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Melbourne Airport CEO woos reborn Virgin

written by Adam Thorn | April 23, 2020
Virgin Australia 737-8FE VH-YIV
A Virgin Australia 737-8FE lands at Melbourne YMML (Victor Pody)

Melbourne Airport’s chief executive has said that a reborn Virgin Australia should make the Victorian capital the cornerstone of its new network.

Speaking to The Australian Financial Review on Thursday morning, Lyell Strambi said, “That doesn’t necessarily have to mean corporate HQ, though it certainly could.”

The news comes after the state’s Treasurer, Tim Pallas, said on Wednesday his government considered joining a bailout bidding war for the airline before administration, and may still have a role to play in future.

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The comments from Strambi are particularly pertinent given his history as a former CEO of Qantas Domestic and COO of Virgin Atlantic.

Strambi said there’s an “ongoing conversation” about how to make a Melbourne move happen and said the city is underutilised in terms of its value as a strategic hub.

“If a lean, fitter, stronger Virgin wants to rebuild, Melbourne has to be at the heart of the plan,” he said.

“Brisbane is a great source of tourism inflow but on its own it doesn’t provide the depth or diversity of traffic, business traffic, to compete with Qantas.”

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In the days leading up to Virgin’s collapse into administration on Tuesday, an apparent bidding war began between states, offering the airline money in exchange for retaining or moving its base to their capital cities.

The row began on Saturday, when the Queensland government offered Virgin a $200 million lifeline on the condition that other states also contribute and the business maintains its base in Brisbane.

However, the next day, NSW Treasurer Dominic Perrottet hinted that any contribution from its government would require the airline to move to Sydney, instead.

Then, on Monday morning, Queensland angrily hit back, with State Development Minister Cameron Dick insisting the move would force 1,200 staff to move states to remain in a job.

“It’s a nonsense to think the Prime Minister would even consider a NSW plan to move the airline there,” he said.

Minister Dick then dramatically told NSW to “back right off” and said, “There is nothing more dangerous than Queenslanders with their backs to the wall.”

Finally, on Wednesday, Victoria seemingly threw its hat into the ring, claiming it had considered making a bid and hinting an offer could still happen.

Pallas said, “We would expect to see more jobs come to Victoria. We are almost exactly identical in size to Sydney and in practical terms, we don’t have a major domestic carrier based here and that strikes us as a little unreasonable.

“We will play our part but we are not going to bankroll essentially this company at the risk of considerable cost to the taxpayer.”

The airline group confirmed its collapse on Tuesday morning, after the announcement leaked the previous evening. The business was struggling to service a $4.8 billion debt pile with little revenue coming in.

After the announcement, Deloitte administrator Vaughan Strawbridge and Virgin chief executive Paul Scurrah revealed more than 10 parties have expressed interest in recapitalising the company, which they described as being “very sophisticated parties”.

For more of our in-depth coverage, click the links below:

Steer your own in-flight experience – available on print and digital Whether our classic glossy magazine in your letterbox, daily news updates in your inbox, peeling back a few layers in the podcast or our monthly current affair reports, you can count on us to keep you up to date. Sign up today for just $99.95 for more exclusive offers here. Subscribe now at australianaviation.com.au.

2 Comments

  • Rod Pickin

    says:

    Yes I am sure that the Peoples Republic of Victoria has plenty to offer the capitalist world of civil aviation especially with its reported access to Chinese capital but seriously, how about just keeping to and ensuring the health and welfare of Victorias’ citizens, is that not what you were elected to do

  • Lechuga

    says:

    They’re right, Melbourne would be the best place to re-launch Virgin. Brisbane was. Great idea 20 or so years ago when it was a growing city and Virgin Blue was a bit of a leisure airline taking people to sunny Queensland. But times have changed and Melbourne has a huge future, ontop of being the second biggest city in the country by a quite small margin.

Leave a Comment

Your email address will not be published. Required fields are marked *

Melbourne Airport CEO woos reborn Virgin

written by Adam Thorn | April 23, 2020
Virgin Australia 737-8FE VH-YIV
A Virgin Australia 737-8FE lands at Melbourne YMML (Victor Pody)

Melbourne Airport’s chief executive has said that a reborn Virgin Australia should make the Victorian capital the cornerstone of its new network.

Speaking to The Australian Financial Review on Thursday morning, Lyell Strambi said, “That doesn’t necessarily have to mean corporate HQ, though it certainly could.”

The news comes after the state’s Treasurer, Tim Pallas, said on Wednesday his government considered joining a bailout bidding war for the airline before administration, and may still have a role to play in future.

Advertisement
Advertisement

The comments from Strambi are particularly pertinent given his history as a former CEO of Qantas Domestic and COO of Virgin Atlantic.

Strambi said there’s an “ongoing conversation” about how to make a Melbourne move happen and said the city is underutilised in terms of its value as a strategic hub.

“If a lean, fitter, stronger Virgin wants to rebuild, Melbourne has to be at the heart of the plan,” he said.

“Brisbane is a great source of tourism inflow but on its own it doesn’t provide the depth or diversity of traffic, business traffic, to compete with Qantas.”

PROMOTED CONTENT

In the days leading up to Virgin’s collapse into administration on Tuesday, an apparent bidding war began between states, offering the airline money in exchange for retaining or moving its base to their capital cities.

The row began on Saturday, when the Queensland government offered Virgin a $200 million lifeline on the condition that other states also contribute and the business maintains its base in Brisbane.

However, the next day, NSW Treasurer Dominic Perrottet hinted that any contribution from its government would require the airline to move to Sydney, instead.

Then, on Monday morning, Queensland angrily hit back, with State Development Minister Cameron Dick insisting the move would force 1,200 staff to move states to remain in a job.

“It’s a nonsense to think the Prime Minister would even consider a NSW plan to move the airline there,” he said.

Minister Dick then dramatically told NSW to “back right off” and said, “There is nothing more dangerous than Queenslanders with their backs to the wall.”

Finally, on Wednesday, Victoria seemingly threw its hat into the ring, claiming it had considered making a bid and hinting an offer could still happen.

Pallas said, “We would expect to see more jobs come to Victoria. We are almost exactly identical in size to Sydney and in practical terms, we don’t have a major domestic carrier based here and that strikes us as a little unreasonable.

“We will play our part but we are not going to bankroll essentially this company at the risk of considerable cost to the taxpayer.”

The airline group confirmed its collapse on Tuesday morning, after the announcement leaked the previous evening. The business was struggling to service a $4.8 billion debt pile with little revenue coming in.

After the announcement, Deloitte administrator Vaughan Strawbridge and Virgin chief executive Paul Scurrah revealed more than 10 parties have expressed interest in recapitalising the company, which they described as being “very sophisticated parties”.

For more of our in-depth coverage, click the links below:

Steer your own in-flight experience – available on print and digital Whether our classic glossy magazine in your letterbox, daily news updates in your inbox, peeling back a few layers in the podcast or our monthly current affair reports, you can count on us to keep you up to date. Sign up today for just $99.95 for more exclusive offers here. Subscribe now at australianaviation.com.au.

2 Comments

  • Rod Pickin

    says:

    Yes I am sure that the Peoples Republic of Victoria has plenty to offer the capitalist world of civil aviation especially with its reported access to Chinese capital but seriously, how about just keeping to and ensuring the health and welfare of Victorias’ citizens, is that not what you were elected to do

  • Lechuga

    says:

    They’re right, Melbourne would be the best place to re-launch Virgin. Brisbane was. Great idea 20 or so years ago when it was a growing city and Virgin Blue was a bit of a leisure airline taking people to sunny Queensland. But times have changed and Melbourne has a huge future, ontop of being the second biggest city in the country by a quite small margin.

Leave a Comment

Your email address will not be published. Required fields are marked *

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