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 due, the 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”.
“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.
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.