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Business News/ Companies / News/  IndiGo parent looks to bid for bankrupt Virgin Australia
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IndiGo parent looks to bid for bankrupt Virgin Australia

Some 19 parties were interested in buying the airline, which entered voluntary administration last month

Cash-strapped Virgin Australia had grounded its operations last month. (Photo: Reuters)Premium
Cash-strapped Virgin Australia had grounded its operations last month. (Photo: Reuters)

InterGlobe Enterprises (IGE) Pvt. Ltd, which controls the company that operates India’s largest airline, has expressed interest in bidding for bankrupt airline Virgin Australia Holdings Ltd in the first round of a sale process that concluded on Friday, said a person with direct knowledge of the development.

InterGlobe Enterprises (IGE) will now evaluate submitting financial bids for the airline, the person said on condition of anonymity.

This will be a rare instance of an Indian company bidding for a prominent foreign carrier, in this case Australia’s second largest after Qantas Airways. If the Rahul Bhatia-led group’s bid is successful, it will secure an asset in a lucrative market that has low taxes.

“Australia has a vibrant aviation market with relatively lower taxes than India," said aviation analyst Mark Martin, chief executive of Martin Consulting LLC. “The IGE Group would prefer Virgin Australia over Air India, because it’s already a cost effective airline. While, whoever buys the Indian national carrier will have to put in huge investment to revive the airline and much more to bring it back to profitability."

Cash-strapped Virgin Australia grounded its operations last month amid the outbreak of covid-19 pandemic.

The airline had last month hired Deloitte to oversee its voluntary administration after the country’s government refused to bail out the debt-ridden carrier.

InterGlobe Enterprises will participate in the sale process of Virgin Australia, a company spokesperson said on Friday, without elaborating further.

“As regards (to) Virgin Australia, InterGlobe Enterprises has signed an agreement to participate in the sale process and is bound by the confidentiality requirements of that agreement. We are unable to say anything further at this stage," the spokesperson said.

The IGE group at present holds more than a 38% stake in India’s largest domestic airline, IndiGo. However, Bhatia’s proposal does not involve IndiGo airlines.

IGE, however, did not reveal if it is partnering with other potential bidders to pick up a stake in Virgin Australia. Rahul Bhatia did not respond to Mint’s query.

A spokesperson of Virgin Australia also did not respond to email queries.

Other parties known to be vying for the airline include private equity firm BGH Capital, global investment giants Bain Capital, Brookfield and Oaktree Capital Management, Macquarie Group, Indigo Partners, the three Australian states of Queensland, New South Wales, and Victoria, Australian publication Financial Review had recently reported.

Several Australian media outlets on Friday reported that there are eight likely bidders for the airline, which would be shortlisted to three potential candidates by early next week, quoting Vaughan Strawbridge, Deloitte’s lead administrator for Virgin Australia.

As many as 19 parties were interested in buying the airline, which entered voluntary administration last month, according to an affidavit published by the Federal Court of Australia earlier this week.

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Published: 15 May 2020, 11:26 PM IST
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