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TWU tells government’s Virgin representative bidders need assurances

written by Sandy Milne | May 26, 2020
Partners – Virgin Blue and Delta Airlines planned to form an alliance. (Seth Jaworski)
Virgin Blue and Delta Airlines once planned to form an alliance in this classic image. (Seth Jaworski)

The TWU met with the government’s Virgin representative, Nicholas Moore, on Tuesday 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 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”.

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“We also relayed the fears of Virgin workers to Nicholas Moore. We told him they are fearful for their futures and their families’ futures,” Kaine said.

“Workers want the government to intervene and they want it to be done in a way that resets the aviation industry, resolving the uncertainties it continually faces whether it is from terrorism threats, natural disasters such as volcanic ash or virus outbreaks.”

Shortly after the business entered administration, Prime Minister Scott Morrison choose former Macquarie boss Moore to be the government’s eyes and ears during the sales process.

The Australian reported sources suggesting that his appointment was made because he “knows all the tricks of the private equity crew; he knows their plays and will ensure the wool isn’t pulled over taxpayers’ eyes”.

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The news comes after one of the four suitors shortlisted for the Virgin Australia sale broke their silence over the weekend. Boston-based Bain Capital outlined plans to “make flying fun again”, pitching a return to the airline’s budget roots as Virgin Blue.

In a statement released Sunday, Bain said that it was “preparing a second-round proposal to become the owner and operator of Virgin Australia … with a long-term mindset and commitment to a well-funded, successful airline”.

However, comments made also play into speculation that the airline may look to cut operating costs and long-haul routes. Managing director Mike Murphy, who is heading up the company’s Virgin bid, said that “we want to bring back the best parts of the Virgin Blue culture and make flying fun again”.

While Murphy hinted broadly at potential restructuring to operating costs, he stayed tight-lipped on detail. Several sources, including The Sydney Morning Herald, have reported that Deloitte administrators have floated the idea of replacing Virgin’s existing international fleet (five Boeing 777s and six Airbus A330s) with eight Boeing 787 Dreamliners, among other cuts.

“We know aviation isn’t going to return to normal any time soon, but Bain Capital is here for the long haul with deep funding to navigate these difficult times,” said Murphy.

“We have the strongest capital base of any of the bidders.”

Murphy reaffirmed a commitment to sourcing jobs locally, saying that Bain is seeking to create “an airline for all Australians, with Australian management and staff, funded by significant Australian money, and Bain Capital, which has been investing in Australia for more than 20 years.”

“We have the depth of experience to help steer Virgin Australia through this turbulence so that together with the staff, Australia can have a safe, financially strong airline which serves the interests of all Australians and meets the needs of the hundreds of thousands of Australians who work in the tourism industry.”

According to the Australian Associated Press, Virgin currently owes $2.3 billion in secured debt to banks and aircraft financiers, $2 billion to unsecured bondholders, $1.9 billion to aircraft lessors, and $450 million to employees.

Deloitte administrators have stated that binding offers for the airline will be required by bidders by 12 June, with a sale expected by the end of June.

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6 Comments

  • JT

    says:

    The government has been crystal clear in that they are not bailing out the airline, so I don5 know what assurances or clarification the TWU and suitors are after. I get it that workers are concerned and somewhat scared but what more do they expect the government to do? If they expect free handouts beyond job keeper and jobseeker and free money for a debt ridden business, then wouldn’t it be fair that many millions of other workers and thousands of small and better run businesses then get the same? We will never pay off the debt and soon we will be revisiting Keetings Banana republic.

  • JT

    says:

    The government has been crystal clear in that they are not bailing out the airline, so I don5 know what assurances or clarification the TWU and suitors are after. I get it that workers are concerned and somewhat scared but what more do they expect the government to do? If they expect free handouts beyond job keeper and jobseeker and free money for a debt ridden business, then wouldn’t it be fair that many millions of other workers and thousands of small and better run businesses then get the same? The countries economy will be farcical with a multi-generational debt and a revisit to Paul Keeting’s Banana republic.

    I’m all for a multi-airline industry, but not at any costs. Look what happened to the car industry, even after governments of both persuasions through free good money after bad.

  • Rod Pickin

    says:

    We all know that the prime task of the administrators is to get the best financial outcome fine, but, what the big money potential bidders haven’t publicly identified is their intended interest beyond the trunk routes operated within Oz. – There are thousands of towns, communities and isolated citizens out there totally dependant on outback interstate and intrastate low density air transport currently serviced by VOZ and or allied companies but it would appear from their comments that like their views on the VOZ international network, they don’t give a toss so they should not be allowed to cherry pick the best fruit. Clearly there are three distinct flying businesses available; bidders need to identify their specific interests and intentions of operations prior to purchase approval. Failure to so do leaves us all in the dark with no resolution.

  • Paul

    says:

    I thought Deloitte was running the administration and bidding process?

  • Kim

    says:

    And owes $150M? to Velocity Frequent Flyer……

  • Francis

    says:

    IF, & that’s a big if, any of the so-called current bidders’ get VA raised again, their ‘models’ will be the lowest-run of LCC.
    The Oz travelling public haven’t a clue what that’s going to be like. Think ‘basement’ of ALL, to the maximum.
    Their record is of possibly cancelled flights, not getting folk to their destinations’ in a day, no ‘frills’ whatsoever. Cheap ticket means cheap in totality.
    It remains to be seen how well the Oz public accept all of this.

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