Virgin Blue co-founder Rob Sherrard has been linked with an 11th-hour attempt to acquire the airline after the final deadline for bids passed at 10am on Monday.
Selected reports said the stricken airline’s bondholders have drafted in a team of aviation experts to formulate an audacious swoop that would involve swapping their $2 billion of debt for equity.
Sherrard famously wrote up the initial concept of Virgin Blue with Brett Godfrey on the back of a beer mat in a London pub. The pair was surprised that Australian airfares were so much higher than equivalent routes in Europe.
The final two bidders officially in the race are US investors Bain Capital and Cyrus Capital Partners, but reports have stated that, should either win, it would likely mean unsecured bondholders would be wiped out.
Now a report in The Australian Financial Review suggests the group has been “secretly working for weeks” on a plan to launch their own bid, which is being headed by restructuring experts Faraday Associates and Corrs Chambers Westgarth.
Overall, there are 6,000 retail investors who have money tied in Virgin’s bonds, and $2.1 billion of the business’ $7.1 billion of debt is allocated to bondholders.
Previously, Australian Aviation reported that momentum appeared 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.
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.
FAAA secretary Teri O’Toole said Cyrus “actually know what they’re doing” while ALAEA federal secretary Steve Purvinas said they have “an intimate knowledge of the Virgin brand and what makes it successful”.
The TWU, the largest union, has yet to publicly back either bid, but has made positive remarks around both bidders.
Cyrus unveiled its plan by proxy last week, when their 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”.
“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.”
Regardless of the new ownership, the carrier has committed to doubling 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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