News: 50% Virgin Blue Sold

[Wirraway]

Patrick takes 50pc of Virgin . .AAP. .12mar02. .. .CHRIS Corrigan's Patrick Corp has signed an agreement to acquire a 50 per cent shareholding in discount airline Virgin Blue.. .. .Following discussions between stevedoring and logistics company Patrick and Virgin Blue, Patrick Corp will pay $260 million for its shareholding. . .. .Patrick Corp and Virgin Blue said the capital requirements were still to be determined. . .. .But part of the payment may be for new capital for Virgin Blue and the balance as consideration for existing shares. . .. .A further consideration may be payable depending on the performance of the company over the next three years. . .. .Virgin Blue said that with Patrick's backing it could now cement its position as the nation's leading domestic low-fare airline. . .. ."The agreement with Patrick Corporation will also allow the company, by being a truly Australian-owned airline, to operate international routes in the future should it wish to do so," a joint statement by Patrick and Virgin Blue said. . .. ."Virgin Blue, together with Patrick Corporation, now has the financial strength to actively pursue in its own right the opportunities arising from the administration of Ansett." . .. .Earlier a trading halt was applied to shares in Chris Corrigan's Patrick Corp. . .. .Patrick Corp said the request for the trading halt was made pending an announcement by the company regarding a proposed transaction and capital raising. . .. ."The event that the company expects to happen that will end the trading halt is a further announcement regarding the outcome of the capital raising, to be made prior to the opening of the market on Wednesday, March 13," it said. . .. .Yesterday shares in Patrick surged to record highs amid speculation the stevedoring and logistics company could take a stake in Virgin Blue. . .. .Patrick shares closed yesterday up 40 cents, or 2.61 per cent, at $15.70 - the highest closing and intraday level since the company was listed in May 1992. . .. .Interest in Patrick, formerly called Lang Corp, has been keen since the collapse of the Tesna bid for Ansett in late February. . .. .Last November, Patrick Corp said it was working on a proposal to acquire some Ansett assets in a deal with cutprice airline Virgin Blue. . .. .Shares in Patrick's partner in the acquisition of the Freightcorp/National Rail assets, Toll Holdings, rose 93.4 cents yesterday to close at $37.684.

[Capt Claret]

Hardly a surprising development, though the questions race through one's mind.. . </font><ul type="square">[*]<font size="2" face="Verdana, Arial, Helvetica">Will QF be seriously concerned re this potential opposition, or will they think that they're tooo strong to be concerned? </font></li>[*]<font size="2" face="Verdana, Arial, Helvetica">Given the way Corrigan appeared to treat his employees during the waterfront dispute a few years ago, how will the Virgin culture change under his influence? </font></li>[*]<font size="2" face="Verdana, Arial, Helvetica">How much influence will he (Corrigan) have? </font></li>[*]<font size="2" face="Verdana, Arial, Helvetica">Will Virgin stay discount, or will they start offering the frills, which of course cost? </font></li>[/list]<font size="2" face="Verdana, Arial, Helvetica">. . . . <small>[ 12 March 2002, 01:24: Message edited by: Capt Claret ]</small>

[Toodogs]

....and it's probably a good thing they treated their employees as they did during that dispute. It was a long time coming!

[nasa]

Hmmmm.....Interesting.....Did not Corrigan employ outside labour during the waterfront dispute....wonder what will happen now if he retains the same attitude and a so called "hero" applies for a position <img border="0" title="" alt="[Eek!]" src="eek.gif" /> <img border="0" title="" alt="[Eek!]" src="eek.gif" />

[Wirraway]

Bloomberg:. .. .Tue, 12 Mar 2002, 12:56pm EDT. .Patrick Corp. Agrees to Pay $136 Million for 50% of Branson's Virgin Blue. .By Andrew Harrison. .. .Sydney, March 12 (Bloomberg) -- Patrick Corp., Australia's largest port cargo handler, agreed to buy half of Richard Branson's discount airline Virgin Blue for A$260 million ($136 million), bolstering the finances of the country's No. 2 carrier. . .. .Patrick, which moves half the cargo through Australian harbors, hired JBWere to sell new shares at A$14.20 each to pay for the stake, according to a statement to the Australian Stock Exchange. Patrick stock yesterday rose 2.6 percent to a record A$15.70. Its stock was halted today. . .. ."It's very good news. It gives Patrick a third growth leg and an opportunity to add value for shareholders,'' said John Grace who holds Patrick shares in the A$1 billion he helps manage at Ausbil Dexia Ltd. "They can apply their skills in transport to the airlines sector.'' . .. .With Patrick's support, Virgin Blue may grab as much as 35 percent of Australia's domestic air market within two years, Merrill Lynch & Co. analyst Simon Gresham said in a report last week. The collapse of Ansett Holdings Ltd. in September allowed rival Qantas Airways Ltd. to expand its share of the market to about 80 percent with Virgin Blue claiming the remainder. . .. .Patrick, previously known as Lang Corp., said it may invest more in Virgin Blue depending on its performance. It did not elaborate. . .. .With Patrick's backing, Virgin Blue "has the financial strength to actively pursue in its own right the opportunities arising from the administration of Ansett,'' a joint statement from the two companies said. . .. .Qantas shares fell as much as 4.4 percent to A$4.31, its biggest drop since Feb. 15. The carrier, 21 percent owned by Branson's archrival, British Airways Plc, has a market value of about A$6.7 billion. Ansett ceased flying last week. . .. .Ansett Play? . .. .Merrill's Gresham said Virgin may use the funds from Patrick to acquire Ansett assets, including terminals and maintenance facilities now lying little used at major airports, such as Sydney and Melbourne. . .. .It's not clear yet how much extra cash will be generated for the carrier in the purchase, said Andrew Fitchie, an analyst with UBS Warburg Australia. . .. ."This agreement may be less about injecting capital into the company but more about Richard Branson taking advantage of a prosperous company to help other parts of his empire,'' Fitchie said. . .. .Qantas may even emerge a beneficiary of the transaction if it results in Australian regulators easing pressure on the carrier to prove it's not exploiting dominance of the market, he said. . .. ."The sooner (Virgin Blue) can get up to about 20 to 25 percent of the market, the easier life will get for Qantas,'' Fitchie said. . .. .Ausbil's Grace said the drop in Qantas' shares points to rising competition ahead for the biggest carrier. . .. ."The market is telling you there is you've got a very viable competitor with excellent management,'' Grace said. . .. .Goldman Sachs Group Inc. advised Virgin Blue and the Virgin Group on the transaction. Virgin Blue operates 16 aircraft on its Australia routes, with seven more planes scheduled for delivery this year.

[backspace]

Curious, If TESNA offered a reported $500mil for VB why would you go with a bid for half that figure. Also quotes from financial sources saying that VB is worth between 1 and 1.5Bil so why would you go with a quarter of that figure. Must be some good conditions in the fine print.

[Buster Hyman]

I guess the pommie shark could tell that the two Aussie sharks had no real money to pay with.. .. .Trust me, it'll end in tears!!!

[farrari]

Good to see VB future secure, however once again some one has paid too much for a share, this price is more than DOUBLE, much more at this stage.

[PeterWally]

Apparently Patrick have been training up pilots on a small Island in the pacific. . .The rumour is that the "cadets",as they are codenamed, are refugees from a Middle East Country. They arrived not long ago.They will on a given date replace all VB crew.. .They have been promised Visas for cheap Labour.. .. .Anyone truth in this rumour?????????

[Wirraway]

From news.com.au. .. .Virgin eyes 50pc of market. .AAP. .12mar02. .. .DISCOUNT airline Virgin Blue has warned Qantas Airways Ltd to "watch its tail", saying it aimed to eventually capture 50 per cent of the domestic aviation market.. .. .Chief executive Brett Godfrey said Virgin aimed to have 30 per cent of the domestic market by the end of the year, with the higher goal of 50 per cent over time. . .. .Mr Godfrey said the aim of owning 50 aircraft over the next five years was "very, very achievable". . .. .The low cost air carrier, which will remain based in Brisbane, was considering moving into freight transport. . .. ."All I can say is Qantas watch your tail because we are on it," Mr Godfrey said. . .. ."We are currently at 15 per cent (domestic market share) today and we operate 16 aeroplanes," Mr Godfrey said. . .. ."We will fairly rapidly go to 30 (planes) ... that will have us somewhere between 25 and 30 per cent (market share). . .. ."I believe our target is to become eventually 50 per cent of this market, and I don't think that's a pipedream at all. It is a very real possibility." . .. .Virgin would retain its "cheap flights" to continue to differentiate from Qantas, Mr Godfrey said. . .. ."The cheap flights will remain, they will always remain," Mr Godfrey said. . .. ."We are profitable today, in fact our margin is greater than Qantas. . .. ."That will remain, we are not changing our focus one bit. . .. ."We would rather fill the whole aeroplane for half as much as Qantas does selling 50 per cent to get the maximum revenue." . .. .Chris Corrigan's Patrick Corp today said it would take a 50 per cent shareholding in the discount airline for $260 million. . .. ."Patrick Corporation are coming in not wanting to run this business, not wanting to take it over and exert their influence," Mr Godfrey said. . .. ."They are basically happy with the way it is operating today." . .. .Mr Corrigan said that besides his "wallet", he brought a low-cost philosophy to Virgin Blue.

[Mud Skipper]

Perhaps VB can now invest more in some basic ground handling equipment. Perhaps even the Adelaide terminal could be built - or not?. .. . <img border="0" title="" alt="[Wink]" src="wink.gif" />

[cabin secure]

How can you capture 50% market share without a full service airline? Budget is fine on short distances however it leaves a lot to be desired on a 5 hour flight.

[Wirraway]

AAP. .. .Patrick, Virgin merger could create jobs for Ansett workers. .MELBOURNE, March 12 AAP|Published: Tuesday March 12, 4:59 PM. .. .The deal struck today between Patrick Corporation and Virgin Blue could help former Ansett workers gain their entitlements, the ACTU said today.. .. .Patrick today signed an agreement to acquire a 50 per cent shareholding in discount airline Virgin Blue.. .. .ACTU secretary Greg Combet said the payment of the entitlements hinged on Ansett's assets being sold by the airline's administrator. . .. ."It is anticipated that the Patrick, Virgin merger may lead to a bid for a number of Ansett assets, particularly the airport terminal leases," Mr Combet said.. .. ."Former Ansett workers, especially long-serving employees owed many years' redundancy pay, will benefit from a successful asset realisation program.". .. .Mr Combet also said the ACTU did not hold a grudge against Patrick Corporation for the 1998 waterfront dispute.. .. ."Patrick Stevedoring is a fully unionised operation and notwithstanding the bitterness of the 1998 dispute, both the unions and the company have worked hard in recent years to rebuild relationships," he said.

[Buster Hyman]

God bless the ACTU eh? Have they made up with the AFAP at all??? <img border="0" title="" alt="[Roll Eyes]" src="rolleyes.gif" /> . .. .B.MAC. I thought the same. How much of the Aussie market does J class take up, coz they aint getting any of that at the moment.

[Slasher]

PW I heard the same but after some sniffing around there appears to be no substance to it. Given the Oz governments surprising success with the great Unwashed re ilegal imigrants, it wouldnt be wrong to conclude these ME people (reportedly Iraqis mainly) would be permitted in. Only the Hawke government in true ALP fashion permitted such activitys.

[Sherm Boy]

B. MAC. .. .(I wonder about that name. Were you ever a President of the AFAP?). .. .I haven't got the exact figures in front of me but the vast majority of Australiaan passengers travel on routes of 2 hours or less. MEL-SYD, SYD-OOL, SYD-BNE, MEL-ADL, ADL-SYD etc. Thats where the money is for a low cost carrier and yes, they can get to about 50% without ever having to rely on dominating 5 hour markets. . .. .I was browsing in my airline's rather well stocked library yesterday (yes Virginia there are well equipped airlines outside of Qantas) and a journal named Airline Monitor showed that the proportion of US domestic travellers using discount fares is in the high 90's. So, sorry to say, J class is no solace either. I'd have a bet that the bulk of US J class seats are filled with Frequent Fliers.. .. .An awful lot of Europeans fly on holidays in 32 inch seat pitch charter jets and happily live with it. I flew them round for a while and didn't notice the luxury concious Scandinavians screaming. Remember that before Compass, most folks wanting cheap trips sat up for 12 hours on a bus. So I don't think that the small percentage of Virgin revenue coming from passengers who do choose a 5 hour trip to go SYD-PER is an awfully big millstone round their airlines neck.. .. .Time for cold-hard-facts...inside 2 years-ish every 737 with a rat on the tail will be being shadowed by a VB 737 running at about 50-60% of QF's cost per occupied seat. That is a nightmare scenario for QF and also for AIPA members without a decent scope clause or a cohesive membership base. . .. .Only flown VB once...it was fun and I met a couple of old friends driving the 737. Still a horrible excuse for an aeroplane but it will serve the airline (and the public) well. . .. .With ACARS and SATCOM I only need to use one of my 777's HF sets most of the time so I can follow the progress of this exciting time of REAL reform and innovation on Radio Australia on those dark Pacific nights.. .. .Cheers. .. .Sherm Boy

[Ramrod2]

Well said !!

[Wirraway]

The Bearded One was interviewed by ABC radio this morning. He said. .that acquiring extra terminal space was a priority, and if successful. .about 1,000 extra staff would be employed over the next 2 months. All. .routes would be "thickened" as soon as aircraft are available, and new. .routes would be introduced. This includes international services to. .New Zealand, Indonesia and Fiji. In the longer term, Virgin Atlantic. .would provide assistance to introduce long haul services from. .Australia to Europe, Asia and North America.

[Sherm Boy]

VBs plans sound impressive.. .. .As I understand Australian Airlines plans they are going to compete with VB (in and out of OZ) by having a low cost operation. But as I understand these things (not very well I grant you) there doesn't seem a lot of scope to match VBs costs:. .. .1. Fuel will cost the same as mainline QF. .. .2. Pilots will cost the same as mainline QF. .. .3. Landing fees and en-route charges will will cost the same as mainline QF. .. .4. Insurance and depreciation and ownership charges in general (leasing, interest etc) will cost the same as mainline QF. .. .5. "We're a big airline and we like our priviledges" attitudes will cost the same as mainline QF. .. .6. Maintenance will cost the same as mainline QF. .. .Yes, marketing may be a little cheaper. Not having to offer lounges? How long will that last for people who are members at other ports.. .. .Will the cabin crew be cheaper? Non-union?. .. .Given the vast gulf that exists between "Can do" VB and "Born to Rule but could lose a few pounds" QF I know which way I'd be betting.. .. .Cheers. .. .Sherm