Queensland breaks cover and hints at Virgin bidder partnership

written by Adam Thorn | June 3, 2020
A file image of a Virgin Australia ATR 72 turboprop at Brisbane Airport. (Rob Finlayson)
A Virgin Australia ATR 72 turboprop at Brisbane Airport. (Rob Finlayson)

Queensland has hinted it could partner with one of the two remaining bidders to purchase Virgin Australia.

Treasurer Cameron Dick said on Wednesday morning that the Queensland Investment Corporation, who he appointed to lead his interest in the airline, had “very positive engagement” with both Cyrus Capital Partners and Bain Capital.

In mid-May, the state declared it was a “serious contender” for a reborn Virgin Australia, adding that it was determined to maintain jobs in Brisbane. Yesterday, the shortlist of prospective buyers was reduced, with private equity firm BGH Capital and US aviation company Indigo Partners knocked out ahead of a 30 June deadline.

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In a short statement released to Australian Aviation, Treasurer Dick added, “The Queensland government remains committed to ensuring that Virgin Airlines remains as Australia’s second airline, that its headquarters remain in Brisbane, and that as many regional routes are maintained as possible. This is a positive step forward.”

Earlier, it was unsure in what form any potential move for the business would take, with Dick claiming it could be a “direct equity stake, a loan, guarantee or other financial incentives”.

“Virgin administrator Deloitte has set an ambitious time frame and we look forward to delivering on this mandate for the Queensland government,” said Damien Frawley, the man leading the potential purchase, back then.

The dramatic move came after a public row between Queensland, NSW and Victoria, who all hinted they wanted Virgin’s headquarters moved to their capital city.

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At one point, Minister Dick told NSW to “back right off” and said, “There is nothing more dangerous than Queenslanders with their backs to the wall. It’s a nonsense to think the Prime Minister would even consider a NSW plan to move the airline there.”

On Tuesday, Deloitte’s Vaughan Strawbridge said both Bain and Cyrus “are well-funded, have deep aviation experience, and see real value in the business and its future”.

Cyrus Capital is the bidder most closely linked to Sir Richard Branson, and Australian Aviation has previously reported speculation that it plans to maintain the business as a full-service international airline.

Meanwhile, Bain Capital publicly outed itself as a contender on 25 May to declare it had the “strongest capital base of any of the bidders” and would be a “committed partner for Virgin Australia with a proven track record”.

Strawbridge said in a media statement on Tuesday, “Over the weekend through to today, we assessed the proposals received from shortlisted bidders and discussed their proposals with them to ensure a thorough and comprehensive assessment has been undertaken.

“There will also be speculation that entities associated with the parties that have not moved into this next phase, as well as others, could become involved in some capacity with the remaining parties. That will, of course, be a matter for them.

For more of our in-depth coverage of the purchase of Virgin Australia, read:

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16 Comments

  • Craigy

    says:

    Queensland government is ready to invest in the airline but makes a deal with Alliance for flights to FNQ. Meanwhile the Virgin administrator is looking to increase revenue to keep the airline operating.

  • B.Gates

    says:

    remember remember Ansett….

  • Murray

    says:

    It would be a more productive discussion if the state borders were open for sure

  • Rod Pickin

    says:

    Message for the Qld Govt., – your reported offer of a partnership with the successful bidder for VOZ is admirable but emotional and with respect, devoid of skills and experience but great at getting a headline before the coming election. If QIC was keen they would have been well into the application process earlier but I can see no evidence of their actions in that respect. I think your efforts would be better suited to facilitating from a state basis the jumping of huge hurdles enncountered from beaurocracies involved in the operation and policing of airports and facilities within your domain. In any event, you can’t afford it.

    • Paul

      says:

      Agreed. Just playing politics before the election.

    • Patrickk

      says:

      Rod QIC indicated their interest to be in the application process at the outset, which invited the ire of Peter Dutton, so they must have done something right. They will not put out all of their discussions in a press release, hence why you haven seen any evidence of their actions.. They will want to keep Virgin there with the expanded airport capacity etc. Whether they can afford it depends on how much QIC puts in, and they are certainly not announcing that in a press release.

      • Rod Pickin

        says:

        Hi Patrickk, thank you but I was under the impression that Minister Dick was the instigator of QIC’s interest and not of their own volition, – that outcome was what aggravated Minister Dutton. I do believe however that Air Transport investment is very high risk and too volatile for a quality conservative and comparatively small equity group such as QIC to consider.

  • Hammer

    says:

    Just don’t see a future for a major airline based in QLD when the majority of traffic, be it domestic or international is between NSW and Vic, Qantas will run away with that huge market essentially leaving Virgin as the second option fighting for scraps again.

    • Hein

      says:

      Hey Hammer, this is the jet age, mate, not the horse and cart age. Matters not where an airline is based…

      • Hammer

        says:

        I’d argue it does, being based in a high traffic airport where all the traffic goes through one airport, is better than being based somewhere where there’s less traffic in general and even then a lot of the traffic to and from that state goes directly to other ports. Nobody is flying to Brisbane to get to GC, SC, Cairns, Townsville etc.

        • James

          says:

          The basing of the airline has absolutely Jack all to do with how many people go in and out of the place.

          It’s the head office base. The size of the airlines presence there or crew base has nothing to do with head office.

        • Opscontrol

          says:

          Brisbane is the only one of the three big airports in this country that has two parallel runways and no curfew. It’s got far more potential for capacity than either YSSY or YMML. Melbourne is ground-delay-central and Sydney is extremely slot-limited at the peak already.

    • Linda Weaving

      says:

      The Sydney-Brisbane route, though not quite up there with Sydney-Melbourne, is still one of the busiest routes in the world, is it not? Plus the funneling of traffic into Sydney is a political decision. The powerful pollies are located in Sydney & they want to funnel as much business into Sydney as possible & stuff everywhere else. What do you think that NSW attempt to steal Virgin from Brisbane & install them at their new airport out the back of nowhere in western Sydney was about? It’s these same pollies, with their Sydney centric agenda & vested interests telling you this is all for the good of the nation. It’s not. It would be better for the nation if other cities got their fair share. There’s no way Virgin should move from Brisbane. What SHOULD happen is Brisbane become another ‘gateway’ into Australia instead of the gov trying to funnel everything through Sydney, which is further away from international markets & the big ticket tourist attractions of the Gold Coast & Great Barrier Reef.

  • John Haydon

    says:

    I wonder how much money will the debtors receive from Virgin, hope all the staff have priority
    over the banks, taxation and Government fees.
    Branson should also be banned from any financial activity with the newcompany.

    • Paul

      says:

      agreed with the Branson comment. He was on the board prior to current events

  • Linda Weaving

    says:

    I wonder which bits they plan to carve up & sell off?

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