Jul 09 2000 - Virgin blue launch at Brisbane airport  - Richard Branson  and Peter Beattie with champagne surrounded by staff - aviation airlines aircraft personnel
Jul 09 2000 - Virgin blue launch at Brisbane airport - Richard Branson and Peter Beattie with champagne surrounded by staff - aviation airlines aircraft personnel

Bid ‘must stack up’ as Beattie warns against betrayal

THE State Government's push to buy Virgin Australia will be shelved if the numbers don't "stack up" as former Premier Peter Beattie issues a warning to all bidders against betraying Queensland.

A team of investment, risk and legal boffins, led by Queensland Investment Corporation CEO Damien Frawley, has spent the past week trawling through Virgin data and forming a game-plan ahead of today's deadline for first offers.

 

 

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In an exclusive interview with The Courier-Mail, Mr Frawley revealed there was "a lot more to do" before deciding whether Virgin would be a good investment for the State of Queensland and poured water on suggestions the purchase was fait accompli.

"If it doesn't stack up we'll be advising our client as such," he said.

"We're not going to lose our mind here and ignore the fundamentals and the numbers.

"Clearly, the numbers need to make sense and they need to work."

Queensland Investment Corporation CEO Damien Frawley is the man behind the Queensland bid for Virgin Australia.
Queensland Investment Corporation CEO Damien Frawley is the man behind the Queensland bid for Virgin Australia.

 

In addition to whether Virgin is a sound asset for Queensland, QIC will also consider the flow-on benefits to the state's tourism and employment.

Mr Frawley said a non-binding offer would be lodged today ahead of talks next week about partnering with another consortium.

If QIC determines Virgin Australia is a good investment for Queensland it will lodge a formal offer to purchase in early June.

Mr Frawley is pinning Queensland's hopes on it already being the home of Virgin.

"Incumbency helps and I think Queensland is not just a great place to live but it's a great place to do business," he said.

"Boeing is in Queensland and we do have quite a flourishing aviation sector."

"You've got to be in it to win it".

Premier Peter Beattie at the launch of Virgin Blue in 2000.
Premier Peter Beattie at the launch of Virgin Blue in 2000.

 

It comes as former premier Peter Beattie, the man who lured the then Virgin Blue to Queensland in 2000, warned that the airline's new owner must stick with an agreement he reached with Sir Richard Branson 20 years ago to base the airline in the state.

Mr Beattie, who used a $10 million marketing and tax relief package to win over Sir Richard, said anything less would be a "betrayal".

"The deal I did with Virgin to put their headquarters in Queensland should be honoured by Virgin regardless of who owns it," he said.

Mr Beattie did not comment on the government's plan to purchase the airline, but declared it was worth fighting for.

 

 

"The Queensland tourism industry desperately needs two competitive airlines and will be devastated if Virgin fails or reduces services to regional Queensland," he said.

The former Labor Premier also took aim at Home Affairs Minister Peter Dutton's criticism of Queensland's plan and called for the Federal Government to work "hand-in-hand with the Queensland Government to save Virgin and not involved in cheap political pointscoring".

Queensland Treasurer Cameron Dick has also moved to assure Queenslanders the state can afford a Virgin Airlines bid and did not rule out offering more than the $200 million already announced.

"The issue is … not doing anything, failing to act, refusing to engage with this issue creates all sorts of uncertainty and ultimately unemployment for Queensland," he said.

Sir Richard Branson and Premier Peter Beattie launch Virgin Blue’s first flight – destined for Sydney.
Sir Richard Branson and Premier Peter Beattie launch Virgin Blue’s first flight – destined for Sydney.

 

Mr Dick said he was satisfied with the level of risk because, "it's critical for the nation to have two airlines".

"We're going to be smart and canny with our money," he said.

"I know it's not my money, it's other people's money, it belongs to Queenslanders, we're going to be very careful about this."

The new Treasurer declared Queensland was going to "strike a very hard bargain".

"Foreign banks and foreign bondholders - they're going to have to take a haircut out of this, they're going to have to pay a price because we need the best possible airline in the best possible shape out of administration to look after Queensland and to look after our nation as our second national airline," he said.

He said QIC's strategy would ensure the state was in the best position to be a partner in a successful bid.

"It's not the intention of the Queensland Government to purchase the airline in its entirety but we want to take a strategic stake to preserve and protect jobs," he said.

 

 

 

Originally published as Bid 'must stack up' as Beattie warns against betrayal

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