Queensland pushes on with Virgin bid despite setback

Richard Branson has sent shockwaves through the race to relaunch Virgin with the airline’s founder making a move that could completely reshape the bidding war and Queensland’s plans to claim its own stake.

QUEENSLAND will push ahead with a bid to take a stake in Virgin Australia despite hitting turbulence when its preferred partner sensationally quit the race amid speculation airline founder Richard Branson wants in.

Queensland Investment Corporation has begun talks with other consortiums after investment company Brookfield, initially understood to be Queensland’s favoured partner in a joint bid, quit the process yesterday.

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QIC, which is doing the bidding on behalf of the State Government, insisted it would “continue to engage with all parties about the potential to join a consortium for the next stage”.

It declined to speculate on what consortium it was targeting, but it would advise the Government about the potential bid “and the best way to achieve its broader economic objectives, particularly maintaining Virgin’s headquarters in Queensland”.

Brookfield’s withdrawal, along with reports Virgin founder Sir Richard was considering joining a consortium, sent shockwaves through the race yesterday as administrators revealed four “credible” parties had been short-listed to take over the carrier.

Doing battle for the ownership of Virgin Australia will be Bain Capital, BGH Capital, Indigo Partners and Cyrus Capital Partners.

Virgin Blue founder Sir Richard has been linked to Cyrus Capital Partners, which invested in Virgin America when he established the airline in 2007.

The four parties will secure access to more detailed financial and operational information and meet with financiers, landlords, suppliers and unions ahead of lodging formal offers by June 12.

“Importantly, each has a plan … which can secure the future for thousands of Virgin Australia employees,” lead administrator Vaughan Strawbridge said. About 9000 of Virgin’s 10,000 creditors are employees.

Mr Strawbridge also confirmed anyone who booked tickets with the airline would get a refund if their flight did not go ahead.

Deloitte confirmed last week that administrators had $100 million in cash which they believed was sufficient to run the airline until it was sold by the end of June.

Griffith University Professor in Aviation Management Gui Lohmann yesterday questioned the Government’s investment, including how regional tourism would benefit by keeping Virgin based in Brisbane.

“A private-sector owner will only invest in routes or destinations where the demand is profitable,” he said.

“It won’t benefit other destinations in Queensland just because the headquarters are in Brisbane.

“It's hard to understand how the Premier (Annastacia Palaszczuk) will to sell to tourism operators across the state that keeping Virgin in Brisbane is beneficial to them … I think the Premier is probably thinking about the election later in the year.”

Originally published as Queensland pushes on with Virgin bid despite setback