Virgin collapse: Nicholas Moore’s guiding hand to help rescue

The federal government couldn’t have done any better than hiring Nicholas Moore to oversee the Virgin rescue.

Nicholas Moore will lead the federal government’s liaison team on Virgin administration. Picture: Hollie Adams for The Australian

Nicholas Moore likes a whiff of aviation fuel.

As the Morrison government’s new ambassador to Virgin Australia, the former Macquarie Group chief executive could bring some serious balance-sheet heft to any discussion with the administrators about the collapsed airline’s future.

Moore, however, is chafing against a tight leash.

“We want a market-led solution on Virgin; we’re not after an opportunity,” a senior government source said. “Nicholas’s appointment is about having eyes on the situation and keeping abreast of what’s going on, precisely because it’s Virgin and the potential for large-scale job losses.

“He also knows all the tricks of the private equity crew; he knows their plays and will ensure the wool isn’t pulled over taxpayers’ eyes.”

After a stellar career at Macquarie, Moore stepped down as chief executive at the end of November in 2018.

His passion for the airline industry, and Qantas in particular, was a hallmark of his tenure.

Macquarie crunched the Qantas numbers on several occasions, culminating in an aborted, $11bn consortium bid by Airlines Partners Australia in 2007.

Moore was the architect of the APA bid, and the brains behind its predecessors.

Most of the cash for the Qantas deal would have come from Allco Equity Partners, which was headed by Peter Yates — a former colleague of Moore who worked with him on aircraft leasing deals at Macquarie.

Yates ended up at Allco after he was recruited by the Packer family to become chief executive of Publishing and Broadcasting in 2001.

Under the APA offer, Allco would have become the carrier’s largest shareholder.

Yates said on Tuesday that the government couldn’t have done any better than hiring Moore to oversee the Virgin workout.

“Nicholas started Macquarie’s aircraft financing business and has such an extraordinarily deep knowledge of the financial side of running an airline,” he told The Australian.

“He really understands the operations and the financing of the assets. So even though he’s an adviser to the government, he’ll also look at Virgin from an investor’s perspective.”

Moore will be expected to enforce the government’s position that market solutions are required for large corporations experiencing financial stress as a result of the coronavirus.

Its case for government assistance has been compromised by its failure to earn a profit in nine of the last 10 years.

As federal Josh Frydenberg expressed confidence that voluntary administration would not mean the end of Virgin, declaring “this is not Ansett”, administrator Vaughan Strawbridge from Deloitte said several parties had expressed interest in the business and were “progressing well on some immediate steps”.

He said it would take about three weeks to assess more than 10 expressions of interest, with the whole process expected to be over in “two to three months”.

While Strawbridge said he did not plan to make any of the airline's 10,000 employees redundant, the number of aircraft and how many routes Virgin would continue to fly would not be clear until the new owners were in place.

Yates rated the prospect of a Virgin rescue as “very good”.

The airline’s mistake, he said, was to reinvent itself as an international carrier, but without the necessary partnerships with long-established incumbents.

The domestic routes, particularly the Melbourne, Sydney and Qantas axis, were extremely profitable, and the Velocity frequent flyer program was a valuable asset.

“Virgin’s also got a very good fleet of aircraft, and there’s no chance of anyone building a railway in the next 25 years so where’s the competition going to come from?” Yates asked.

“Maybe it’s time to put the band back together!”