Wirraway
10th Nov 2003, 23:59
Tues "Australian Financial Review"
The true-blue beginning of Virgin Blue
Oct 27
Katrina Nicholas
Waiting for Virgin Blue chief executive Brett Godfrey to disembark from a domestic flight last week, his arrival party began to worry.
All but the last stragglers had come down the exit ramp, but still there was no sign of Godfrey. Perhaps he'd missed the flight, one waiting executive wondered. An airport staffer was sent to check but returned within minutes.
No, Godfrey had made the flight but was just helping attendants vacuum the aisles, remove the discarded drink cups and recross the seatbelts to ensure a faster turnaround time.
Surprising behaviour from an airline boss? Not at all, according to those who know the man who's set to become a multimillionaire when Virgin Blue floats.
Although it's a little-known fact, Godfrey, and not flamboyant British entrepreneur Sir Richard Branson, is Virgin Blue's founding shareholder. While Branson and Patrick boss Chris Corrigan now own the bulk of the budget airline, Godfrey, along with a small handful of original Virgin Blue employees, holds 4 per cent of the company via CU Nominees.
If Virgin Blue is valued at between $1.4 billion and $2 billion when it floats, as market watchers expect, that means Godfrey, the chartered accountant who hatched the idea for a no-frills Australian carrier back in 1993 - six years before it eventually became a reality - is set to become a very rich man, worth a cool $80 million at the outside.
But growing Virgin Blue to the point where it commands 30 per cent of Australia's domestic market has been a long and difficult journey, as some of the airline's key management team related to The Australian Financial Review this week.
With a father who worked for Qantas, Godfrey, who is described by his peers as charismatic but a total workaholic, was always interested in planes and aviation. In fact, it was long time friend and fellow Virgin Blue founder Rob Sherrard who gave Godfrey his first job as an accountant at Sherrard Aviation.
After working with the company for several years, Godfrey decided to expand his horizons overseas. He landed in London and soon scored a job in the finance department of Virgin Atlantic.
But the dream of one day running his own airline always niggled and so, when Sherrard came to visit him in the UK - the pair were going to the 1993 Ashes Test together - Godfrey put the idea to him, literally mapping out the key points on the back of a beer coaster as they drank together at a London pub.
Sherrard was interested, but circumspect. Compass in Australia has just fallen over and starting an airline would require significant capital.
Unperturbed, Godfrey began presenting the business plan to various executives, although not Branson, at Virgin Atlantic. None of them bit.
Three years later, in 1996, Branson's empire bought into Euro Belgian Airlines, which later became known as Virgin Express. Branson asked then Virgin Atlantic finance director Nigel Primrose who might be a suitable candidate to go across to Brussels and look after Virgin's interests. Primrose suggested Godfrey.
Godfrey accepted but soon found himself working for an airline shackled by unions and marred by industrial disputes. Whether it was Godfrey's disposition or the fact that Australians tend to be more culturally sensitive than their American counterparts abroad, Godfrey's superiors being from the US, Godfrey successfully managed to quell union disquiet at Virgin Express, an achievement that prompted Branson to ask whether he wanted to, temporarily, take the top job.
Again, Godfrey accepted, but on two conditions - he could return to his home country shortly and Branson would take a quick look at a business plan he'd once nutted out for a low-cost Australian airline.
Godfrey presented his 50-page Powerpoint business plan to Branson that Friday. By Monday there was a handshake agreement and on Tuesday Godfrey called Sherrard from Belgium to ask whether he wanted to start an airline.
As Branson remembers: "Ever since the early 1990s when Virgin Atlantic began its expansion I had always harboured a desire to expand our aviation interests into Australia . . . and I was always looking for the right opportunity to jump in. We had several approaches about doing this but none even came close to the inspiration of Brett and Rob's proposal, which I later found out that they had hatched together as early as 1994.
"When Brett said he was thinking of going back to Australia, I asked him what he wanted to do and he said 'Funny you should mention that' and then proceeded to tell me about the business plan. I was prepared to invest and to put our team at Virgin behind it but there is no doubt that Rob and Brett, as well as the rest of the launch team, some who followed Brett halfway across the world to settle in Brisbane, have created the success story.
"It was a Friday afternoon and he had a copy delivered to my house that evening. I read it and immediately called him. We spent two hours on the phone, both excited at the prospects and the opportunity. Brett had some 'skin in the game', but he needed a lot more. In the airline industry you need deep pockets and access to significant capital resources so that you don't suffer the burn-off that crippled Compass. By the end of that conversation, I'd agreed that Virgin would put up nearly $US10 million ($14.3 million) additional capital."
Although having Branson as a backer was clearly fortuitous - "it was the perception that there was a lot more behind us that was really important at that early stage" one executive said - one of the most difficult things Sherrard, charged with organising everything back on the ground in Australia, faced was not letting on to the aviation public who was behind the planned airline.
"We just said we had overseas backers and in fact it wasn't until the launch of Virgin Blue at Customs House in Sydney that Sunday in November 1999 that Richard was unveiled as the main investor," Virgin Blue communications head and third founding employee David Huttner said.
============================================
Tues "Sydney Morning Herald"
The accountant who turned a few pints into $78m
By Peter Munro and Colin Kruger
November 11, 2003
An idea that started life as scribblings on the back of beer coasters in a London pub is expected to deliver a $78 million pay-off to Virgin Blue chief executive Brett Godfrey.
The Sans Souci-born Mr Godfrey will receive 34.75 million shares, worth up to $2.25 each, after the budget airline yesterday announced its intention to float on the stock market next month.
The 40-year-old former accountant hatched his plan for what is now Australia's second national carrier while drinking pints with his fellow Virgin Blue founder, Rob Sherrard, in a West London pub during the 1993 Ashes Test series. At the time, Mr Godfrey was a junior finance manager at Virgin Atlantic.
"We had a few beers and as the night wore on I got bolder and bolder about the concept," Mr Godfrey told the Herald last night. "I honestly felt there was a bad deal for Australians and I just thought we could do it a bit better than the classic airline duopoly. I woke up with a bit of a hangover the next morning, but with a steeled reserve to knock up a business plan."
In two weeks Mr Godfrey had "knocked up half a dozen beer coasters of thoughts and concepts" into a business plan.
This grand plan, however, was knocked back by Virgin Atlantic. And a year later, he was turned away by two commercial banks, which he will not name for fear of embarrassing them.
"I thought Bug*ger it, and gave it another go. I thought it could work but the banks looked at me and said forget it. It's funny because they'd probably be interested in owning shares today."
Then in 1999, while working in Belgium as Virgin Express's chief financial officer, Virgin Group founder Sir Richard Branson asked if he had any investment ideas for the Australian market.
"My exact words were, 'Funny you should say that,' " Mr Godfrey said. "I dusted off my business plan, tarted it up a bit and got one staff member to fly across to Oxford and hand-deliver it to Richard at 5pm. He called me at seven in the evening and we talked about it until nine or 10 o'clock. He was as excited as a kid in a lolly shop."
Mr Godfrey's shares are a thank-you for turning Sir Richard's initial investment of $12 million into an airline with a market value that could exceed $2 billion. Virgin Blue has carved out what it estimates to be 28 per cent of the Australian aviation market and plans to take more.
"We will continue to chase them [Qantas] around the track," Mr Godfrey said at yesterday's press conference to announce Virgin Blue's listing on the stock market on December 10.
Now mum and dad investors will be able to buy in on the action with up to $558 million worth of shares being offered to the public when Virgin Blue's retail offer opens next Monday. Shares are expected to be priced from $1.80 to $2.25.
Most of Virgin Blue's 2780 employees are also expected to emerge as stockholders in the budget airline. The share plan includes eligible employees receiving $1000 worth of shares as a tax-free gift.
==========================================
The true-blue beginning of Virgin Blue
Oct 27
Katrina Nicholas
Waiting for Virgin Blue chief executive Brett Godfrey to disembark from a domestic flight last week, his arrival party began to worry.
All but the last stragglers had come down the exit ramp, but still there was no sign of Godfrey. Perhaps he'd missed the flight, one waiting executive wondered. An airport staffer was sent to check but returned within minutes.
No, Godfrey had made the flight but was just helping attendants vacuum the aisles, remove the discarded drink cups and recross the seatbelts to ensure a faster turnaround time.
Surprising behaviour from an airline boss? Not at all, according to those who know the man who's set to become a multimillionaire when Virgin Blue floats.
Although it's a little-known fact, Godfrey, and not flamboyant British entrepreneur Sir Richard Branson, is Virgin Blue's founding shareholder. While Branson and Patrick boss Chris Corrigan now own the bulk of the budget airline, Godfrey, along with a small handful of original Virgin Blue employees, holds 4 per cent of the company via CU Nominees.
If Virgin Blue is valued at between $1.4 billion and $2 billion when it floats, as market watchers expect, that means Godfrey, the chartered accountant who hatched the idea for a no-frills Australian carrier back in 1993 - six years before it eventually became a reality - is set to become a very rich man, worth a cool $80 million at the outside.
But growing Virgin Blue to the point where it commands 30 per cent of Australia's domestic market has been a long and difficult journey, as some of the airline's key management team related to The Australian Financial Review this week.
With a father who worked for Qantas, Godfrey, who is described by his peers as charismatic but a total workaholic, was always interested in planes and aviation. In fact, it was long time friend and fellow Virgin Blue founder Rob Sherrard who gave Godfrey his first job as an accountant at Sherrard Aviation.
After working with the company for several years, Godfrey decided to expand his horizons overseas. He landed in London and soon scored a job in the finance department of Virgin Atlantic.
But the dream of one day running his own airline always niggled and so, when Sherrard came to visit him in the UK - the pair were going to the 1993 Ashes Test together - Godfrey put the idea to him, literally mapping out the key points on the back of a beer coaster as they drank together at a London pub.
Sherrard was interested, but circumspect. Compass in Australia has just fallen over and starting an airline would require significant capital.
Unperturbed, Godfrey began presenting the business plan to various executives, although not Branson, at Virgin Atlantic. None of them bit.
Three years later, in 1996, Branson's empire bought into Euro Belgian Airlines, which later became known as Virgin Express. Branson asked then Virgin Atlantic finance director Nigel Primrose who might be a suitable candidate to go across to Brussels and look after Virgin's interests. Primrose suggested Godfrey.
Godfrey accepted but soon found himself working for an airline shackled by unions and marred by industrial disputes. Whether it was Godfrey's disposition or the fact that Australians tend to be more culturally sensitive than their American counterparts abroad, Godfrey's superiors being from the US, Godfrey successfully managed to quell union disquiet at Virgin Express, an achievement that prompted Branson to ask whether he wanted to, temporarily, take the top job.
Again, Godfrey accepted, but on two conditions - he could return to his home country shortly and Branson would take a quick look at a business plan he'd once nutted out for a low-cost Australian airline.
Godfrey presented his 50-page Powerpoint business plan to Branson that Friday. By Monday there was a handshake agreement and on Tuesday Godfrey called Sherrard from Belgium to ask whether he wanted to start an airline.
As Branson remembers: "Ever since the early 1990s when Virgin Atlantic began its expansion I had always harboured a desire to expand our aviation interests into Australia . . . and I was always looking for the right opportunity to jump in. We had several approaches about doing this but none even came close to the inspiration of Brett and Rob's proposal, which I later found out that they had hatched together as early as 1994.
"When Brett said he was thinking of going back to Australia, I asked him what he wanted to do and he said 'Funny you should mention that' and then proceeded to tell me about the business plan. I was prepared to invest and to put our team at Virgin behind it but there is no doubt that Rob and Brett, as well as the rest of the launch team, some who followed Brett halfway across the world to settle in Brisbane, have created the success story.
"It was a Friday afternoon and he had a copy delivered to my house that evening. I read it and immediately called him. We spent two hours on the phone, both excited at the prospects and the opportunity. Brett had some 'skin in the game', but he needed a lot more. In the airline industry you need deep pockets and access to significant capital resources so that you don't suffer the burn-off that crippled Compass. By the end of that conversation, I'd agreed that Virgin would put up nearly $US10 million ($14.3 million) additional capital."
Although having Branson as a backer was clearly fortuitous - "it was the perception that there was a lot more behind us that was really important at that early stage" one executive said - one of the most difficult things Sherrard, charged with organising everything back on the ground in Australia, faced was not letting on to the aviation public who was behind the planned airline.
"We just said we had overseas backers and in fact it wasn't until the launch of Virgin Blue at Customs House in Sydney that Sunday in November 1999 that Richard was unveiled as the main investor," Virgin Blue communications head and third founding employee David Huttner said.
============================================
Tues "Sydney Morning Herald"
The accountant who turned a few pints into $78m
By Peter Munro and Colin Kruger
November 11, 2003
An idea that started life as scribblings on the back of beer coasters in a London pub is expected to deliver a $78 million pay-off to Virgin Blue chief executive Brett Godfrey.
The Sans Souci-born Mr Godfrey will receive 34.75 million shares, worth up to $2.25 each, after the budget airline yesterday announced its intention to float on the stock market next month.
The 40-year-old former accountant hatched his plan for what is now Australia's second national carrier while drinking pints with his fellow Virgin Blue founder, Rob Sherrard, in a West London pub during the 1993 Ashes Test series. At the time, Mr Godfrey was a junior finance manager at Virgin Atlantic.
"We had a few beers and as the night wore on I got bolder and bolder about the concept," Mr Godfrey told the Herald last night. "I honestly felt there was a bad deal for Australians and I just thought we could do it a bit better than the classic airline duopoly. I woke up with a bit of a hangover the next morning, but with a steeled reserve to knock up a business plan."
In two weeks Mr Godfrey had "knocked up half a dozen beer coasters of thoughts and concepts" into a business plan.
This grand plan, however, was knocked back by Virgin Atlantic. And a year later, he was turned away by two commercial banks, which he will not name for fear of embarrassing them.
"I thought Bug*ger it, and gave it another go. I thought it could work but the banks looked at me and said forget it. It's funny because they'd probably be interested in owning shares today."
Then in 1999, while working in Belgium as Virgin Express's chief financial officer, Virgin Group founder Sir Richard Branson asked if he had any investment ideas for the Australian market.
"My exact words were, 'Funny you should say that,' " Mr Godfrey said. "I dusted off my business plan, tarted it up a bit and got one staff member to fly across to Oxford and hand-deliver it to Richard at 5pm. He called me at seven in the evening and we talked about it until nine or 10 o'clock. He was as excited as a kid in a lolly shop."
Mr Godfrey's shares are a thank-you for turning Sir Richard's initial investment of $12 million into an airline with a market value that could exceed $2 billion. Virgin Blue has carved out what it estimates to be 28 per cent of the Australian aviation market and plans to take more.
"We will continue to chase them [Qantas] around the track," Mr Godfrey said at yesterday's press conference to announce Virgin Blue's listing on the stock market on December 10.
Now mum and dad investors will be able to buy in on the action with up to $558 million worth of shares being offered to the public when Virgin Blue's retail offer opens next Monday. Shares are expected to be priced from $1.80 to $2.25.
Most of Virgin Blue's 2780 employees are also expected to emerge as stockholders in the budget airline. The share plan includes eligible employees receiving $1000 worth of shares as a tax-free gift.
==========================================