Is Melbourne-based marksman in the Virgin Australia mix?

Indigo Partners might be reaching out for local expertise to handle its latest attempt to get into the Australian market.

“We see Australia as a very interesting market,” Mr Franke said, speaking from Phoenix, where Indigo is based. Picture: AAP

Speculation is growing that airline insolvency expert Mark Korda is advising Phoenix-based airline investor Indigo Partners in its bid for Virgin.

Korda’s firm KordaMentha, which includes partner Mark Mentha, has been advising Bain Capital on its bid for Virgin.

But the Arizona-based airline investment group, which was confirmed as one of four short-listed bidders for Virgin this week, is believed to have appointed the experienced Mark Korda to handle its latest attempt to get into the Australian market.

Indigo, which is a majority shareholder in low-cost carrier Frontier Airlines and other low-cost carriers in Latin America and Europe, has had a long interest in the Australian aviation industry behind the scenes although it has never made a public bid for an airline in Australia.

It is believed that Indigo has used investment bank Investec in the past when it looked at entering the Australian market, advised by Investec’s managing director Anthony Lazzoppina.

But now that it has been drawn into a full bid for Virgin, which is up for sale after going into administration on April 21, working alongside co-investor Los Angeles-based Oaktree Capital, it is believed to be opting to use the highly experienced Melbourne-based Mark Korda.

Korda and Mentha both have a long history of involvement in the Australian aviation industry, including handling the collapse of Ansett Airlines.

New York-based Cyrus Capital, which is one of the other four short-listed bidders, is being advised by boutique investment advisory group Tribeca Investment Partners, which has offices in Sydney and Singapore and US law firm Jones Day.

The fourth short-listed bidder for Virgin is a consortium of BGH Capital and the $170bn Australian Super.

Indigo Partners co-founder Bill Franke told an online seminar hosted by the Centre for Aviation on Wednesday that Indigo would like to find an Australian partner.

“We see Australia as a very interesting market,” Mr Franke said, speaking from Phoenix, where Indigo is based.

He said the Australian airline market was basically a duopoly between Qantas and Virgin.

“We think that’s a helpful, competitive environment.”

“We think the country needs two airlines, and we want to be able to assist Virgin Australia in being one of those two airlines,” he said.

Mr Franke said Indigo, which was selected as one of four short-listed bidders for Virgin on Monday by administrator Deloitte’s Vaughan Strawbridge, had already been approached by “a number of Australian entities” about becoming potential partners with Indigo in a bid for Virgin.

Depends on the details

He indicated that it could team up with one of those as part of a bid for Virgin.

“We would, at the end of the day, like to have an Australian partner,” he said.

“It would be the right thing to do, but it all depends on the details.”

He said the bidding process for Virgin would “unfold over the next month”.

Indigo, which has a controlling interest in Frontier Airlines in the US and Chilean low cost carrier, JetSmart, is partnering with Los Angeles-based fund manager, Oaktree Capital, for its bid for Virgin.

He said the two partners had not been able to visit Australia to personally advance their bid because of COVID-19 flight restrictions, but had been talking with the administrator in Australia via video links.

“The two of us (Indigo and Oaktree) are working as best we can,” he said.

“We can’t have meetings in person, but we are trying to adapt ourselves to become geniuses of the electronic age,” he said.

Mr Franke’s comments make it clear Indigo is aware of the need for a local Australian investor.