Brookfield, Indian tycoon said to mull Virgin Australia bids

Brookfield Asset Management Inc. and Indian aviation tycoon Rahul Bhatia are considering bids for Virgin Australia Holdings Ltd., joining a score of suitors seeking to capitalize on Asia’s first airline casualty from the coronavirus pandemic, people with knowledge of the matter said.

The Canadian investment firm, which manages more than $540 billion, is planning to make its own indicative offer before the end of this week, according to the people. Brookfield could team up with other bidders later in the process, one of the people said, asking not to be identified because the information is private.

Bhatia, the billionaire co-founder of Indian budget carrier IndiGo, is separately evaluating information on the Australian airline and finalizing his strategy for a potential bid, according to another person. The proposal is being prepared by Bhatia’s private holding company InterGlobe Enterprises Ltd. and doesn’t involve IndiGo, the person said.

No final decisions have been made, and there’s no certainty the deliberations will lead to an agreement, the people said. Representatives for Brookfield and InterGlobe Enterprises declined to comment. IndiGo denied an earlier report it plans to bid for Virgin Australia.

Brookfield’s interest was reported earlier by the Australian Financial Review, which cited unidentified people.

Virgin Australia has attracted at least 20 potential buyers as its administrator, Deloitte, races to sell the airline within two months of its collapse. Deloitte is seeking indicative bids by Friday and binding offers in June, targeting a deal by the end of that month.

The airline, which was started by Richard Branson, collapsed owing A$6.84 billion ($4.4 billion) to more than 10,000 creditors, overwhelmed by a near-halt in revenue as the coronavirus shut down travel.

Virgin Australia reported seven consecutive annual losses before it folded. At the time of its first flight from Brisbane to Sydney in 2000, Virgin had just two aircraft and one route.

Under Chief Executive Officer John Borghetti, who took over in 2010, the airline transformed itself into a full-service carrier, selling business-class seats across its domestic network. Borghetti went head-to head against his old employer, Qantas Airways Ltd.

The huge investment required for the battle, and a capacity war with Qantas, spawned almost endless losses. Borghetti’s successor Paul Scurrah, who took the helm in 2019, was in the middle of a turnaround plan to reduce debt and costs when the coronavirus emerged and swamped any hopes of a recovery.

A plan to operate Virgin as a low-cost carrier may run into opposition in Australia. Such a strategy would hand almost all the corporate and business-class market to Qantas, which itself owns budget carrier Jetstar. The head of Australia’s competition watchdog, Rod Sims, has already called for Virgin to return as a full-service carrier. The government also said it wants the country to have two competing airlines.