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Cyrus secures key union backing for Virgin bid

written by Adam Thorn | June 18, 2020

A Virgin Australia Boeing 737-800 Hobart
A Virgin Australia Boeing 737-800 arrives at Hobart Airport (Craig Murray)

Momentum appears to be swinging behind Virgin bidder Cyrus Capital Partners after it secured the support of both the Flight Attendants Association of Australia and the Australian Licensed Aircraft Engineers’ Association.

FAAA secretary Teri O’Toole said, “Cyrus are not dipping their toes in aviation, they actually know what they’re doing and they’re taking this on with eyes open.”

Union support will be vital in deciding who will win the contest as the airline’s employees together account for 9,020 of the total number of creditors and are owed $451 million.

“They’ve got the airline experience and they really understand the Virgin culture and the brand value,” O’Toole said.

Meanwhile, ALAEA federal secretary Steve Purvinas was similarly positive about the bid, telling The Sydney Morning Herald, “They have an intimate knowledge of the Virgin brand and what makes it successful.”

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The TWU, the largest union, has yet to publicly back either bid, but has made positive remarks around both bidders.

It comes alongside reports that suggest the Sir Richard Branson-linked party has secured the support of on Macquarie Group to inject equity into its bid.

Rumours have continued to link the bid to both the state of Queensland and the British businessman.

On Monday, Australian Aviation reported that Cyrus Capital adviser and former Virgin America CEO Jonathan Peachey revealed the bidder wants to make the reborn airline 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 said. “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.

Virgin Australia last week surprisingly announced it was to double its current capacity in July, matching a similar move by Qantas.

The airline will add 30,000 seats across 320 flights and will include interstate services to Brisbane, Adelaide and Perth, allowing many stood down workers to return.

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Comments (21)

  • paul

    says:

    Well let’s see. If Cyrus is successful it will be the same old thing with Branson pulling the strings. Will the flying public go for this?

  • Duncan

    says:

    Maybe those Unions backing the Branson / Cyrus bid want to familiarise themselves with the FlyBe collapse before they throw their whole support behind this bidder. When it all gets too hard and too expensive this bidder walks away…

    • cj

      says:

      yes flybe was a complete & utter stuff up.

      • Craigy

        says:

        To be fair to Cyrus, they were part of a consortium not outright owners so more difficult to influence outcomes.

  • AgentGerko

    says:

    Not sure how you place yourself between QF and JQ. You either give food (QF) or sell food (JQ). You either have lounges (QF) or not (JQ). You either allow baggage (QF) or charge for baggage (JQ). VA has already tried the full service but at a lower cost option. Trouble is QF have almost a monopoly on govt travel because public servants don’t care what they pay so long as they get their points, and the official govt travel agent, Qantas Business Travel, doesn’t seem to follow the guideline of pushing the lowest fare. I believe a new VA’s best hope is to drop all international services, apart from maybe some Pacific Island routes, drop all unprofitable regional services, join up to Star Alliance and provide a full service network just based around the major capital cities.

    • Mike

      says:

      agentgerko, that easy to answer. V2 has to reduce costs dramatically including cheaper leases on aircraft, office space & space at airport. Surely they could even negotiate slower payments on office/airport space like 150 days not 30 days.

      Reduce staff numbers & pay. Those who won’t work for less or too union orientated, don’t get past 1st interview.

      Qantas, have a big problem, in that their costs are way too high & we’re now officially in recession, although really been in one for year or so. So eg. for business types who want to go SYD/MEL/SYD for a meeting same day return, when Qantas $499 each way, V2 could be $399 each way OR same price as Qantas, but give something away free, like bottle of good French champagne worth $50 to $100 (but bought in bulk for much less) to give to spouse when get home. These could easily be handed out on departing aircraft, with boarding pass showing something in big bold letters. Straight out of the Southwest handbook.

      OR instead of booze, give away a FREE hotel room night at some 5 star hotel for night to perhaps spend with spouse on a weekend ? Again, buying in bulk at much less than advertised prices. Everyone loves free stuff.

      OR think of some other freebee. Better than ff pts.

      • Aaron Cheney

        says:

        Mike; why would you give a bottle of French champagne to your spouse? Most businessmen travelling for “business” have their mistress/master in the city they’re attending their “meetings” and “conferences”. That’s where the champagne will be going. I’ve been a crew member for over 25 years and could write a book about this. It’s quite entertaining to see the subterfuge going on with a lot of business travellers, both sexes too I might add.

    • Dave

      says:

      haha Agentgerko, you start off by saying you’re not sure how they should do it and then explain exactly how they should. I like your suggestions but think they should keep LAX and maybe back to HKG, they can make money there. You’re correct they can’t go head-head with QF for busi so they need to create a niche of some sort, think Jetblue or similar.
      Dropping the regional routes just completes the process of buying regional airlines (i.e. Skywest), stripping them, rolling them into corporate, finding they can’t turn a profit on a previously profitable business, and leaving regional areas worse off. Someone needs to do something about that.

  • Barry

    says:

    Let us hope it all goes to plan !!! We need that extra airline in the System.

    • Beanie

      says:

      Why? And stop with the ‘competition for QF’ crap.
      We’ve already got
      QANTAS, Alliance & Rex.

      That’s enough.

  • Barry Harris

    says:

    Let us hope it all goes to plan

  • JT

    says:

    In response to AGENTGERKO, I work for government and a frequent flyer (COVID-19 aside) and I don’t see the points. You will find the government contracts are based on a lower price point than previous with points removed.

    Irrespective of the points scenario, QBT do offer all flights available with the pricing of all flights very clear. Part of the reason why QF may prove more attractive is due schedule, locations and flexibility. I know my preference is QF each time, for what is often an equal or very similar price, so my connections remain with the same airline.

    And yes lounge access is a key ticket with QF providing a better value proposition as a rule.

  • Scott

    says:

    How is it possible for Qantas to own the government booking agency and remain independent. Everyone in the industry should challenge this, its picking winners and loosers. How is this possible in today’s world ? An airline owning a government travel agency ?

    • Kim

      says:

      QBT is just one section of QANTAS. It is NOT a ‘travel agent’. It does NOT deal with the general public.
      It has looked after small to medium business air travel for decades’.
      Many companies’ book through it, not just government.
      Ansett had a business travel section, too.
      These are facts.

  • Keith Simpson

    says:

    What’s it got to do with Australian Unions. They have destroyed Australian manufacturing in the past which lead to our reliance on overseas manufacturers. What can they do for airlines?

    • Bill O'Really?

      says:

      Everything from salaries, benefits, health care and education come to you from the political side of Australian Unions, grizzle guts. Stop whining in hackneyed, nonsense cliches. Australian manufacturing can’t compete with 3rd world cost, that is the reason, pure and simple, for it’s decline. Along with Australian business owners greed, driving them to relocate overseas.

  • Anton

    says:

    Will this be enough to save Virgin? Let’s wait and see…

  • Marcus

    says:

    How about flying to somewhere different to Qantas (When it is possible of course) India? Amsterdam? Rome?

  • Jaime

    says:

    So there’s now a THIRD Branson linked ‘bidder’.
    Maybe the ACCC should investigate that instead of bullying QF.
    It’s a worry that unions’ are having so much input into Vol Admin process.
    It doesn’t bode well at all.

  • Khny

    says:

    All clueless

  • Shane

    says:

    Some funny comments above. Do or did anyone work for an airline before besides Aaron

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