wages. Brett was shrewd: he had set up a separate account and tucked away a spare million for exactly this eventuality, and Manny was able to run the payroll.
We needed new planes and Brett had to deal with this too. Our first planes were leased but later we also decided to buy ten New Generation Boeing 737s, delivered brand spanking new from Seattle. A few days later I received my daily phone call from Brett. The cheeriness was gone from his voice, and I sensed his nervousness.
'Richard, I've a cheque in front of me for $A600 million. Are you sure you want me to sign it? The biggest cheque I've signed before was for my mortgage.'
'Brett?'
'Yes, Richard?'
'Just sign the bloody cheque.'
Our initial sales projection had us reaching profit within three years, but we overtook those goals sooner than we expected. Brett wanted to enter the New Zealand market after Air New Zealand's subsidiary, Freedom Air, began a service from Tasmania to Brisbane. This allowed us to launch Pacific Blue, operating out of New Zealand and flying from Christchurch to Brisbane.
The idea was simple: to fly directly, point to point, rather than herd passengers unnecessarily through a larger hub airport. This 'hub-busting' approach made life far easier for the customer, and since our new planes were extremely reliable, there were huge efficiency gains. Within four years, Virgin Blue was flying forty-one Boeing 737s, the packhorses of the worldwide expansion of budget flying, and we had 3,000 people on our payroll and more than 30 per cent of the market. It was a considerable achievement.
The day of the launch was 31 August 2000 at 10 a.m. The flight was packed and Brett, Rob and the team took a leaf out of my book and began a tradition of dressing up. They arrived as the Blues Brothers. I wish I could have seen the expression on the face of Geoff Dixon, Qantas's CEO, when he heard that. Here were his only serious rivals, taking the piss out of themselves, and everybody – crew, press and passengers – was loving them for it.
A year in, and we were going head-to-head with Qantas and Ansett. We knew we were hurting them. They were running into a lot of difficulties. Virgin Blue, the new kid on the block, was roughing up the market.
From the start, Virgin Blue was the airline of the Internet. If you wanted to fly, the cheapest way was booking over the Net. Qantas and Ansett, with their legacy systems and relationship with travel agents, took around 2–3 per cent of their bookings on the Net. Virgin Blue's Internet bookings were 60 per cent of the total at the launch, and 92 per cent within six months. The Net was easier to use, and because the transaction fees were minimal for us, this gave us an edge on costs.
Then, in June 2001, we received an unsolicited offer for Virgin Blue. Brett was approached by Gary Toomey, Air New Zealand's CEO, and they had dinner at the Chairman's Club Lounge in Melbourne – an opulent place with its gold-plated toilet seats. They chatted away and Brett said that he would definitely listen to any offer, and wanted to keep the channels open if there was any way they might work together. A few weeks later, Brett was invited to catch up with Gary again at the Crown Casino in Melbourne, a popular haunt for big dealmakers. Before their hors d'oeuvres were ordered, Gary offered him $70 million for the airline. Brett, as quick as a flash, asked if this was US dollars. 'Of course,' replied Gary.
That was A$120 million.
When Brett finished supper he phoned me with this info. It meant that at least we had a valuation for the business on the table. As far as the wider Virgin Group's position was concerned, it would have been a good time to realise some of the investment but, in truth, it was far too early to contemplate.
We turned down the offer but it wasn't long before we had another, more significant approach. The chief executive of Singapore Airlines, Dr C K Cheong, called me up. I knew him well. In December 1999, we
We needed new planes and Brett had to deal with this too. Our first planes were leased but later we also decided to buy ten New Generation Boeing 737s, delivered brand spanking new from Seattle. A few days later I received my daily phone call from Brett. The cheeriness was gone from his voice, and I sensed his nervousness.
'Richard, I've a cheque in front of me for $A600 million. Are you sure you want me to sign it? The biggest cheque I've signed before was for my mortgage.'
'Brett?'
'Yes, Richard?'
'Just sign the bloody cheque.'
Our initial sales projection had us reaching profit within three years, but we overtook those goals sooner than we expected. Brett wanted to enter the New Zealand market after Air New Zealand's subsidiary, Freedom Air, began a service from Tasmania to Brisbane. This allowed us to launch Pacific Blue, operating out of New Zealand and flying from Christchurch to Brisbane.
The idea was simple: to fly directly, point to point, rather than herd passengers unnecessarily through a larger hub airport. This 'hub-busting' approach made life far easier for the customer, and since our new planes were extremely reliable, there were huge efficiency gains. Within four years, Virgin Blue was flying forty-one Boeing 737s, the packhorses of the worldwide expansion of budget flying, and we had 3,000 people on our payroll and more than 30 per cent of the market. It was a considerable achievement.
The day of the launch was 31 August 2000 at 10 a.m. The flight was packed and Brett, Rob and the team took a leaf out of my book and began a tradition of dressing up. They arrived as the Blues Brothers. I wish I could have seen the expression on the face of Geoff Dixon, Qantas's CEO, when he heard that. Here were his only serious rivals, taking the piss out of themselves, and everybody – crew, press and passengers – was loving them for it.
A year in, and we were going head-to-head with Qantas and Ansett. We knew we were hurting them. They were running into a lot of difficulties. Virgin Blue, the new kid on the block, was roughing up the market.
From the start, Virgin Blue was the airline of the Internet. If you wanted to fly, the cheapest way was booking over the Net. Qantas and Ansett, with their legacy systems and relationship with travel agents, took around 2–3 per cent of their bookings on the Net. Virgin Blue's Internet bookings were 60 per cent of the total at the launch, and 92 per cent within six months. The Net was easier to use, and because the transaction fees were minimal for us, this gave us an edge on costs.
Then, in June 2001, we received an unsolicited offer for Virgin Blue. Brett was approached by Gary Toomey, Air New Zealand's CEO, and they had dinner at the Chairman's Club Lounge in Melbourne – an opulent place with its gold-plated toilet seats. They chatted away and Brett said that he would definitely listen to any offer, and wanted to keep the channels open if there was any way they might work together. A few weeks later, Brett was invited to catch up with Gary again at the Crown Casino in Melbourne, a popular haunt for big dealmakers. Before their hors d'oeuvres were ordered, Gary offered him $70 million for the airline. Brett, as quick as a flash, asked if this was US dollars. 'Of course,' replied Gary.
That was A$120 million.
When Brett finished supper he phoned me with this info. It meant that at least we had a valuation for the business on the table. As far as the wider Virgin Group's position was concerned, it would have been a good time to realise some of the investment but, in truth, it was far too early to contemplate.
We turned down the offer but it wasn't long before we had another, more significant approach. The chief executive of Singapore Airlines, Dr C K Cheong, called me up. I knew him well. In December 1999, we
Similar Books
