Branson-linked bidder to keep Virgin full-service, say reports

written by Adam Thorn | May 27, 2020
In this blast from the past, Virgin Australia staff pose with former figurehead Sir Richard Branson (Virgin)

The Virgin Australia bidder most closely linked to Richard Branson, Cyrus Capital, has insisted it wants to maintain the business as a full-service international airline, according to reports.

Other speculation emerging ahead of Friday’s second-round deadline includes the revelation that knocked out bidders Brookfield Asset Management and the founder of Indian carrier IndiGo are both considering re-entering the competition.

On 29 May, administrator Deloitte hopes to whittle down the four current shortlisted parties – Bain Capital, BGH Capital, Indigo Partners and Cyrus Capital Partners – to become just two.

Advertisement
Advertisement

With two days to go, The Sydney Morning Herald claims Cyrus plans to keep Virgin “roughly the same size” and only cut “some” regional routes.

International flying would resume as and when coronavirus restrictions are lifted, with a new fleet of fuel-efficient 787 Dreamliners replacing its current 777s and A330s.

The newspaper’s sources also added that Virgin would keep most of its 75 737s but phase out its A320s, Fokker 100s and ATR72s.

Australian Aviation earlier reported how Cyrus Capital is based in the US but has a presence in Europe. It led a consortium that owned the ill-fated Flybe, Europe’s biggest regional carrier that became the first major casualty of the coronavirus crisis.

PROMOTED CONTENT

The AFR said the Virgin Group was already in that consortium, and plans were that a new airline would be branded ‘Virgin Connect’. In 2005, Cyrus became an investor in Virgin America, which was eventually sold to Alaska Airlines in 2016 for $2.6 billion.

Meanwhile, The Australian speculated on Wednesday that former bidders Brookfield Asset Management and InterGlobe, the major shareholder behind budget carrier IndiGo, have not “given up hope” of getting back in the race.

There is still no word on whether Queensland will, as earlier announced, throw its hat into the ring.

Only yesterday, the TWU met with the government’s Virgin representative, Nicholas Moore and told him attempts to sell the business are being impeded by lack of clarity over whether or not there will be federal help.

Unions representing the airline’s employees – who together account for 9,020 of the total number of creditors and are owed $451 million – told the media later that a lack of reassurance means serious bidders are “trying to crunch numbers in the dark”.

National secretary Michael Kaine added afterwards that interested parties “don’t know when the airline might be able to get back in the air because of state and federal restrictions and they don’t know if there will be any financial assistance. This means it is almost impossible to put together a plan for Virgin”.

Did you know that Australian Aviation Magazine comes digitally? Subscribe to Australian Aviation’s digital magazine for just $59.95 a year! Our app is available on mobile, tablet and PC devices! Subscribe now at australianaviation.com.au.

10 Comments

  • Anton

    says:

    If Virgin Australia wants to succced properly, GET RID OF ALL LEASED A330s AND ATR AIRCRAFT!!! Cyrus is a stupid bidder. If it keeps all the fleet then Virgin Australia will suffer another collapse in a few more months time!

  • Anton

    says:

    If Virgin Australia wants to succeed properly, GET RID OF ALL LEASED A330s, BOEING 777s AND ATR AIRCRAFT!!! Cyrus is a stupid bidder. If it keeps all the fleet then Virgin Australia will suffer another collapse in a few more months time!

  • Paul

    says:

    Cyprus want to cut regional routes. Well that will not go gown well with Qld govt. The Virgin brand not matter how you twist it is tainted. They should do some market research.
    Sorry but i believe back to basics. The VA brand was a hybrid somewhere between LCC and full service. LCC is where this new airline needs to be initially.

  • AgentGerko

    says:

    Best of luck to Cyrus then. Virgin America was a great airline, with the best Business Class cabin of any US domestic carrier, with the exception possibly of JetBlue. But for dropping “some” regional routes, I’d think “most” is more likely as the ATR72s and F100s are the very aircraft used on these routes. Very few regional routes can maintain a 737, which is why Qantaslink has so many Dash 8s and 717s. But full-service Virgin Connect? Yes please.

  • Marcus

    says:

    Dropping regional routes, playing into the hands of Rex.

  • Dennis

    says:

    Virgin 2.0 must keep regional services. There must be a minimum of two airlines for regional, be it Virgin, Rex ,QantasLink.
    The Australian public requires this.. also Alliance has more capabilities.

  • Sebastian

    says:

    If the newspaper’s sources believe Cyrus would want to remain as a full service airline and phase out the A320s, Fokker 100s and ATR72s, I would say the newspaper’s sources are not credible or Cyrus really needs to hire some new strategists. An airline in a country as big as Australia without a strong regional arm would not be considered a ‘full service’ airline. It would be interesting and foolish to see a one third full 737 flying the Sydney to Canberra shuttle. This is where having the ATR made sense. Contracting the regional flying to another operator is also not strategically smart as VA was with Alliance. Consistent branding utilising new technology equals customer loyalty and long term longervity.
    Perhaps a 3 tier system would be a force to be reckoned with ie. E170-E2 or A220 flying regional, keep the 737’s, and B787 for international.

  • weightANDbalance

    says:

    VOZ already damp-leased many of its QLD regional routes to Alliance. I believe its very dynamic. What was initially scheduled on a VOZ B738 would be bumped to an Alliance F100 on pretty short notice, e.g. the day before. The F100s are mainly used in WA for FIFO charters with VARA, I believe. The ATRs are primarily used in regional NSW routes. I don’t think the QLD government will be too upset at the plan. (NSW on the other hand…).

    They have also wanted to get rid of the A330s for a while, and they were already slated to go, more or less, at least informally, even if no official announcement was made. It was just a matter of the fleet and route planning and financing etc. It would have probably been an outcome to replace both teh A330s and B777s with B787s. And it was already well on the way of getting the A320s out of both VARA and Tiger, publically stated.

    The only real change here from already existing VOZ momentum is the stated desire to completely offload the ATRs.

  • Bernard

    says:

    Virgin overplayed it’s hand by the people running it happy to have the debt levels it had. On the restart of the industry let’s not forget that customers need to be served throughout the country so whoever provides regional services needs to do it as responsibly, professionally, profitably as possible and this may need govt subsidy because all those towns and centres need regular flight services for social and other important reasons. You can’t let them all turn into cut off ghost towns, which is why Regular contact is needed. Call it as part of addressing the tyranny of distance big countries suffer. So if Rex becomes the default provider it’s better than not having one.

  • Matt

    says:

    I feel that the Virgin Australia name should stay.
    Virgin Connect doesn’t sound right unless they used that name for Regional Services like how Qantas uses Qantaslink. I also wouldn’t fly Virgin if they moved back to a Low Cost Carrier model and that would be a huge mistake as they would be giving Qantas the monopoly on Corporate Travel.
    If Rex were to go into the regional routes to take over from Virgin that wouldn’t be a bad thing although the Saab 340s might be a bit small for some of the routes although Rex are already flying to some of the routes such as Sydney to Albury.

Leave a Comment

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

Each day, our subscribers are more informed with the right information.

SIGN UP to the Australian Aviation magazine for high-quality news and features for just $99.95 per year