The Queensland government has announced it’s set to bid for Virgin Australia.
Queensland’s new Treasurer Cameron Dick has already appointed an investment company and said the financial package could take the form of a “direct equity stake, a loan, guarantee or other financial incentives”.
“This is a competitive space, but Queensland is a serious contender and our discussions with the administrators have been making progress,” Dick said.
“We have been very clear. Two sustainable national airlines are critical to Australia’s economy.
“We have an opportunity to retain not only head office and crew staff in Queensland, but also to grow jobs in the repairs, maintenance and overhaul sector and support both direct and indirect jobs in our tourism sector.
“We saw the punishing increase to the cost of flights after the Ansett collapse, and this government will not stand by and let that happen again.”
The state government has appointed Queensland Investment Corporation’s Damien Frawley to oversee the bid ahead of management’s Friday deadline for offers.
“Virgin administrator Deloitte has set an ambitious time frame and we look forward to delivering on this mandate for the Queensland government,” said Frawley.
The dramatic development comes after reports earlier suggested Virgin Australia’s management team want to continue flying to international destinations such as LA, Tokyo, New Zealand, Bali and Fiji.
The Sydney Morning Herald claims to have spoken to bidders with access to a confidential handover document which also forecasts that remaining a full-service airline could triple annual earnings to $1.2 billion in the 2022 financial year.
The apparent revelation is one of multiple rumours to emerge this week, ahead of administrator Deloitte’s Friday deadline for bids to be received.
All parties who had access to the management plan document signed strict confidentiality clauses, but one told the newspaper that the reborn airline is loathed to give up some profitable international routes because it would mean forfeiting hard-to-secure gate slots.
Shortly before the pandemic, for instance, Virgin planned to start flying a new Brisbane to Tokyo Haneda airport route.
Virgin Australia originally launched as budget carrier Virgin Blue, but slowly morphed into a more complete international rival to Qantas, enduring huge losses.
It’s led many to speculate that the new airline would return to its roots, but these new rumours suggest current management instead prefers a more balanced approach.
Recently released minutes from the first creditors meeting also appear to confirm less change than initially thought, with one line suggesting, “The best outcome for everyone is the preservation of the whole business.”
Yesterday, Australian Aviation reported rumours that the billionaire founder of Indian budget carrier IndiGo is set to join the list of interested parties.
Rahul Bhatia will make the approach through his InterGlobe company, The Australian claimed, and has already hired advisory firm Investec.
Bhatia and his father, Kapil, have an estimated fortune of more than $5 billion, and InterGlobe, of which he owns 51 per cent, has already invested in the local Australian tourism industry.
Other rumours state that the Macquarie, Brookfield joint bid has been scrapped and that Sir Richard Branson could invest in the reborn airline through selling a stake in his Galactic space project.
As of Wednesday, potential suitors linked include BGB Capital, Wesfarmers and Andrew Forrest, along with rumoured interest from state governments.
For more of our in-depth coverage, click the links below:
- Velocity Frequent Flyer points have been paused, but won’t be cancelled;
- Sir Richard Branson hits out at the Australian government as he pays tribute to Virgin staff;
- The TWU and opposition urges the government to make a ‘bold’ move to save the airline;
- Australia’s states have entered an apparent bailout bidding war to help Virgin Australia – on the condition the reborn business shifts its base away from Brisbane.
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