Virgin stakes claim to Ansett terminals
By Geoffrey Thomas
SIR Richard Branson yesterday launched Virgin Blue's long-awaited expansion plans that include a bid for four of Ansett's eastern States terminals and up to 40 more aircraft.
Missing from the bid were Ansett's Sydney terminal - the subject of a possible legal challenge - and Ansett's Perth terminal, which will be required only if the State Government agrees to give Virgin Blue more of its travel contract and intrastate rights.
Sir Richard said yesterday that Virgin Blue was considering a bid for both airports, subject to a range of issues that were being resolved.
Virgin Blue has bid for Ansett's Brisbane, Melbourne, Canberra and Hobart terminals.
Ansett's Sydney terminal was the subject of a legal wrangle between Ansett's administrators and the Sydney Airport Corporation Ltd (SACL) which was resolved late yesterday when the administrators agreed that the sale process would be timely, transparent and fair to all 15 bidders.
Sir Richard said he believed Virgin Blue would move into most of Ansett's terminals but the issue would be whether they were leased or owned outright.
To fill those terminals with passengers Virgin Blue would decide within the next two months whether to buy up to 40 Boeing 737s or Airbus A320s, worth $3.6 billion.
"If the price is the same we will stay with Boeing but it all depends on how sharp Airbus"pencil is," Sir Richard said.
The expansion would be funded internally from cash generated by Virgin Blue.
Virgin Blue's bid for Ansett assets also includes hangar space, which will increase the airline's capacity for engineering and maintenance. With the Patrick Corporation on board, Sir Richard said there was no rush to float up to 20 per cent of the airline.
Sir Richard and Patrick Corporation chief executive Chris Corrigan formally signed an agreement yesterday for Patrick's $260 million investment in Virgin Blue, giving the transport and logistics group a 50 per cent stake.
And Sir Richard said his Virgin Atlantic partner, Singapore Airlines, would not play a role in Virgin Blue or its overseas expansion.
"With Patrick, our staff and the public float there is no room for Singapore Airlines," he said.
Singapore Airlines had been active with Ansett's administrators and developing business plans for Ansett.
With the collapse of the Tesna bid for Ansett, focus had moved to a possible role in Virgin Blue but that airline's all economy no-frills strategy does not fit with Singapore Airlines"full service product.
Sir Richard said the public float of Virgin Blue was still some time off.
"We want to double our market share to 25 per cent first," he said.
He believed that goal would be achieved in about 18 months.
However, the key to expansion is Ansett's Sydney terminal, which the administrators valued at $400 million.
Virgin Blue executives have conceded that it is difficult to expand to a fleet of more than 25 aircraft without moving to a new terminal at Sydney airport.
The airline has 16 aircraft in service with another 10 due by the end of the year.
International flights are also on the horizon for Virgin Blue and Sir Richard said he expected to launch flights to New Zealand and Hong Kong within 18 months.