Virgin Blue In Talks For International Alliance

Mon Dec 10, 2001 10:09 am

Australia's Virgin Blue in Talks With Int'l Carriers on Alliance

PERTH, Dec 10 Asia Pulse - Budget airline Virgin Blue is negotiating with a number of international carriers about possible alliances, Chief Executive Brett Godfrey said Sunday.
"We're in negotiations with a couple of very interesting overseas players at the moment," he said.

"I reckon by Christmas, we'll probably announce a couple of deals with major carriers.

"It will certainly disappoint or surprise the Ansetts of this world who we're talking to," he told AAP during the inaugural Virgin Blue flight from Melbourne to Perth on Sunday.

Unlike traditional international alliances, Virgin is looking at arrangements which will allow the international carriers to handle their own passengers at Virgin terminals in exchange for "a super deal".

Aviation experts consider a lack of an international arm one of the biggest stumbling blocks for Virgin Blue's assault on the dominance of Qantas.

Virgin Blue will also start flying to Darwin this month, finally giving it status as a national airline.

Part of the Richard Branson Virgin empire, the airline is still targeting a public listing by around September or October next year.

"If we obtain the numbers that I think we can obtain this year at a March year end, then I'll feel comfortable that we can go to the market based on our 2003 earnings," Mr Godfrey said.

He would not give a prediction for 2003 but is confident of meeting market predictions of $A30 million ($US15.38 million) in earnings for 2001-2002.

"With the number of planes we have in the air next year, our forecasts are significantly higher than that.

At the moment, Virgin Blue has an agreement in principle to sell a majority stake in the airline to stevedoring group, Lang Corp.

"Lang would allow us to grow more quickly and realise our full potential earlier," Mr Godfrey said.

The deal hinges on whether the Lew-Fox consortium wins control of the Ansett business.

Even if Virgin is unsuccessful in taking control of the troubled airline's assets, Mr Godfrey believes there is still room for a deal between the two groups.

"It's very possible ... they've got a good record and their business ideas are very aligned to us," he said.

"Conceptually there would be something even if this deal doesn't go ahead."

Virgin Blue is also considering branding arrangements with some regional airlines.

"We're contemplating doing that with some of the regional players who are putting consortiums together," Mr Godfrey said.

"We wouldn't own them but we would infuse our culture and our cost base and our management ... and they would pay royalties for that privilege."

The airline has already aligned itself with two parties in WA and South Australia who are bidding for the Ansett regional services.

So what are the carriers that Virgin Blue might cooperate with?
Posts: 556
Joined: Mon Nov 06, 2000 10:28 pm

RE: Virgin Blue In Talks For International Alliance

Mon Dec 10, 2001 11:56 am

I'd guess it would be SIA considering SIA's investment in Virgin Atlantic. It would make perfect sense for DJ to codeshare on SQ's flights in and out of PER, ADL, MEL, SYD and BNE. However, VS sells seats (but no codesharing agreement) on MH services to KUL where passengers then join up to VS's flights from KUL to LHR. I'd say that we'll see the end of this alliance in favour of alliances with Singapore Airlines for Asian and European services plus Air New Zealand and UAL for American services.
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Joined: Thu Jan 13, 2000 3:58 pm

RE: Virgin Blue In Talks For International Alliance

Mon Dec 10, 2001 12:31 pm

I'm interested to see who DJ allies themself up with. I can't really think of any international carriers that are compatible with DJ in Australia, but someone must be interested, eh?

SQ? Yes, there may be some alliance via VS, but the products of SQ and DJ are totally incompatible. You have DJ which has the lowest product in AU, and SQ which has one of the highest products in the world.

About the only thing they share in common is the same pathetic seat pitch in Economy Smile (well on the 73Gs anyway - 734s is another matter).

Considering that this is not a traditional alliance and this involves ground handling, I still cannot see any international carrier willing to use DJ ground 'facilities'. Go to ADL and see the baggage collection 'shed' - you'll understand what I mean.


Posts: 518
Joined: Sun Feb 04, 2001 10:34 am

RE: Virgin Blue In Talks For International Alliance

Mon Dec 10, 2001 12:40 pm

Hard to see SQ aligning with DJ especially if SQ take on the
management roll at AN.


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