Queensland Government in bid for Virgin Australia

Bryan Pearce
3 Min Read
Virgin Australia Terminal Adelaide Airport (YPAD/ADL) taken by Bryan Pearce on 8 September 2017

The Treasurer of the Queensland state government, Cameron Dick, revealed that the state had told it’s investment arm, QIC to explore a bid for Virgin Australia. The investment arm could take a direct equity stake, offer loans, guarantees or incentives to another bidder.

Mr Dick said in a statement, “We have been very clear — two sustainable, national airlines are critical to Australia’s economy. We have an opportunity to retain not only head office and crew staff in Queensland, but also to grow jobs in the repairs, maintenance and overhaul sector and support both direct and indirect jobs in our tourism sector. We saw the punishing increase to the cost of flights after the Ansett collapse, and this Government will not stand by and let that happen again.”

The Queensland Premier, Annastacia Palaszczuk, has previously said that she would “stop at nothing” to keep the airline in the state according to the Sydney Morning Herald.

Strategic Aviation Solutions chairman Neil Hansford told ABC news “I don’t think governments should ever be risking their taxpayer funds, particularly when you take the state of the Queensland economy, investing in a business which at its best is high risk, low yield. You have to be looking at the fact you have an election in Queensland in October. I think the Government is very sensitive to the fact that they can be seen to have tried to do whatever possible to save the available jobs. If you’re looking for a partnership in a transaction as large as this, you don’t go looking two days before the bids close.”

Earlier this week the Administrators told the Federal Court there are 19 prospective bidders, with Friday 15 May the deadline for non-binding initial offers. Media reports suggest that US equity firm Bain Capital is viewed as a strong contender, with BGH Capital being the frontrunner. Bain’s team includes former Jetstar boss Jayne Hrdlicka, and KordaMentha. KordaMentha oversaw the insolvency of former airline Ansett. Bain also has an existing relationship with Richard Branson. Bain oversaw the turnarounds of Northwest, Atlas Air and United.

Brookfield is also considered to be another favourite in the bidding process. Brookfield is a Canadian investment firm that owns ports and coal terminals across Australia, private health operator Healthscope and the Canary Wharf skyscraper in London.

Reports also indicate that the founder of Indian LCC IndiGo is also put forward a proposal for Virgin.

Others in the race include Oaktree Capital Management, Apollo Global Management and airline investor group Indigo Partners.

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