Sources said an InterGlobe team was overseeing the entire bid process. A spokesperson for IndiGo also confirmed in a stock exchange notification that the airline was not involved in the process.
The Rahul Bhatia-owned enterprise has appointed an Australian consultant for the process. “The entity has accessed data room and may take the process forward. However, no formal interest has been submitted yet,” said a person about InterGlobe’s plans. A spokeswoman for InterGlobe said the firm would not comment on market speculation.
May 15 is the last date to make first offers for Virgin Australia. To date, 20 bidders have expressed interest, said Deloitte, which is running the bid process. The bids will be “non-binding indicative offers”, based on full access to Virgin’s books and a detailed sale memorandum prepared by the airline-appointed administrator (Deloitte).
Sources aware of the plan said the InterGlobe management believes Virgin Australia has strong business potential because it is the strongest rival to continental giant Qantas.
“A country as large as Australia cannot have Qantas as the only airline. The government of Australia also made known its intention to revive Virgin Australia,” said a person in the know.
Virgin Australia’s biggest drawback is its $5-billion debt. Analysts have said it would likely be successful in using the administration process to trim debt and lower costs, though it may need to pare its international services and lay off staff. This is reflected in Australian policymakers’ public approach to save the airline. According to the local press, they do not want to risk thousands of jobs, monopoly by Qantas, and higher fares.
Queensland State Development Minister Cameron Dick offered Virgin $200 million, conditional on debt restructuring, with shareholders, bondholders, and the federal government chipping in.
In case Virgin fails, Qantas may emerge a monopoly operator. “When we emerge from this disaster, with perhaps 15-20 per cent unemployment, do we really want a single monopoly airline?” asked a research report by CAPA.
An investment banker, part of Jet insolvency process, said: “The promoter is betting on a distressed market where he gets the entity cheaper and has brilliant scope to turn it around. They have good relations with aircraft lessors, manufacturers, vendors, and employees to rewrite the airline’s balance sheet. The entrepreneurial mind of Bhatia is taking a calculated bet.”