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Last Update: Friday, August 26, 2005. 12:17pm (AEST)
Jetstar faces renewed communication breakdown complaints
Jetstar passengers have complained they were not notified of the cancellation of an early-morning Hobart-Sydney flight until they arrived at the airport this morning, just days after the airline promised better communication with its customers.
Jetstar says the cancellation was the result of a mechanical fault that saw the Hobart-bound plane stuck in Adelaide overnight.
Corporate relations manager Simon Westerway says the airline tried to get the plane to Hobart last night, but was unable to fix it in time for Adelaide's 11pm AEST airport curfew.
He says the timing made it difficult to notify Hobart passengers.
"The difficulty is, when do you commence calling?" Mr Westerway said.
"We had dispensation to try to get the aircraft out by around midnight last evening.
"There's always a balancing act in terms of: do you start making call-outs at one, two in the morning, or will you try to manage the situation as the sun rises?"
The Australian
The blue shaking up Virgin
Steve Creedy
August 26, 2005
CHRIS Corrigan looked less than comfortable as he clutched a glass of bubbly and posed for a picture with a smiling Richard Branson at Sydney\'s upmarket Bondi Icebergs club on April 3.
The photograph, emailed to reporters the next day, was designed to illustrate that the two executives had buried the hatchet after a hostile takeover battle and were ready to co-operate in the new era of a Corrigan-controlled Virgin Blue. But even at that stage outsiders could sense the unease between the two men.
"They just looked like a real odd couple," said one observer who was in the bar.
"Neither of them looked comfortable."
This week Branson again moved to bury the hatchet - in Chris Corrigan.
It was payback time for the bloody nose that Corrigan had given Branson during the airline\'s float, and the hostile bid to take control of Virgin Blue.
Monday\'s carefully choreographed attack by Branson on Corrigan\'s stewardship of Virgin was the first public broadside in a campaign the British entrepreneur says he had been planning since late last year.
Complaints included the failure to hedge against rising fuel prices, and delays in introducing a frequent flyer plan and attacking the business market.
Branson particularly blamed Corrigan for the fuel problems, which added $150 million to Virgin\'s costs and have seen it punished by the market with a succession of profit downgrades.
Branson says that as a way of protecting his position in Virgin Blue he originally began speaking to Toll boss Paul Little, even as Corrigan outmanoeuvred him to launch a bid for control.
Little was not yet ready to move, but about six weeks ago he rang Branson to tell him the game was afoot, and the two reached an agreement about the future of Virgin Blue last week.
"We wanted to be involved in the running of Virgin Blue, and because of our airline expertise we felt that it was important to Virgin Blue as well," Branson said. "So when Chris actually made the bid to take over Virgin Blue we put a brave face on it, but we were trying to see if there was some way of getting back into a situation where we could have a reasonable say over its future."
An irate Corrigan camp hit back, describing the comments as "laughable" and noting that Branson had never attended a board meeting. (Virgin Group has two board representatives, David Baxby and Patrick McCall, while Branson has the advisory role of "lifetime president".)
"There never have been, as Richard claims, any strong debates on the issue of fuel hedging," Patrick spokesman Paul White said, "as all the board members, including his own representatives, have always agreed the position."
The exchange is a new low in the relationship between Branson and Corrigan, which has had rumours of conflict since Patrick\'s $500 million acquisition of a 50 per cent stake in Virgin Blue in March 2002. It was obvious from the start that the two men - the flamboyant, publicity-hungry British entrepreneur and the reclusive former banker - were cut from radically different cloth.
Industry sources say there were strategic differences from the first days and that the gung-ho Branson was always destined to fall out with the more cautious Corrigan.
But it was not until 2003 that a row about how much of Virgin Blue should be floated brought differences between the two into the public spotlight.
Branson had wanted to float 30 per cent of the company and raise new capital representing up to 20 per cent of the airline. Corrigan fought the Branson plan, arguing that the move would significantly dilute Patrick\'s shareholding and that its agreement with Virgin only required it to sell a stake of 5 per cent.
The issue went to arbitration and Corrigan won - but he was unable to stop Branson from taking the airline public.
Branson took advantage of strong demand for the December 2003 float to sell his stake down from 29.1 per cent to just over 25 per cent at $2.25 a share, pocketing an additional $84 million in the process. But in doing so he set the scene for Patrick\'s move at the end of last year to take control of the airline.
Patrick offered $1.90 a share but Branson attempted to force up the price by buying stock at $2.06 and claiming he ran an associated company - supposedly requiring Patrick to match his bid under the Corporations Act. Corrigan hit back with criticisms that Virgin had failed to respond adequately to the threat of Qantas\'s low-cost offshoot Jetstar and needed to modify its business model to concentrate on domestic operations.
The British entrepreneur lost again when ASIC ruled in Patrick\'s favour and a last-minute stampede of sellers gave it 62.4 per cent of the company.
Since then, Virgin has restructured its management and is working on a new strategy aimed at attracting business travellers away from Qantas.
The strategy is already addressing some of Branson\'s criticisms - for example, a frequent flyer program is expected later this year - but apparently not quickly enough for Branson. Having nailed his colours to the mast, Branson says he is confident his bid will succeed. If that proves to be the case, it will effectively allow him to buy back for as little as $1.40 the shares he sold at $2.25 and give him 40.6 per cent of the company.
"But if we don\'t succeed, we just hope Chris will do certain things at Virgin Blue that we think need to be done," Branson said. "It does need some airline expertise which Chris has not got and we need to try to get certain issues fixed."
The deal still has a long way to go and it could be months before there is a resolution. No one is counting Corrigan out, and obstacles include getting the deal past the competition watchdog.
But Branson can be reasonably sure of one thing: no more chummy drinks at the Icebergs.