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Branson’s back with 5% stake in Virgin Australia

written by Adam Thorn | November 20, 2020

Sir Richard Branson has finally confirmed he’s acquired a 5 per cent stake in the new Virgin Australia, days after the airline exited administration.

Speculation had suggested he was keen to maintain the 10 per cent holdings he held in the business prior to its administration but has settled for less while also agreeing on a new licensing deal for his corporate branding.

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On Tuesday, new owners Bain formally took over the company and on Wednesday, Jayne Hrdlicka started her first day as the new chief executive, promising to stop Virgin becoming a low-cost carrier.

Virgin Group founder Sir Richard said in a short statement issued on Thursday evening, “I’m delighted that Virgin Australia is ready for take-off once more, soaring out of administration, with a clear future direction to fly towards.

“We’re very optimistic about the future and enormously proud of all of the Virgin Australia team.”

The wider Virgin Group held a 10 per cent stake in the airline before it collapsed into administration in April. The next month, investors Bain beat out Cyrus Capital Partners to become the administrator’s preferred bidder, but the decision wasn’t rubber-stamped until September, after receiving shareholder approval.

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Prior to administration, Virgin Australia was paying the larger Virgin group $15 million to use its branding. However, rebranding the airline again would be a costly exercise given the volatile market.

The move was expected after he broke a months-long silence to endorse Bain as the new owners on the eve of the final creditors meeting to rubber-stamp the succession.

“I have confidence in the revival plan for Virgin Australia, and Virgin will be working closely with Bain to rebuild the airline,” Sir Richard said.

“As the founding shareholder, I am extremely proud of what Virgin Australia has achieved over its first 20 years.

“We look forward to helping to create the next important chapter, as Virgin Australia get back to flying and connecting Australia once again.”

Despite his small stake in the business, Sir Richard was the most vocal investor when the airline collapsed, releasing an Instagram message to staff within hours of the administration being confirmed.

“This is not the end for Virgin Australia and its unique culture,” he said. “Never one to give up, I want to assure all of you, and our competitor, that we are determined to see Virgin Australia back up and running soon.”

 

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The Virgin Group is already involved in a joint venture with Bain, called Virgin Voyages.

Meanwhile, The Sydney Morning Herald has reported that Queensland will sign a 10-year-deal to acquire around 2 per cent of the company, ensuring its base remains in Brisbane.

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9 Comments

  • John Phillips

    says:

    Hope he didn’t pay too much! A bad investment, IMO

  • With Branson back we can expect the unfinished business specification will be thrown into chaos. As ever Branson will only be as good as the last person he spoke to! This is not going to be a happy marriage!!!!
    Combine the merciless money grabbing by Bain combined with Branson changes by the hour and VA could be anything by mid 2021.
    Branson brings NIL Mid level airline experience and he just won’t get the new service offerings.
    He will cause Hrdlicka to abandon ship with his interference and a bright idea a day.
    With Branson involved SQ won’t touch it after VA (1) and the SQ/Branson JV that was Virgin Atlantic.

  • Bernard K

    says:

    Yeah well it’s the end of Virgin for us small shareholders. It’s name and Branson and others involved in screwing over the small holders are mud in my view.

  • Vannus

    says:

    He wanted 10%, but Bain would only give him 5%.
    He still gets his annual multi-millions’ $$$$ for naming rights, which is obscene to the max.
    It’ll be interesting to see if Bain still puts up with that, over time. Maybe he’s got it ‘in writing’ for perpetuity!

  • JOHN TYLER

    says:

    Great news indeed, Australia needs Virgin and should get right behind this new beginning for the much loved airline . Kudos to the Queensland Government for their early support.

  • No Respect for Branson. He was quite happy to keep his hands in his pockets when the Airline needed him most. Swoops in after Bain takes on the “risk” of salving Virgin to be back at the table!

  • Mick

    says:

    He’s still getting his obscene, amoral multi-millions’ $ just for the naming rights! That’s ALL that interests him!

  • Vannus

    says:

    Hi John Phillips…

    Branson paid $50mn for his 5% stake. That’s chump-change to he who get multi-millions’ $, just for the naming rights of Virgin!

    Hello Neil Hansford,

    You’re 100% correct. Branson just brings bad luck to any company he’s involved.
    So it’ll depend how ‘strong’ Bain is against his ‘wishes’, although at 5%, practically no notice should be taken of his ‘wishes’.

  • Ned

    says:

    Branson, pffft!
    Wouldn’t let him near any business of mine.
    If Bain let’s him ‘rule the roost’, don’t like its’ longevity.

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