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New York City, New York, U.S. - The U.S. SEC-registered investment fund Cyrus Capital said that it aims to keep Virgin Australia as a full-service international airline to compete with Qantas.

The New York-based group - which has a history of investing in airlines with Richard Branson's Virgin Group - has told unions and state governments its long-term plan is for Virgin to remain roughly the same size it was before going into voluntary administration in April, according to sources close to the bid.

The revelation of Cyrus' ambitions come amid growing fears that Virgin's new owners could drastically slash the size of its operations or turn it into a budget airline, at the loss of jobs and competition for the traveling public.

Cyrus is competing against US private equity fund Bain Capital, Melbourne-based outfit BGH Capital, and the American ultra-low-cost airline specialist Indigo Partners.


Sources close to Cyrus' bid who spoke on the condition of anonymity to discuss confidential matters said the fund would cut some regional routes from Virgin's domestic network but otherwise continue flying between capital cities and major regional centers.

International flying would gradually return as demand recovers from COVID-19, with a new fleet of fuel-efficient Boeing 787 Dreamliners to replace Virgin's Boeing 777s and Airbus A330s within the next five years.

Virgin would keep most of its 75 Boeing 737s for domestic flights, but other aircraft types - including eight A320s, 14 Fokker 100s, and 14 ATR72 turbo-propeller planes - would likely be cut, sources said.

One union source with knowledge of the discussions said that while Cyrus' vision was encouraging, they hoped it was genuine and based on a detailed assessment of Virgin's business and not simply because it was "behind in the process".

Cyrus was a surprise addition to the four shortlisted bidders chosen for the second round of the sale process run by administrators Deloitte on Monday.

Unions representing Virgin's 9000 workers - who make up the biggest group of creditors - have said they will back any bidder that keeps as many jobs as possible, protects worker entitlements, and has a long-term plan for a viable airline.

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