The chances of something much bigger than a change in control of Virgin Blue occurring by year’s end are rising after its founding CEO Brett Godfrey told reporters at yesterday’s AGM that he wouldn’t stick around under the”‘wrong” owners.

Toll Holdings has 62 per cent of VBA. And it has been candid for some time about not being long term if the right price comes along. But most of the questions about who might provide the right price are being asked of the wrong suspects.

In recent days both Singapore Airlines and Emirates have reaffirmed their disinterest. Yet no one has been able to get a response so far from Temasek Holdings, the superannuation investment arm of the Singapore Government, which owns 54 per cent of Singapore Airlines, 11 per cent of Tiger Airways (in turn 49 per cent owned by Singapore Airlines) and for that matter 19 per cent of Jetstar Asia, which is almost half owned by Qantas.

Temasek is a sector investor, and somewhat like the late Sir Peter Abeles with trucking companies, appears unconcerned at owning all or part of competing companies that may or may not go for each other’s throats as long as the outcomes look good.

Similarly, the entities to keep in view in Dubai include Dubai World, the holding company for the business and project portfolio of the UAE, or perhaps even more sharply focus on its Istithmar division, which specialises in higher risk opportunities including aerospace services and even airlines.

Dubai World and Temasek have an enormous advantage over Emirates or Singapore Airlines. Because they aren’t airlines they are allowed to own up to 100 per cent of a domestic Australian airline and 49.9 per cent of any international services it might operate.

And there is another opportunity for airline investment and rationalisation in this region which has long taunted Qantas (and once burned Singapore Airlines for more than $700 million) in the form of Air New Zealand, which is well run, profitable, and majority owned by the New Zealand government, which like Toll, doesn’t see itself as a long term airline investor.

The effective joint ownership or control of Air New Zealand and Virgin Blue (and its own NZ subsidiary Pacific Blue) mightn’t pass the regulatory hurdles over which Qantas stumbled when it went for the Kiwi carrier, but it is awfully tempting in airline terms. And there is the outside chance, which is driving some of the rumours, that Air New Zealand might even persuade Wellington that it should buy the Toll stake.

Finally there is Richard Branson, who is sitting on 26 per cent of VBA, has signed up for 20 per cent of AirAsiaX, and is disagreeing with Singapore Airlines over the price at which he might buy back the 49 per cent of Virgin Atlantic he sold it at the end of 1999.

There are doubts as to whether Branson has the money or inclination to buy back full ownership of Virgin Atlantic plus take out Toll, but it would be rash to second guess what he might do, including sell or enlarge his stake, as a potential new controlling stakeholder for Virgin Blue comes out of the shadows.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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