Cyrus lifts the lid on Virgin 2.0, plans for Tigerless ‘hybrid’ 

written by Sandy Milne | June 15, 2020
Cyrus Capital’s Jonathan Peachey says the company plans to scrap Tigerair if successful in its bid for the collapsed airline (Source: Australian Aviation archives)

Cyrus Capital adviser and former Virgin America CEO Jonathan Peachey has detailed the company’s plans for a Virgin Australia reboot, as pressure mounts in the run-up to deadline day.

With less than a fortnight left until binding offers are duethe Cyrus adviser revealed over the weekend that the company is moving forward with plans to reposition Virgin as a mid-market “hybrid”.

According to Peachey, Cyrus hopes to streamline and simplify the airline – which he said has become a “little too complex over the years”. Running a smaller network, the investment group then hopes to reposition the airline to “sit below that very top tier of where Qantas plays so strongly in, and above and maybe overlapping slightly where Jetstar sits”.

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“We don’t intend to take it back to the Virgin Blue days, the pure low-cost carrier of the past,” Peachey emphasises. “The brand has evolved, the business has evolved and the market has evolved as well. We don’t think the market needs that, with Jetstar’s presence.

“We think there’s a really sweet spot in the middle where Virgin can play very strongly. And that’s exactly what we saw in the States with Virgin America.”

To that end, Peachey also says that Cyrus plans to scrap budget arm Tigerair, though it would stick with the current Virgin Australia branding.

“Trying to operate a full-service carrier and a low cost carrier within the same group is very complex and very difficult. There aren’t many airlines around the world that have been able to do that successfully,” he said.

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While the company would look to draw on a long-term affiliation with Virgin Group boss Sir Richard Branson, Peachey reiterated that the founder remains non-committal.

“[Virgin Group] is not working with any one party at this point is my understanding,” he said. “We’re in close contact, as I’m sure the other parties are.”

With speculators linking Cyrus to the collapse of the ill-fated Flybe, Peachey also took the opportunity to take aim at suggestions that Cyrus had mishandled its administration or that it would act as a “cut-and-run” investor.

“This is quite a different situation. With Flybe, we invested as part of a consortium, so Cyrus wasn’t the lead investor as we are hoping to be in Virgin Australia and it wasn’t up to us to make all of the decisions,” he said.

According to Peachey, a Cyrus-controlled Virgin would retain the current executive team – including Paul Scurrah – and would rely on its network of creditors rather than any government subsidy for funding.

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20 Comments

  • Anton

    says:

    It would be great if Virgin sells off Tiger Air. That will make the airliner more profitable without Tiger Air. If Virgin wants get out of bankruptcy, it will have to sell their assets of including Tiger Air.

  • Ess Enn

    says:

    Trying to operate a full-service carrier and a low cost carrier within the same group is very complex and very difficult. There aren’t many airlines around the world that have been able to do that successfully,” he said.

    That’s exactly what Qantas have done, snookering VA into the position that they ended up in. Bain & Cyrus, gambling with investors’ cash…. what will happened when the next “hiccup” hits the aviation industry?

    • Warwick

      says:

      Virgin are in their current money-less situation due years’ of poor management on every level.
      For a company to reach a $7 BILLION debt, at a minimum, is disgraceful.
      It’ll be interesting to see how things pan out over the next few months’.

    • Max

      says:

      “what will happened when the next “hiccup” hits the aviation industry?” Perhaps next time QANTAS will be back on its knees again, with cap in hand. People have short and at times very selective memories. By the way this situation is far from a mere “hiccup”. It’s more like a major hemorage, airlines across the globe have their financial backs to the wall.

  • Nate

    says:

    Still a ‘long runway’ between now, & getting an airline up, & flying.
    Still longer, to have a successful business.
    Only time will tell.

  • Craigy

    says:

    So Mr Scurrah, your past statements about Tigerair remaining part of the Virgin Australia group now look to be misplaced or at worse, dishonest. At least Cyrus is upfront about their plans without Tigerair.

    • Scott

      says:

      That’s a big call. PS and Virgin has done fantastically well after picking up only 10% of Federal government funds during COVID, and before that only 7% of government contracts.
      PS has always maintained Tiger in the restructure plan, the latest news is from the BUYERS not PS, then again why would the buyers broadcast their Entire plan pre purchase to their major competitor based on competitive reactions over history. I’d expect a surprise or two, but it’s all about waiting rather than speculation, hope the Virgin group come out strong, well backed, with a fantastically lowered cost base via the administration process combined with a remodelled product for the new world and new economy. Good luck Virgin and PS the small guys in this market.

  • David

    says:

    They’re still going to pay Branson multi-$mn’s just for the name!
    What a waste of money!
    And they say ‘profit’ will be achieved in 3 years’? Good luck with that!
    Old saying comes to mind, ‘a fool & his money are easily parted’.

    • James

      says:

      Yes, they must really think the ‘name’ is worth $15mn approx per year.
      That’s money that could go towards wages for staff at the coal-face, on aircraft maintenance et el.

      They don’t realise the ‘name’ is now tainted, as it has been with all others’ that’ve gone bust under it.

      Get a new name, & save the company millions’ of dollars annually.

  • Meepa

    says:

    Its like they knew Tiger air would be scrapped many months ago when they sacked all the Tigerair staff while keeping the Virgin Pilots to fly the Tiger aircraft!

    They say that they cant run a Low Cost Carrier??! Well that just says that the current owners and the new owners wont be able to run a profitable airline with crap talk like that. Have they heard of Qantas & Jetstar?

    All I see is a massive opportunity for another player into the Aussie LCC market to clean the clocks of VA! Especially since there is a “recession” and people fly the budget options moreso during this time! Plus, there is about 220+ Airbus pilots and 400+ FA’s from Tigerair waiting in the winds to rub it into the face of Scurrah and VA for recking Tigerair over the past 7 years!

    • Deborah

      says:

      Paul Scurrah commenced as VA CEO on 25 March 2019.

  • Maggie

    says:

    I hope Virgin 2 gets off the runway whether it is a Cyrus or Bain or whatever, I currently have two bookings with Virgin, one at the end of September to Hamilton Island the other to Perth at the end of October. I am also a Peachey by birth so am hoping as well that Johnathan Peachey at Cyrus can successfully get Virgin off the ground.

    • Tony

      says:

      Good luck with your tickets’ on Virgin. Sometimes in life, there’s a ‘price’ to be paid for ‘cheap’.

  • Mark QF

    says:

    5 min late Virgin Business class Boarding declined. After standing 30 minutes inline to be ticketed! Were not in the slightest interested in helping me.
    Walked to Qantas terminal and also 5 minutes late they flew me. Who got the cash?

    • Connor

      says:

      All the ‘rules’ that Virgin had variously, have now come back with a vengeance, to bite them.
      I didn’t ever fly with them, for many reasons’.
      Always preferred travelling with QF, with whom I never had a problem, at any time.

  • Rod Pickin

    says:

    One would have to admit that Covid19 is not the most encouraging time to re-introduce a troubled airline and coupled with some interesting facts that makes the re-invention of the VOZ group even more interesting. An intending purchaser’s first check would be; Cash at the bank?,- Liability for Debts? Moving on to Assets it is reported that major operational assets owned are thus, 1 x A330-200, – 4 x B777-300ER, – 40 x B737’s inc 2 x 700 models,- 1 x A320-200 and finally 9 x F70/100 Fokkers. The balance of the operational assets totalling 63 airframes are all reported to be leased and this excludes Tigerair. I guess the first move would be to offload leased units and make a start up with the balance and there are many equations but most importantly for the country it would appear from the intending purchasers that there is no mention of regional ops. only trunk and some international routes and again, the intending owner/operators are all foreign. Time will tell.
    Owner/Lease data from Planespotters

    • Blake

      says:

      Yes, Rod, they’re only interested in the monied trunk routes. The ‘outback’ doesn’t exist for them.
      At least we’ve Alliance & Rex still, thank goodness.

    • James

      says:

      Virgin don’t operate F70’s.

      Don’t listen to everything you read people.

  • Brian

    says:

    Don’t worry if VA doesn’t get off the ground again, there’s a bigger REX on the ascendency ?

  • That’s correct James. Only Alliance operate the F70 in Australia.

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