Branson brings Virgin blue at Sydney airport to a head

[Wirraway]

Tues "Melbourne Age" 5/11/02

Branson brings Virgin blue at Sydney airport to a head
November 5 2002
By Colin Kruger
Sydney

Virgin boss Sir Richard Branson this week hopes to end a bitter six-month stand-off with Sydney Airport Corp Ltd over Virgin Blue's attempts to lease part of the former Ansett terminal.

Speaking in Sydney yesterday, he said that while he would not agree to a deal that would force up air fares, he wanted the issue settled "either way" before he left Australia next week.

Virgin Blue says that after the airport was sold to a Macquarie Bank-led consortium, SACL's management reneged on a handshake deal to lease the terminal.

"We can't afford to give in on it, and I'm hopeful that sense will prevail," Sir Richard said.

But if a deal was not struck while Sir Richard was in Australia the airline would "go off and do something else", he said.

Meanwhile, in London, Will Whitehorn, Sir Richard's right-hand man, said that Virgin Blue, jointly owned with transport group Patrick Corporation, was looking to float possibly in the first quarter of next year.

"We put in £10 million ($A27.9 million) to start it, sold half to Patrick for $100 million and now Australian analysts are valuing it at between $1.2 billion and $1.4 billion. Virgin Blue is probably the most successful investment we have made for a while."

The news was even more upbeat on other fronts for the Virgin machine, with new market promotions expected to help boost subscriber numbers for Virgin Mobile, the group's Australian mobile phone unit, from the current 230,000 to 400,000 over the next 18 months.

The "Flash" promotion will turn Virgin Mobile phones into "virtual discount cards", allowing discounts at 400 shops, restaurants clubs and bars across Australia from today.

"You don't have to fill in forms; you just literally have to have a Virgin mobile phone. We don't even need to know who you are," Sir Richard said at the launch in Sydney yesterday.

He said Virgin Mobile was "about on budget" and forecast it would become profitable during the 18 months of the subscriber push.

"I don't think it has actually been harder than we expected," Sir Richard said of the Australian mobile phone market. "We're very, very pleased with the way mobile is going in Australia."

Virgin Mobile had a loss of $72 million in the year to March 31, widening from a $44 million loss a year earlier, according to SingTel Optus accounts for the period. Virgin has 75 per cent of Virgin Mobile while SingTel Optus owns the rest.

Sir Richard also announced plans for the largest Virgin Megastore in Australia, which will be located in Martin Place, Sydney. The store is expected to open next March.

Mr Whitehorn, said the Virgin empire was having a profitable year, despite torrid markets and persistent rumours it was facing a cash crisis. "None of our companies have a cash requirement. They are all doing very well," he said.

-with AAP
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AFP

Virgin Blue hopes to end row over Sydney Airport space: Branson
Virgin Blue chairman Richard Branson said he hopes to settle the airline's long-running dispute over the lease of terminal space at Sydney Airport and move in within the next week.

The British tycoon said the row with Sydney Airport Corp. Ltd. (SACL) over the lease of terminal space previously occupied by failed carrier Ansett had gone on long enough and he wanted it settled "either way" before he left Australia at the weekend.

"If things haven't been settled whilst I'm in Australia -- I'm here another week -- then we'll go off and do something different," he said.

"I'm hopeful that sense will prevail and that something will get sorted out hopefully over the next seven days or so."

Branson claimed in June after the airport was sold to the Macquarie Bank-led consortium, that SACL's management reneged on a handshake deal to lease the terminal to Virgin Blue.

He has previously said the airport was demanding "nearly triple" the 17-18 million (9.5-9.9 million US) dollars the airline was prepared to pay for the terminal space.

SACL has denied such deal was ever struck.

Branson said Monday that Virgin would not compromise by accepting another arrangement because if it did it would mean higher fares for Virgin passengers.

"Negotiations have been going on for the past six months and as long as the prerequisite of it not costing our passengers any more takes place, then if we can reach agreement then we would love to see our passengers move into a bigger terminal," he said.

Virgin Blue took court action against SACL in a bid to force the Sydney Airport operator to uphold the agreement claimed to have resulted from talks between Branson and SACL chief executive Tony Stuart.

The case is still continuing.

SACL spokesman Peter Gibbs would not comment on how negotiations were progressing between the two companies, but he said he was hopeful an agreement could be reached.

"We have had ongoing discussions with Virgin Blue and we would hope that we may be able to come to a successful conclusion but I'm not going to put a time frame on it or where the discussions are at the moment," Gibbs said.

AFP