Queensland will put in a bid to take over Virgin Australia this week, in an attempt to not only bring the failed airline back into the skies and into profitability, but to keep it based in Brisbane.
State treasurer Cameron Dick confirmed the bid this evening, saying it would be run through the government-owned Queensland Investment Corporation and be presented as part of a consortium.
That group could involve one of the other "interested parties" running their eyes over the airline or introduce new players such as state-based superannuation funds and other commercial investment partners of QIC.
Dick said the government's investment in the collapsed airline could take the form of "a direct equity stake, a loan, guarantee or other financial incentives."
"This is a competitive space, but Queensland is a serious contender and our discussions with the administrators have been making progress," he added.
QIC chief Damien Frawley said the group was "well-equipped to manage the state’s interest in Virgin Australia Holdings should the consortium be successful."
"QIC's track record as an acquirer, owner and manager of nationally critical infrastructure for both the Queensland Government and long-term investors supports our consortium bid."
While a first wave of "indicative non-binding bids" must be handed into administrator Deloitte by the close of business this Friday May 15, Queensland and co. will then have four weeks to knock off the rough edges of what it has dubbed 'Project Maroon' – after the state's rugby league colour – and present its final "serious, binding" bid by mid-June.
"We remain confident that our target of achieving a sale by the end of June is achievable," Deloitte administrator Strawbridge has said.
Keeping Virgin tethered to the state is central to the pitch, with the state having already promised $200 million to that end.
Brisbane has been the airline's operational base and spiritual home since it launched as Virgin Blue in 2000, and almost half of Virgin's 10,000-strong workforce in located in Queensland.
Management and the Velocity Frequent Flyer program lease commercial offices in Sydney – it's not known if a successful Queensland bid would see both of those arms relocate north of the border.
“We have an opportunity to retain not only head office and crew staff in Queensland, but also to grow jobs in the repairs, maintenance and overhaul sector and support both direct and indirect jobs in our tourism sector," Dick said.
Also in the running...
Strawbridge has previously indicated that a score of potential bidders were scoping out Virgin Australia, which he expected to be "a very competitive process" involving "high-quality bidders with fantastic credentials and the ability to restructure this business."
Some of the suitors are said to include:
- Melbourne-based private equity firm BGH Capital, which is reportedly building a locally-financed 'Team Australia' bid as a counterpoint to Virgin being previous dominated by foreign ownership
- Australian-based multinational investment firm Macquarie Group
- Perth-based Wesfarmers, which is said to have its eye on how the Velocity rewards program could be used to bolster FlyBuys
- WA mining magnate Andrew 'Twiggy' Forrest
- Singapore sovereign wealth fund Temasek
- Bain Capital, assisted by former Bain exec and Jetstar CEO Jayne Hrdlicka
- US-based private equity firm, airline investor and low-cost champion Indigo Partners, which owns US budget carrier Frontier Airlines and holds stakes in an array of other LCCs, including Europe's Wizz Air, which Indigo co-founded
Virgin's suitors will have been running the numbers across a range of scenarios, ranging from a return to the airline's low-cost Virgin Blue roots, a hybrid mid-market position between Qantas and Jetstar, and a smaller but still full-service 'boutique' model.