemployment is likely to remain at troubling levels potentially above that of GFC?

HDq3US

HOG is a great example of a divine franchise. It wasted far too much money on share buybacks (now suspended) and sits with a credit rating just two notches above junk.

The annualised Q1 2020 loss experience for the finance business sit at 10-year highs even before it has been thumped by the coming turndown. People buy HOGs as a hobby, not transport. A purely discretionary purchase. We imagine that restoring household balance sheets will take precedence to stumping up serious coin for a Harley cruiser.

Sadly Levatich and his 2027 vision have not been consigned to the dustbin of history which is the only logical filing cabinet for it. Completely unrealistic, devoid of reality and totally in denial of the shifting sands in the global motorbike market.

The new “Rewire Plan” (p.5) while sketchy on detail (as it would with an interim CEO) is a reheat of Levatich’s plan. Sad.

In our view, the entire motorcycle industry needs a strong HOG. New management is a good start but it won’t help if they intend to convince investors that they were on course to shoot Q1 to its best level in 6 years with questionable math. How quickly can inventory be pared? What models will revive its fortunes?

HOG needs to get in touch with its core customer base the way Willie Davidson did after the dark days of AMF ownership. It needs to build products which hark back to its former glory rather answer questions in segments that no one is asking it to fill.

Indian, its rival of 100 years ago is killing it with the FTR1200. Indian’s parent company, Polaris Industries, posted a small single-digit increase for motorcycles in Q1 2020. Enough excuses HOG. You are running out of time and your retained earnings are 1/5th what they were 5 years ago!

Why is the market giving it the benefit of the doubt when the worst is still ahead?

HOG

Harley needs a crisis manager. Will the incoming CEO possess those skills?

Raelene hands back the keys to the Castle

The Giteau Law will be reviewed in 2019. Photo: Getty Images

Rugby Australia’s (RA) board losing faith in CEO Raelene Castle was inevitable. We have long held that RA’s leadership team had no rudder.

FNF Media has openly criticised the lack of performance as its biggest failing – from the ridiculous state of affairs where management had no relationship with the head coach of the core franchise to the focus on “woke” causes which alienated fans (aka core customers). Folau’s saga and broadcast rights could have been handled far more sensibly. They weren’t.

Let’s be clear. COVID19 was a catalyst, not the cause.

Any business must adapt to transitions in the marketplace but never for the sake of chasing popular causes which have little or nothing to do with core competencies. That is where RA went wrong.

Castle commented,

I love rugby on every level and I will always love the code and the people I have had the honour of working with since I took this role…I made it clear to the board that I would stand up and take the flack and do everything possible to serve everyone’s best interests…

“…In the last couple of hours, it has been made clear to me that the board believes my no longer being CEO would help give them the clear air they believe they need…

“…The game is bigger than any one individual – so this evening I told the Chair that I would resign from the role I will do whatever is needed to ensure an orderly handover. I wish the code and everyone who loves rugby nothing but the best and I would like to thank the people I work with and the broader rugby community for their enormous support.

We believe that a fish rots from the head. The lack of decisive crisis management talent has led to this situation. Ultimately the ‘customers’ deserted in droves. We tabulated the differences between the management of RA vs our rivals across the ditch.

RA needs a new leader who has grown up in the game. Who understands the customers. Who understands the investment required at the junior and club rugby level so the professional side can incubate talent. To get to a stage where the regular local competitions don’t lose players to overseas leagues that have ended up hollowing out the ability to run sustainable club competitions.

The new leadership team can start by removing/demoting any staff in positions of authority who laid down threats of walking if Castle was pushed. There is a distinct difference between issuing ultimatums and raising dissenting voices during crises. RA doesn’t need any more poison during a rebuild.

Produce the right product and the fans will return. It’s that simple.

QLD gov’t to subsidize the rest of Australia on Virgin bailout?

AA

You have to hand it to the Queensland Government’s absolute lack of awareness. It has intimated that it might fork over $200m in loans to rescue the airline. To call any airline a “family jewel” means one probably thinks Great Wall is the pinnacle of luxury auto brands.

Perhaps what Premier Palazczuk and Treasurer Trad miss is that by using Queensland taxpayer funds they would effectively grant residents in other states the full benefit of Virgin’s recovery for free. Furthermore, if Virgin didn’t manage to pay back the monies, Queensland taxpayers would undoubtedly be caught in a zombie lending scenario. So the other states would still benefit. Federal Treasurer Josh Frydenberg should be more than happy to see the sunshine state take his place.

We are surprised that so much umbrage is being taken at the idea of Chinese money coming in to subsidize the troubled airline. There is a sense of irony to see people cry nationalism when the airline has largely been owned by foreigners, 40% from China for a considerable time.

It is not as though the Chinese would treat Virgin Airlines like cans of baby milk powder and take all their planes home. Any rational investor would want to own a profitable airline based on juicy slot allocations rather than pursue relentless growth by building parallel tracks to already unprofitable destinations.

Sure, having an airline that boosts competition is a wonderful thing. We agreed with distressed debt specialist Jonathan Rochford’s summary which suggested insolvency as the best path forward. That way, hard decisions would be forced on Virgin and the restructuring would leave no stone unturned. Aircraft leasing companies have gone through this dance before and would be only too willing to act sensibly to help in the rebirth, especially given the appalling state of rail or road alternatives.

We understand people want to play hardball with China in a post-COVID19 world for its willful neglect shown during the pandemic. However, we must not let irrational fears turn away investment that benefits us, just because it is from China. Aussie investors haven’t supported Virgin much since the IPO in 2003. So why not let the Chinese do their dough? If we embraced their capitalist streak, were this investment to lower ticket prices, would we really complain? Or would we protest the idea that Qantas’ future might be at risk?

As comedian Dave Allen once said bout airlines, “they would make more money by leaving the planes at the gate and burning piles of cash on the runway!