By David Knibb in Brisbane
Toll acquired 62.2% of Virgin Blue as part of its hard-fought takeover of Patrick Corp. Since this was finalised in late May, Virgin Blue’s senior management has been briefing Toll so that it has a full appreciation of the airline’s operations and plans, including its proposed transpacific service to the USA.
Whether Toll will sell some of its Virgin Blue stake to Sir Richard Branson’s Virgin Group remains undecided. Toll and Branson had such a deal earlier, but Toll backed out of it when a rise in Virgin Blue’s share price created a potential windfall for Branson and complicated Toll’s takeover bid.
Branson chose not to enforce his group’s right to a A$12 million ($9 million) penalty against Toll for cancelling that deal, hoping with his gesture to buy some long-term goodwill.
One of the least desirable outcomes for Virgin Blue’s current model would be a decision by Toll to boost the carrier’s air cargo operation at the expense of its low-cost passenger service.
Virgin Blue already lifts a substantial volume of cargo, but the carrier is careful not to compromise the quick turns needed for high aircraft utilisation. If it became the preferred cargo carrier for some of Toll’s major customers, that could change. This is part of a broader concern raised by some that Toll could use Virgin Blue in ways that help Toll but not necessarily the airline. Such concerns are fuelled by unproven allegations Patrick made during the takeover battle, where it claimed in a lawsuit that Toll was exploiting a joint venture railroad for its own benefit.
Mark Rowsthorn, the new chairman of Virgin Blue, was the Toll official in charge of that venture. However, Rowsthorn’s aviation background also makes him a logical choice as Virgin Blue’s chairman. ■
Source: Airline Business
