Branson sells control of Virgin Blue in £111m deal with Australian group

Richard Branson yesterday handed over control of his Australian budget airline Virgin Blue in an AS$300 (£111m) deal.

Lang Corp, an Australian logistics group, disclosed that it was taking a stake of "51 per cent or more" in the company.

Chris Corrigan, Lang Corp's chief executive, told a local television channel that the exact stake would depend on the detailed financing. He added that Virgin Blue would become an Australian airline that could compete with the market leader Qantas.

"Overnight we reached agreement with Richard Branson's interests, which would lead to Lang Corp taking a majority interest in Virgin Blue and injecting significant capital, up to A$300m," he said.

"Virgin Blue is now the second airline in Australia and it's got a very unique and exciting business model," he said. "We think there's a great opportunity for it to become a much larger operator in the Australian market."

However, the deal was conditional on the purchase of some key assets of the collapsed Ansett airline, with a proposal to be put to Ansett's administrators this morning.

"We think there is not much point expanding Virgin if it's not going to be able to get access to key assets that would allow it to expand rapidly," Mr Corrigan said, pointing to terminals, maintenance facilities and other infrastructure.

He said Virgin Blue, which would remain a one-class airline, would probably take on about 1,500 Ansett staff, much less than a rival rescue bid from Melbourne businessmen, Solomon Lew and Lindsay Fox, whose offer would employ about 4,000 of the original 16,000 Ansett employees.

A spokesman for Virgin Blue declined to provide further details of the terms of Lang's investment in the airline.

"If Lang isn't successful in obtaining those Ansett assets, the deal probably won't go through," he said. According to reports last week, money from any airline stake sale may go to a Virgin phone venture in the United States

Mr Branson plans to invest $50m (£35m) in Virgin Mobile USA, a venture with Sprint Corp's PCS Group, which plans to offer a pre-paid wireless phone service using the US's third largest long-distance phone company's mobile phone network.

Brett Godfrey, Virgin Blue's chief executive, said his airline would get access to Ansett passenger terminals across Australia. "Lang comes with sizeable financial might and [it] can provide those terminals which are very expensive," Mr Godfrey said.