RMIT expert available for comment on the Virgin Australia short list

All Virgin Australia bidders plan to cut services and frequencies 

Warren Staples (0407 584 564 or warren.staples@rmit.edu.au)

Topics: Corporate Governance, Business Ethics, CSR, Business & Government relations

"Bids are rumoured to be in the $3.5 to $4 billion range. In the face of a coronavirus decimated global aviation industry the bidders have pitched much smaller operations than the 130 planes Virgin Australia had flying.  

“There seems to be consensus around a more paired back strategy, and this will result in some pain for current Virgin employees.

"One bidder, BGH, appears to have pitched a small start-up fleet of 15 operational planes but seems to have largely aspirational goals about where that can grow to.  

“The other bidders seem less bullish. Regardless of who is ultimately successful this is likely to mean that regions and tourism are going to be hit hard, and this reboot will not be a serious competitor for Qantas. 

"There appears to be five companies left in the race for Virgin Australia. The four who were officially shortlisted (BGH Capital, Bain Capital, Indigo Partners and Cyrus Capital Partners) and Canadian investor Brookfield Asset Management who withdrew from the process but continue to circle.  

“All five pitched their plans to the ACTU, who represent about 9000 Virgin Australia employees, earlier this week." 

"In the lead up to this decision the bidders have had their PR machines in full gear and have been on the charm offensive.  Surprise bidder Cyrus have been profile and brand awareness raising.  

“Bain have stressed their long-term interest but have had some of their other Australian investments questioned.  BGH have been relatively quiet but continue to look a likely finalist, while Indigo have been silent

"Bain and BGH, who have appeared to be the two most probable candidates from the outset, have been in discussions with Richard Branson to retain the Virgin branding.  

“Bain have floated the idea of Branson's Virgin Group as a possible equity partner.  Branson is trying to walk both sides of the street here by cosying up to all the bidders and is a creditor at the same time.

"Liquidation still remains a possibility and this will mean significant losses for employees and suppliers."

Warren Staples is a Senior Lecturer in the School of Management at RMIT University whose research and teaching focuses on corporate governance, corporate social responsibility, business ethics and business & government relations.

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