Speaker 1: The Australian Financial It was always going to be an
Speaker 1: eventful day for Virgin Airlines as it returned to the
Speaker 1: stock market on Tuesday, but no one predicted it will
Speaker 1: be this dramatic. Israel's Defense minister has acknowledged that they
Speaker 1: have carried out strikes against Iran, the first time in
Speaker 1: month of Iran.
Speaker 2: Fired two waves of missiles overnight towards Israel.
Speaker 3: The United States as dramatically entered Israel's war against Iran.
Speaker 2: News of the temporary closure of Katari airspace threatened to
Speaker 2: overshadow Virgin's float. In the days leading up to its listing,
Speaker 2: Israel and Iran traded missiles and the US entered the fray.
Speaker 2: The prospect of a broader conflict and a spike in
Speaker 2: fuel prices was not good news for the airline industry.
Speaker 2: But then suddenly, on Tuesday, the conflict deescalated and there
Speaker 2: was talk of a ceasefire. Time for a relieved Virgin
Speaker 2: CEO Dave Emerson to ring the bell.
Speaker 4: Investors are buying Virgin shares today as the airline goes
Speaker 4: public in one of the most hotly anticipated floats.
Speaker 2: In a strong result, Virgin's shares jumped eleven percent on
Speaker 2: the first day of trading. But now the airline must
Speaker 2: stay on track and ensure history doesn't repeat.
Speaker 4: There's just something about airlines, There's something about aviation executives
Speaker 4: is so tempting for these guys to expand and try
Speaker 4: and compete with the likes of Quantas.
Speaker 2: Welcome to the Finn. I'm Lisa Murray. This week, senior
Speaker 2: reporter Aisha decrets Her and chanticlear columnist Anthony McDonald on
Speaker 2: Virgin's way back to the market, why it could struggle
Speaker 2: to stay in its lane, and whether Australia can ever
Speaker 2: sustain more than two airlines. It's Thursday, June twenty six.
Speaker 2: Hi Aisha, Hi, and thanks for coming on the podcast.
Speaker 4: Thanks for having us, Lisa.
Speaker 3: Thanks Lisa.
Speaker 2: And when a company lists on the AOSX, it's usually
Speaker 2: an exciting day, but Virgin's IPO was particularly dramatic on Tuesday.
Speaker 2: Its executives were up in the early hours of the
Speaker 2: morning dealing with the diversion of flights following Iran's decision
Speaker 2: to launch missiles at a US base in Qatar, But
Speaker 2: the day ended well. How would you rate Virgin's return to.
Speaker 4: The market, Lisa, This was in the hands of the gods,
Speaker 4: and the gods.
Speaker 5: Smiled, so so much could have gone wrong, Like Virgin
Speaker 5: did well to raise at six hundred and eighty five
Speaker 5: million dollars for its IPO, but that was three weeks ago, Lisa,
Speaker 5: like so much has happened in the past three weeks,
Speaker 5: so much that could have really impacted investor's sentiment.
Speaker 4: And how would trade on listing. You know, you had
Speaker 4: Israel and Iran and the US bombing Iran, the oil
Speaker 4: price spike every the weekend, the threat of retaliation strikes
Speaker 4: like at worst could have sunk the float. Lisa, like
Speaker 4: Bayan might have had to have pulled this float. I mean,
Speaker 4: at best, you would have thought it would scare off
Speaker 4: some investors and the stock would trade down, But almost miraculously,
Speaker 4: the whole thing calmed down Monday night in the US
Speaker 4: right ahead of the listing on Tuesday morning austral In time,
Speaker 4: Trump was even talking about a ceasefire in the Middle East,
Speaker 4: which is something that we certainly didn't see coming. And
Speaker 4: by midday when it was time to list, the market's
Speaker 4: mood was risk on. Investors were keen to by stocks,
Speaker 4: and Virgin landed in smooth markets. It opened up seven
Speaker 4: and a half percent and held those gains for most
Speaker 4: of its first day. Now normal times, Lisa, you'd say
Speaker 4: that's a solid debut. It's nothing miraculous, But given what
Speaker 4: the market conditions were like, given what's been happening in
Speaker 4: the Middle East, you'd say it's a remarkable daboot.
Speaker 2: And before we get to what happens next, take us
Speaker 2: back to mid two thousand when the airline launched as
Speaker 2: Virgin Blue in a marketing blitz led by Richard Branson.
Speaker 2: How did Virgin secure its place in the Australian aviation market.
Speaker 4: They launched with a mystery flight to Marichid of all places.
Speaker 4: At the time, it was called Virgin Blue because its
Speaker 4: first planes were red and blue is the Australians saying
Speaker 4: for redhead now at least. It started services in August
Speaker 4: two thousand, in the lead up to the Sydney Olympics.
Speaker 4: Set up by Branson and Brett Godfrey, based in Brisbane
Speaker 4: as a low cost carrier. At first it had only
Speaker 4: two planes, but then in September two thousand and one.
Speaker 2: When the last flight touched down in Sydney this morning,
Speaker 2: Ansets passed into aviation history.
Speaker 4: Antet Australia, which was the number two airline in Australia.
Speaker 4: It collapsed and Virgin all of a sudden became the
Speaker 4: second biggest airline now. It's I'm say Virgin contributed to
Speaker 4: the collapse of Inset because it had turned down and
Speaker 4: off from Singapore Airlines an Anset to buy Virgin and
Speaker 4: Branson he actually called a press conference pretending he'd accepted
Speaker 4: the deal.
Speaker 5: Anyway, I'm off to England with my court pavillion dollar
Speaker 5: check and thank you very much.
Speaker 4: Before announcing he was only joking and ripped up the check.
Speaker 4: I'm just joking. It's pitch was there was younger, funer
Speaker 4: and less expensive than quantious. It did widespread marketing or.
Speaker 3: Richard Branson will launch an assault on the Australian domestic
Speaker 3: travel market this morning, rebranding Virgin Blue as Virgin Australia.
Speaker 4: The big sort of change came in twenty eleven when
Speaker 4: it rebranded as Virgin Australia. What we're building here is
Speaker 4: an airline that he still has very competitive airfares, but
Speaker 4: he's also very competitive at the front end of the aircraft.
Speaker 4: To try and move the company on from its low
Speaker 4: cost Virgin Blue roots. It became a more full service
Speaker 4: airline and started targeting business flight.
Speaker 3: Virgin Australia has a new strategy and its rivalry with Quantus.
Speaker 2: It's unveiled a luxury aircraft for use on domestic roots Now.
Speaker 4: Twenty fourteen, Virgin bought Tiger Airways, an airline you might
Speaker 4: remember now. It was sort of copying Quantus, which had
Speaker 4: launched Jetstar as a low cost carrier to try and
Speaker 4: keep Virgin Blue out of the market. And Virgin at
Speaker 4: the time was run by a guy called John Borghetti.
Speaker 4: There is an alternative now and it is for the
Speaker 4: first time in over a decade, in fact, sinceanst stopped
Speaker 4: playing Did you have a two carriers now that can
Speaker 4: serve us all elements of the market. It was trying
Speaker 4: to take on Quantas that was spending lots of money
Speaker 4: on lounge's furniture, business class flights, all this costly sort
Speaker 4: of premium stuff. And that's because there was a bit
Speaker 4: of rivalry between Borghetti and Alan Joyce, who was running Quantus.
Speaker 2: Virgin chief executive John Borghetti took over Virgin after being
Speaker 2: post over for the top job at Quantus three years ago.
Speaker 4: They both worked at quantas Joyce had won the CEO
Speaker 4: spot and Borghetti went Virgin, and he decided to take
Speaker 4: them on.
Speaker 3: John Borghetti, how satisfying is it to get this job
Speaker 3: given you missed out on the CEO role at Quantus.
Speaker 4: I think this job is an incredible opportunity and one
Speaker 4: that I'm looking forward to very much, irrespective of any
Speaker 4: other job. As part of it, Virgin built a frequent
Speaker 4: fly business called Velocity. At one stage it even sold
Speaker 4: a stake and it's private equity, and then brought that
Speaker 4: stake back using a lot of debt, closed borders and
Speaker 4: grounded planes. The coronavirus pandemic has the airline industry facing
Speaker 4: the worst crisis in its history. So by that time
Speaker 4: the pandemic struck in early twenty twenty, Virgin all of
Speaker 4: a sudden had lots of debt as planes were in
Speaker 4: the sky, and the whole thing went into administration.
Speaker 2: I share all airlines were grounded by COVID. Why was
Speaker 2: Virgin affected more than other airlines and how did it
Speaker 2: manage to turn the business around?
Speaker 3: So I think his aunt mentioned had just had too
Speaker 3: much debt. More than five billion dollars had been racked up,
Speaker 3: and I think the recriminations can fly over who acquired
Speaker 3: all of that debt and on what and whether it
Speaker 3: was useful. Some people would say that chasing quantas and
Speaker 3: trying to be premium was a good strategy. Others would
Speaker 3: say buying the stake in Velocity back at the wrong
Speaker 3: time meant that Virgin tipped into administration. So people can
Speaker 3: kind of argue over what was the straw that broke
Speaker 3: the Campbell's back. But I think what we can say
Speaker 3: is that the foreign shareholders that sat on Virgin's register,
Speaker 3: which were Singapore Airlines, Eddie had China's nan Chan Group,
Speaker 3: all owned about twenty percent each, and they sort of
Speaker 3: weren't the most useful of shareholders because all state owned,
Speaker 3: they didn't have necessarily shareholder profits at the heart of
Speaker 3: what they did, and they all had a different strategic
Speaker 3: plan for Virgin. The airline had to temporarily stand down
Speaker 3: about eight thousand of its workers while borders were shut
Speaker 3: during that pandemic. Virgin Ground did eight thousand people now
Speaker 3: out of work.
Speaker 4: It is what it is done, it is what it is.
Speaker 4: We're all in this together. There's nothing we could do.
Speaker 3: Paul S Garret, the CEO who did buy back that
Speaker 3: stake in Velocity. He'd asked the government, Morrison government for
Speaker 3: a one point four billion dollar loan.
Speaker 4: There was an enormous man of estort Peter to try
Speaker 4: and get the support from the federal government. And look,
Speaker 4: it was their decision and we respect that decision because
Speaker 4: of the effort we put in. It felt a little
Speaker 4: bit disappointing, but there.
Speaker 3: Was a bit of lobbying behind the scenes by a
Speaker 3: number of players, including Quantis and ultimately Scott Morrison and
Speaker 3: Josh Fredenberg, who was the Treasurer at the time. They
Speaker 3: went for a market based solution that was proposed by
Speaker 3: Nicholas More, the former CEO of Macquarie, who said that
Speaker 3: actually allowing the airline to tip into administration was a
Speaker 3: better kind of option and letting the market find a
Speaker 3: solution so very much. The imperative from Moore and others
Speaker 3: at the time was to make sure that whatever happened
Speaker 3: coming out of the pandemic, there was still a strong
Speaker 3: competitor Aquantas. So what happened was Deloitte was appointed as
Speaker 3: the administrator.
Speaker 4: Virgin's the biggest casualty so far as COVID nineteen ricks
Speaker 4: havoc on Australia's locked down economy.
Speaker 3: There was a sale process run and in the end
Speaker 3: it was US private equity firm Bank Capital that won
Speaker 3: to rescue Virgin out of administration. Private equity fund Bain
Speaker 3: Capital looks set to become the new owner of Virgin
Speaker 3: Australia after New York hedge fund Cyrus Capital Partners withdrew
Speaker 3: its offer. They sacked three thousand staff and they really
Speaker 3: bought an airline that had halved the number of aircraft
Speaker 3: and renegotiated hundreds of contracts to reset its cost base.
Speaker 2: And former CEO Jane Hrdlicka came on board once Bain
Speaker 2: took over. How much credit can she take for the
Speaker 2: turnaround and why didn't she take the airline all the
Speaker 2: way to the IPO.
Speaker 4: Jane used to work for Baane and Company. That's the
Speaker 4: management consulting arm that's the sister company to Baane Private Equity,
Speaker 4: and there's a lot of crossover between the two. They
Speaker 4: know her, she knows them. She was involved in this
Speaker 4: from the start before Virgin collapsed. When Bain Private Equity
Speaker 4: opened its file, they pretty quickly got her on. She
Speaker 4: used to work for Jetstar. She knows airlines she knows
Speaker 4: Bain and she was available. She's quite dogged, she's well
Speaker 4: known in the market, she's got a particular style, and
Speaker 4: they thought this is someone who can really be involved
Speaker 4: in the turnaround with us. It was a bit controversial
Speaker 4: at the time because Jane can be a divisive character,
Speaker 4: but she can also be quite effective at what she does. Virgin,
Speaker 4: as I just said, was run by a blake called
Speaker 4: Paul Scurra. It was sort of widely anticipated that he
Speaker 4: would continue to run Virgin under Baine's ownership, but pretty
Speaker 4: much as soon as Baine got the keys, they threw
Speaker 4: them over to Jane and said do your best. Yeah.
Speaker 3: There was always this tension though, I think, and between
Speaker 3: Scurr's plan for the airline, which was to ke keep
Speaker 3: it internationally focused, to keep it as a competitor Aquantus
Speaker 3: on more levels, and what Bain and Herloko wanted to do,
Speaker 3: which was keep this a very low cost, more domestically
Speaker 3: focused the airline that wasn't flying long haul international anymore.
Speaker 4: So Bain's turn around under Jane it was a bit
Speaker 4: of good management. It's some good luck. I mean, they
Speaker 4: used the administration framework and the laws around it to
Speaker 4: completely reset the airline, get rid of aircraft's, renegotiate contracts,
Speaker 4: refine the customer proposition, change the routes it flies like.
Speaker 4: In meetings with investors in April, it told them it
Speaker 4: had changed five hundred contracts since it first went into administration,
Speaker 4: which is a huge number, Lisa, and it saved a
Speaker 4: lot of money. So Bain then has the airline after
Speaker 4: the pandemic. I mean the sector was always going to
Speaker 4: bounce back. It took a while. Remember that the lockdowns
Speaker 4: lasted through twenty twenty, twenty twenty one. They were on
Speaker 4: and off. But then this revenge travel boomed. People were
Speaker 4: sitting on savings. The flood gates really opened. Aline capacity
Speaker 4: was lower, and so if you did have a plane
Speaker 4: with seats on it, prices were up and you were
Speaker 4: laughing right at the same time, Lisa. Quantas, which is
Speaker 4: undisputably Australia's biggest airline, number one, it's got two thirds
Speaker 4: of the domestic market, it shot itself in the foot.
Speaker 5: You know.
Speaker 4: It's customers were raging against flight cancelations, COVID credits, lots, baggage,
Speaker 4: all this basic customer service stuff that Quantus either forgot,
Speaker 4: how to do during the pandemic, or just wasn't set
Speaker 4: up to do anymore. It's brand plummeted in the rankings,
Speaker 4: while Virgins, which looked a bit more sensible and had
Speaker 4: its act together, perhaps was easier because it was smaller,
Speaker 4: It's rose up as a result. Now, through it all,
Speaker 4: Virgin created a new lane for itself and it stayed
Speaker 4: in it. Jane's an absolute force. She did a good
Speaker 4: job in firing up the Virgin's staff, getting deals done
Speaker 4: with unions, even locking in guitar airways as big shareholders.
Speaker 4: But the problem is Lisa that investors were a bit
Speaker 4: wary of her. She wasn't the one to take it
Speaker 4: to the IPO. She did a lot of the heavy lifting,
Speaker 4: a lot of the prep work, got this turnaround on
Speaker 4: track and sort of helped design it. But she wasn't
Speaker 4: the one ringing in the bell at the ASEX on Tuesday.
Speaker 4: And you have to ask why, And it's just because
Speaker 4: the investors did push back against her. Bain realized that,
Speaker 4: so they replaced Jane with another Bayin and Company former
Speaker 4: consultant called Dave Emerson. I mean, he has also been
Speaker 4: involved in the turnaround for a few years now. And
Speaker 4: the message that he's been selling to investors is that
Speaker 4: Virgin has found its lane. It's a third of the
Speaker 4: domestic aviation market. You've got Conscious above it, you've got
Speaker 4: jet Star below it. Virgin's just in the middle, making
Speaker 4: pretty good, middling sort of margins from everyday business customers
Speaker 4: and holiday makers. At least, it's a nice little lane
Speaker 4: to swim in. Now. The problem is Virgin's been in
Speaker 4: a nice little lane before. Remember it was the budget
Speaker 4: carry out I was doing reasonably well. There's just something
Speaker 4: about airlines. There's something about aviation executives that avgas can
Speaker 4: go to their heads and it's just so tempting them
Speaker 4: to go up market, to have business class flash lounges,
Speaker 4: so tempting for these guys to expand and try and
Speaker 4: compete with the likes of Quantus. So you have to
Speaker 4: wonder whether Virgin will be able to stay in its
Speaker 4: lane long term. I share.
Speaker 2: We're talking about Virgin Airlines, which floated on the Stock
Speaker 2: Exchange on Tuesday after managing an impressive comeback from its
Speaker 2: collapse during the pandemic. What's the outlook for Virgin? Will
Speaker 2: it stay in its lane or do you think like
Speaker 2: Ant says it might try and take on Quantus and
Speaker 2: at some point upset the state of play in the
Speaker 2: aviation market.
Speaker 3: I think it's very that Virgin has told investors that
Speaker 3: it knows its place. It wants to be the great
Speaker 3: second airline in Australia and it's very comfortable doing that.
Speaker 3: It's a very very profitable place to.
Speaker 2: Be right now.
Speaker 3: So the outlook right now is helped by very very
Speaker 3: solid domestic aviation industry. Australia is unique in having only
Speaker 3: two airlines at the moment. You know, the Regional Express
Speaker 3: that tried to take on Virgin and Quantus on capital
Speaker 3: city routes and ended up in its own administration process.
Speaker 3: We also saw discount airline Bonser that came and tried
Speaker 3: also failed within a year. So I think when it
Speaker 3: comes to staying in your lane, the thing that always happens,
Speaker 3: and you know, we can say that it's a market
Speaker 3: for two airlines until we're blue in the face. There
Speaker 3: will always be a third competitor that comes and goes.
Speaker 3: You know, whether they last for more than twelve months
Speaker 3: is another story, but someone will try and I think
Speaker 3: at that point that's when airlines need to decide what
Speaker 3: is going to be your proposition, and I think that
Speaker 3: one of the things Virgin has emphasized as a point
Speaker 3: of growth as it goes to investors with a growth
Speaker 3: story is that the Velocity frequent flyer program will grow. Now,
Speaker 3: growing your frequent flyer program when you don't have a
Speaker 3: long and big international network like Quantus is quite challenging.
Speaker 3: Do people want to be part of a frequent flyer
Speaker 3: network where you can redeem on flights from Melbourne to
Speaker 3: Sydney or to the Gold Coast versus going to London
Speaker 3: or flying business class life flat to New York. Probably not.
Speaker 3: It's a less attractive proposition, So there will always be
Speaker 3: the temptation to get back into long haul. The problem
Speaker 3: is scale, So getting new planes to be able to
Speaker 3: fly enough to make your network a genuine competitor to
Speaker 3: Quantus is going to take a long time. You know,
Speaker 3: right now we're seeing uncertain fuel prices with what's happening
Speaker 3: in the Middle East. There are a lot of unknowns
Speaker 3: in the market, and that's always the case with aviation.
Speaker 3: But I think we can be sure of you kind
Speaker 3: of two things. One that a third competitor will spring up,
Speaker 3: and two, as ant says that at some point they'll
Speaker 3: get ambitions to.
Speaker 4: Grow at least a Virgin's time. That's float quite nicely.
Speaker 4: I mean, Bain did get lucky. It's taken a couple
Speaker 4: of years of IPO preparations for it to get its
Speaker 4: ducks in line here and relist the business. The domestic
Speaker 4: aviation industry backdop just sort of got better and better
Speaker 4: in that time. And if you're buying Virgin shares now,
Speaker 4: you have to ask, is this as good as it
Speaker 4: gets for the industry. If so, is Virgin doing anything
Speaker 4: internally to increase its margins to be more robust and
Speaker 4: a better position. Should should the industry not be as
Speaker 4: good as it is now in the future. I mean
Speaker 4: there's always skepticism buying shares of private equity, and that's healthy.
Speaker 4: You know, Bain's made truckloads of money or ready from Virgin.
Speaker 4: It's probably made three or four times the amount of
Speaker 4: money put into it, and it's still going to own
Speaker 4: thirty nine percent of the listed Virgin. As far as
Speaker 4: private equity stories go, I'd say this is a good one.
Speaker 4: You know, it's a financial investment that's stepped up in
Speaker 4: a tough period, took risk oversur sensible turn around story.
Speaker 4: But now, of course it's private equity and it's trying
Speaker 4: to get some bang for its buck. It's trying to
Speaker 4: make money and to do that it is selling shares
Speaker 4: to ordinary Australian investors, to super funds, to institutional investors,
Speaker 4: basically anyone that can Baine picked this up at the bottom.
Speaker 4: It's now floating it is it floating at the top?
Speaker 4: If not, where's the top? And what Convergent do between
Speaker 4: now and then?
Speaker 3: I think that that's a good question ed. But they
Speaker 3: have said that they still have costs that they can
Speaker 3: keep on eliminating. They say the five years behind Quantus
Speaker 3: when it comes to taking some of those transformation challenges
Speaker 3: around it, around how they sell tickets, how they do
Speaker 3: a lot of things. So they see that there is
Speaker 3: still growth that they can make through just you know,
Speaker 3: continuous improvements and incremental kind of revenue and margin improvement
Speaker 3: that probably isn't there for Quantus.
Speaker 2: So Aisha, then what does all this mean for the
Speaker 2: consumer and the cost of air travel? You mentioned before
Speaker 2: fuel prices and the impact that the uncertainty in the
Speaker 2: Middle East is having. What does that mean for the traveler?
Speaker 3: I think what we can see from the Australian domestic
Speaker 3: market is that having two competitors only in aviation is
Speaker 3: not great for the consumer. We're in a domestic aviation
Speaker 3: market where we've seen the price of airfares between Melbourne
Speaker 3: and Sydney routinely hit over one thousand dollars. We've had
Speaker 3: periods where loads on planes have been over ninety percent full,
Speaker 3: which is historically unheard of. So I think unfortunately for consumers,
Speaker 3: this probably isn't going to be a great thing. Those
Speaker 3: incremental improvements will be passed on to investors. If fuel
Speaker 3: prices spike, virgins hedged for six months out, so you know,
Speaker 3: the impact for investors will be minimal, but they do
Speaker 3: pass on the impact of higher fuel prices in fuel
Speaker 3: surcharges that are charged to consumers, So you know, as
Speaker 3: geopolitical tensions ratchet up, you should probably be prepared to
Speaker 3: pay a little bit more for your.
Speaker 2: And the market hasn't had very many big floats in
Speaker 2: recent years. We've talked a lot about the shrinking of
Speaker 2: the ax What does the virgin IPO mean for the
Speaker 2: local stock market?
Speaker 4: This is a good news story for ax LESA like
Speaker 4: this is Virgin coming home. There is no other owner
Speaker 4: for it. Airlines globally are either owned by countries themselves
Speaker 4: or they're listed. So yeah, this is good. It comes
Speaker 4: for an AX the time when it needs more listings.
Speaker 4: Public markets globally they are shrinking. The asex is shrinking.
Speaker 4: If you look at the number and the value of
Speaker 4: companies that are coming off the AX, you know, companies
Speaker 4: that are being bought by private equity or super funds
Speaker 4: or sovereign wealth investors or whatever. The vary of those
Speaker 4: companies is much more than what's coming back through IPOs.
Speaker 4: So this has been a big shift for Australia and
Speaker 4: for Australians, And at least the public markets have been
Speaker 4: so great for ordinary Australians for their super fund balancers
Speaker 4: and as direct investors. We're all trying to work out
Speaker 4: where the private markets, you know that's private equity and
Speaker 4: the like, whether they can be so good for ordinary
Speaker 4: Australians assex trying to work this out as well. And
Speaker 4: while it does that, it's tanking with the listing rules
Speaker 4: to try and encourage more IPOs. But Lisa Virgin showed
Speaker 4: is you can get an IPO done. There are buyers
Speaker 4: for shares, you just need the right story, the right
Speaker 4: structure and the right price.
Speaker 3: I think this IPO just shows like, look at what
Speaker 3: they've been through. They started these talks with investors before
Speaker 3: Trump went crazy on tariffs, so you know they've come
Speaker 3: through a monumental period in history to get this to market.
Speaker 3: It shows the strength of the domestic Australian aviation market.
Speaker 2: A final question for both of you, then, how will
Speaker 2: Virgin go from here? And is Australia's domestic aviation sector
Speaker 2: destined to be a.
Speaker 4: Duopoly for the foreseeable future. Absolutely, Lisa Australia. I don't
Speaker 4: think it's just not big enough for a big third player.
Speaker 4: We've seen others try and fail. Look at Rex recently,
Speaker 4: look at Bonza. Australia's even too small sometimes for a
Speaker 4: second viable airline. We had Virgin go bust, we had
Speaker 4: Anset go bust. Yes, they're in wobbly markets, but it
Speaker 4: just shows you how hard it is to run a
Speaker 4: decent sized scale network in Australia, which I think makes
Speaker 4: it really hard to see a third player coming in
Speaker 4: and really sticking it to Quantus and Virgin. That means
Speaker 4: I think we'll be a two airline town for a
Speaker 4: while yet. And Lisa, that's actually similar to what Australia
Speaker 4: is like in a lot of other industries as well.
Speaker 4: Look at supermarkets, we've got Woolworths and Coals. Look at
Speaker 4: department stores it's Meyer and David Jones. Look at energy
Speaker 4: it's agl and Origin. Australia is a country of jeopolis
Speaker 4: and it's hard to see airlines being any different.
Speaker 3: I think no matter what we say, whether it's rational
Speaker 3: or not, there will always be a third airline. I
Speaker 3: think I disagree with you on this point ed. History
Speaker 3: has shown us that someone will always try to challenge
Speaker 3: contestant Virgin. They see this market as being big enough,
Speaker 3: but you do need the scale, and I think that
Speaker 3: that means that it will take a little bit of
Speaker 3: time before we get that third competitor. And you know,
Speaker 3: conditions are really ripe for Virgin. In the interim, I
Speaker 3: think the investors have appetite for this. IPO has been
Speaker 3: really strong, and that's a testament to the fact that
Speaker 3: we know that no big competitor is coming to take
Speaker 3: these guys on for at least the next few years.
Speaker 2: Thanks and thanks Aischa.
Speaker 4: Thanks for having us.
Speaker 2: Lisa Thanks Lisa, Thank you for listening to The Finn.
Speaker 2: I'm Lisa Murray, with senior reporter Aisha Decretza and Chanticleer
Speaker 2: columnist Anthony McDonald joining the podcast today. The Finn is
Speaker 2: produced by Alex gu with assistance from Mandy Coolan. Fiona
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