Close sidebar

Virgin Blue founder Sherrard linked as final deadline passes

written by Adam Thorn | June 22, 2020
VH-VBA Virgin Blue Boeing 737-700 - 1942009
VH-VBA Virgin Blue Boeing 737-700, shot in 2009 at Brisbane Airport (Craig Murray)

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.

Advertisement
Advertisement

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.

PROMOTED CONTENT

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.

Steer your own in-flight experience – available on print and digital Whether our classic glossy magazine in your letterbox, daily news updates in your inbox, peeling back a few layers in the podcast or our monthly current affair reports, you can count on us to keep you up to date. Sign up today for just $99.95 for more exclusive offers here. Subscribe now at australianaviation.com.au.

15 Comments

  • The bondholders certainly have over $2m skin in the game and because they have been treated with contempt by Bain and Cyrus they were always going to fightback. Fine to give the foreign shareholders a complete back and sides haircut but there was too much power in the bondholder group to ignore them Rob Sherrard would have enough experience to see where most the pockets of excess are sitting.
    What is more he knows the Virgin Blue market segment which is just as relevant today. A combination of the bondholders with BGH and Australian Super would be a good long term Australian solution rather than Wall Street vagabonds.
    The Unions deserve to be left in the cold as no new VA 2 can afford the conditions that helped send Virgin Australia broke. Pilots can’t expect to earn 20% more than Jetstar crews. When will an airline address the burden of lowly taxed daily allowances for flight crews.

    • P

      says:

      Lol. You have no clue.

  • Jonathon

    says:

    And just where are they getting the CASH to fly? Thought they were beyond ‘broke’.
    Nobody will take their ‘credit cards’, so they’ve got to pay cash upfront for everything.
    Is there a hidden ‘benefactor’?
    It’s worrisome that unions’ are having such a high ‘profile’ in the Vol Admin process.
    Do the US bidders’ know what ‘influence’ they have here?
    July will be interesting.

    • Brett

      says:

      @Rob Sherrard…….I thought retirement home were locked down.

  • Vic Robertson

    says:

    We are Virgin Platinum Frequent Flyers and fly Business Class, if this class is dropped in the new Virgin Australia we will reluctantly have to return to QANTAS.
    This move is unfortunate as we do not like QANTAS Business Class.

    • Clarry

      says:

      Just consider yourself fortunate that you travel Business Class.
      Millions’ of Aussies’ can’t.
      Whinger!
      I’d travel on the World’s Safest Airline, QANTAS, any day, even in Economy.

  • Vic Robertson

    says:

    We are Platinum Frequent Flyers and if this class is stopped we will reluctantly return to QANTAS.

    • James

      says:

      What class are you talking about?

      • Seb

        says:

        Bye bye Virgin! For the last years there was no compensation with Qantas and lack of lower prices within Australia.
        Doesn’t surprise me that Virgin didn’t survive.
        We need another more competitive airline here in AU !!

  • Rod Pickin

    says:

    It’s the outcome that matters and from what I read, with great respect, the currently accepted and published two bidders for VOZ are not what our country needs. I believe that we would have been better served by a consortium headed by BGH and I would ask them why they exited from the process.

    • Edward

      says:

      Rod, because they didn’t like the way first-timer Strawbridge was handling the Vol Admin process.
      People aren’t going to put billions’ of their dollars down, when they’re being rushed off their feet in the process. There’s too much at stake.

      This whole process, now the TWU has shown their ‘true colours’ ie going to be the puppet-Master of the maybe, new airline, is starting to get ugly.
      Both the Administrator, Deloitte’s, & the US-based ‘bidders’ obviously are not aware of this powerful union, & what it likes to do ie ‘bake slowly’ companies’ who don’t kow-tow to them.
      It’s not going to end well at all.
      It’s probably just going to end, full stop.

      • Rod Pickin

        says:

        Hi Edward, I happen to agree with you, – Deloitte’s appear to be in command of a loose ship with too many captains of other allied interests clambering for space on the bridge and of course, disorder, but they will still take the first big bite of the cake come serving up time. In addition, the involvement of trade unions at this time is alarming; was not the ALAEA at the the forefront of AJ’s decision to shut down QF a while back?, now, their claim they have of having an intimate knowledge of the Virgin Brand, WOW, thats scary. Our industry has progressed but the support structures seem to have stagnated; with the roles of EBA’s/contracts at the forefront of employment one is entitled to ask why not take the unions out of the equation as any violation/s of those EBA’s etc becomes a legal problem and not one of industrial relations, all else could be covered under OH&S. Meanwhile the VOZ problem continues and it concerns me that there will be few winners, if any.

  • ssmith3104

    says:

    As a bond holder, I would very much like this to succeed, but it appears unlikely as it is too little, too late, and seems not fully baked!

  • Seb

    says:

    Bye bye Virgin! For the last years there was no compensation with Qantas and lack of lower prices within Australia.
    Doesn’t surprise me that Virgin didn’t survive.
    We need another more competitive airline here in AU !!

  • Meepa

    says:

    Need a more structured, efficient airline that actually wants to run like a propoer business. VA was a joke in the past handful of years with its PC culture, wrecking Tigerair and basically letting the executives suck the life out of the company making out like bandits… pity the fallout will be felt by the coal face workers!

Leave a Comment to Meepa Cancel

Your email address will not be published. Required fields are marked *

Virgin Blue founder Sherrard linked as final deadline passes

written by Adam Thorn | June 22, 2020
VH-VBA Virgin Blue Boeing 737-700 - 1942009
VH-VBA Virgin Blue Boeing 737-700, shot in 2009 at Brisbane Airport (Craig Murray)

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.

Advertisement
Advertisement

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.

PROMOTED CONTENT

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.

Steer your own in-flight experience – available on print and digital Whether our classic glossy magazine in your letterbox, daily news updates in your inbox, peeling back a few layers in the podcast or our monthly current affair reports, you can count on us to keep you up to date. Sign up today for just $99.95 for more exclusive offers here. Subscribe now at australianaviation.com.au.

15 Comments

  • The bondholders certainly have over $2m skin in the game and because they have been treated with contempt by Bain and Cyrus they were always going to fightback. Fine to give the foreign shareholders a complete back and sides haircut but there was too much power in the bondholder group to ignore them Rob Sherrard would have enough experience to see where most the pockets of excess are sitting.
    What is more he knows the Virgin Blue market segment which is just as relevant today. A combination of the bondholders with BGH and Australian Super would be a good long term Australian solution rather than Wall Street vagabonds.
    The Unions deserve to be left in the cold as no new VA 2 can afford the conditions that helped send Virgin Australia broke. Pilots can’t expect to earn 20% more than Jetstar crews. When will an airline address the burden of lowly taxed daily allowances for flight crews.

    • P

      says:

      Lol. You have no clue.

  • Jonathon

    says:

    And just where are they getting the CASH to fly? Thought they were beyond ‘broke’.
    Nobody will take their ‘credit cards’, so they’ve got to pay cash upfront for everything.
    Is there a hidden ‘benefactor’?
    It’s worrisome that unions’ are having such a high ‘profile’ in the Vol Admin process.
    Do the US bidders’ know what ‘influence’ they have here?
    July will be interesting.

    • Brett

      says:

      @Rob Sherrard…….I thought retirement home were locked down.

  • Vic Robertson

    says:

    We are Virgin Platinum Frequent Flyers and fly Business Class, if this class is dropped in the new Virgin Australia we will reluctantly have to return to QANTAS.
    This move is unfortunate as we do not like QANTAS Business Class.

    • Clarry

      says:

      Just consider yourself fortunate that you travel Business Class.
      Millions’ of Aussies’ can’t.
      Whinger!
      I’d travel on the World’s Safest Airline, QANTAS, any day, even in Economy.

  • Vic Robertson

    says:

    We are Platinum Frequent Flyers and if this class is stopped we will reluctantly return to QANTAS.

    • James

      says:

      What class are you talking about?

      • Seb

        says:

        Bye bye Virgin! For the last years there was no compensation with Qantas and lack of lower prices within Australia.
        Doesn’t surprise me that Virgin didn’t survive.
        We need another more competitive airline here in AU !!

  • Rod Pickin

    says:

    It’s the outcome that matters and from what I read, with great respect, the currently accepted and published two bidders for VOZ are not what our country needs. I believe that we would have been better served by a consortium headed by BGH and I would ask them why they exited from the process.

    • Edward

      says:

      Rod, because they didn’t like the way first-timer Strawbridge was handling the Vol Admin process.
      People aren’t going to put billions’ of their dollars down, when they’re being rushed off their feet in the process. There’s too much at stake.

      This whole process, now the TWU has shown their ‘true colours’ ie going to be the puppet-Master of the maybe, new airline, is starting to get ugly.
      Both the Administrator, Deloitte’s, & the US-based ‘bidders’ obviously are not aware of this powerful union, & what it likes to do ie ‘bake slowly’ companies’ who don’t kow-tow to them.
      It’s not going to end well at all.
      It’s probably just going to end, full stop.

      • Rod Pickin

        says:

        Hi Edward, I happen to agree with you, – Deloitte’s appear to be in command of a loose ship with too many captains of other allied interests clambering for space on the bridge and of course, disorder, but they will still take the first big bite of the cake come serving up time. In addition, the involvement of trade unions at this time is alarming; was not the ALAEA at the the forefront of AJ’s decision to shut down QF a while back?, now, their claim they have of having an intimate knowledge of the Virgin Brand, WOW, thats scary. Our industry has progressed but the support structures seem to have stagnated; with the roles of EBA’s/contracts at the forefront of employment one is entitled to ask why not take the unions out of the equation as any violation/s of those EBA’s etc becomes a legal problem and not one of industrial relations, all else could be covered under OH&S. Meanwhile the VOZ problem continues and it concerns me that there will be few winners, if any.

  • ssmith3104

    says:

    As a bond holder, I would very much like this to succeed, but it appears unlikely as it is too little, too late, and seems not fully baked!

  • Seb

    says:

    Bye bye Virgin! For the last years there was no compensation with Qantas and lack of lower prices within Australia.
    Doesn’t surprise me that Virgin didn’t survive.
    We need another more competitive airline here in AU !!

  • Meepa

    says:

    Need a more structured, efficient airline that actually wants to run like a propoer business. VA was a joke in the past handful of years with its PC culture, wrecking Tigerair and basically letting the executives suck the life out of the company making out like bandits… pity the fallout will be felt by the coal face workers!

Leave a Comment to Meepa Cancel

Your email address will not be published. Required fields are marked *

Each day, our subscribers are more informed with the right information.

SIGN UP to the Australian Aviation magazine for high-quality news and features for just $99.95 per year