Cassy's teary farewell to passengers went viral. Now her airline is back in the game

Sydney Morning Herald

15 hours ago

It was a memorable moment at the start of the pandemic. In late March 2020, Cassy Appleton, Virgin Australia crew supervisor, delivered a pre-landing safety message to passengers that she appended with a farewell speech for the airline's international operation. Choking back tears, Appleton thanked customers and praised colleagues. Epitomising the fear of the widening COVID-19 pandemic, Appleton's speech quickly went viral.
For Virgin Australia, the unknowns at the time were arguably more profound.
Within weeks of the speech, the company – once a domestic competitor for Qantas, the only one – would be in voluntary administration, delisted from the ASX, later sold to US-based private equity group Bain Capital.
On Tuesday, Virgin, reorganised, under new management, backed now by a Middle Eastern aviation behemoth, took the leap and returned to the Australian Securities Exchange, a viable, listed competitor to Qantas.
Virgin has come full circle, in the process facing down reluctant regulators, unions and global uncertainty spurred by US President Donald Trump's trade wars – as well as hot wars in the Middle East.
'We're very proud of the product and service that we put out there,' chief executive Dave Emerson said. 'We provide strong competition and great value and service for Australian consumers'.
Yet, the timing of Virgin's IPO only became a certainty a few months ago, after a number of conditions fell into place: the new chief executive, restored investor interest, the support of its largest union, the backing of stakeholder Qatar, Virgin's new strategy to be a simpler, more focused airline, and, ironically, the strength of Qantas' share price helping showcase domestic appetite for aviation stocks.
Emerson took the role of chief executive in March, the same month the government approved Qatar Airways to take a share of Virgin and to participate in the 'wet-lease' agreement that allowed the Doha-based airline to increase the number of flights from Australia by 28 a week.
The government had denied Qatar Airways' application for additional flights in 2023, citing elusive reasons of 'national interest'. Transport Minister Catherine King's inability to explain the basis of the government's rationale prompted a Senate inquiry which examined Qantas' potential influence on the government's ruling.
Speaking this week before Virgin listed, Emerson reflected: '[It] was pretty difficult for us to go to market when there was uncertainty about whether that deal would be approved by the Foreign Investment Review Board. I think that that was the key trigger of us then being able to start to market the company.'
Virgin's reliance on the government's approval of Qatar's participation was ironic, given the government's unwillingness to bail Virgin out during its 2020 fall. It was out of this dark period for aviation that Qantas laid off 1800 staff illegally, creating the industry backdrop from which Virgin would rise.
'It's a brutal industry, and Qantas has been a brutal player in that industry,' said Emily McMillan, national assistant secretary of the Transport Workers Union, which is the largest representative of Virgin employees.
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The union was relieved when Virgin ended speculation and said its chief customer and digital officer, Paul Jones, who had earlier been involved in Qantas' industrial relations, would not replace outgoing boss Jayne Hrdlicka as chief executive.
TWU's McMillan said: 'We're pleased that Virgin have made key choices in these last five years as they've navigated through this process to work with its workforce in a different way.'
Ruling out Jones, who replaced Emerson as Virgin's chief commercial officer, paved the way for Emerson – one of the least known personalities in Australian aviation – to be named chief of the airline.
Emerson was part of the Bain Capital team looking over the restructuring of the troubled airline that the US private equity group took control of in 2020.
Father of four sons, a sometime reader of sci-fi (John Scalzi and Martha Wells) and author Michael Lewis, and a somewhat reluctant pickleball player, Emerson brought years of experience in aviation consulting from Bain & Company, where his predecessor Jayne Hrdlicka had once worked.
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As the pandemic hit, Emerson and his wife had already been looking for an overseas posting. He said he had just dropped his youngest son off at university, before heading to the plane to come to Australia, a place that is the 'opposite of a hardship posting'. However, given the time, Emerson's first impression of the country was limited to the walls of a Marriott hotel room where he stayed upon COVID quarantine.
Bain had named Reunion Capital as the independent adviser in 2023, which then appointed Goldman Sachs, UBS and Barrenjoey as book builders of the deal.
Emerson's appointment in March signalled the start of the IPO process.
Once Bain decided to launch, brokers and investors moved quickly to secure significant volumes of investor demand.
On his first day on the job, Emerson met investors, as well as staff in Brisbane and Sydney, going on a tour of Virgin's front-line staff that would take him to Perth, Melbourne and Adelaide. Importantly, he met the union.
'We met with Dave Emerson on the first day of his job,' said TWU's McMillan, 'which we thought was a really positive sign of working collaboratively with the workforce.'
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Emerson was to simplify the business, pivoting away from the complexity that helped expose it to loss before 2020. The plan was also to be focused on areas where Virgin could compete effectively.
'We want to win in the segment of the market that we've chosen to serve, the value segment,' Emerson said. That didn't mean unlimited, unchecked competition against larger rival Qantas, which helped drive Virgin towards unsustainable debt levels before 2020.
Rather, Virgin would compete for premium leisure, small and medium business customers and value-minded corporate customers.
'We have a lot of respect for Qantas,' said Emerson, who notes that Qantas does a good job serving its core customer segments. 'That's one of the reasons that we chose the business model that, we thought, was built around segments that aren't as well served in their existing ... model.'
Qatar Airways' participation would help. Virgin operates a simplified fleet of 100 mostly 737s domestically and in overseas destinations such as Fiji, Bali and Vanuatu. Under the 'wet-lease agreement' with Qatar, Virgin could 'carefully re-enter' long-haul travel while sidestepping the complex planning and operations it demands. (Under the deal, Qatar will provide the planes and crew for flights sold by Virgin.)
From Qatar, Virgin gets commissions on flights sold, more users of its Velocity loyalty program, and, with more people flying into Australia, more traffic into Virgin's domestic lines.
That's all good as long as international travel holds up, which is no certainty in a time of war in the Middle East and Donald Trump's on-again, off-again tariff announcements.
Emerson said: 'The way our partnership with Qatar is structured, our economics are focused on the domestic business, and their economics are focused on the long-haul business. So even if demand didn't meet expectations, we wouldn't expect it to have a material effect'.
Perceptions around the rebuilt airline mattered too. This meant convincing future investors that Virgin had changed since its days of damaging price wars with Qantas. Going into administration had wiped out the value of Virgin debt securities listed on the ASX. There was a bit of a 'hurdle to overcome how this is a different business now', said one person involved in the IPO, who described it as the 'first challenge' in taking the deal to market.
But the outlook for aviation since the end of lockdowns had transformed. Demand for travel appeared limitless. Investors were highly attracted to the industry structure and saw Virgin 'with strong and stable market share and an ability to increase margins over the next couple of years'.
Emerson's jammed up meeting schedule ahead of the IPO – banks, unions and company staff – left little time for interviews. Given the restrictions around what can be said before a company lists, and his sudden appointment as chief executive, there was often little Emerson could say.
The air of mystery contributed to the sense of anticipation about the reception a relisted Virgin would get from the public.
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On a recent visit to Melbourne Airport at Tullamarine, a sampling of Virgin passengers voiced sentiments that were uncannily close to Virgin's identified target market. While a number of passengers' stories began with pledges to never fly Qantas again, business travellers this masthead spoke to were generally happy with Virgin. One said Virgin appeared more 'inventive' while Qantas was 'stale'. Another bristled at Qantas' welcome-to-country announcements.
Andrew Mills, who months ago spent 30 hours trying to get back to Australia from New Zealand after a Qantas cancellation, said: 'I made the decision to fly only with Virgin, and it's been pretty promising to date.
'I would say 95 per cent of the flights that I've been on since then have been on time and able to allow me to get to my destination as expected.'
In fact, in May, Virgin's on-time arrivals reached 84.8 per cent while Qantas' stood at 82.5 per cent, according to the Bureau of Infrastructure and Transport Research Economics.
One person with knowledge of the deal said Bain had done a 'pretty good job' of turning Virgin around, by finding a part of the market that avoids costly clashes with Qantas. Virgin 'should probably be able to earn increasing margins over time' by not, for example, competing directly for most international routes.
Still, the aviation business is not an easy one to succeed at. There are high fixed costs, such as the price of maintaining fleets of jets, or fuel prices. Ticket prices are influenced not just by demand but costs which themselves are vulnerable to outside factors such as those on display this week between Iran and Israel.
Chief executive of Moomoo Securities Australia Michael McCarthy said the fact that the prospectus offered no guidance after June 2025 was a 'possible red flag' from Virgin. 'If the people who run this business believe the future for Virgin is so uncertain that they cannot estimate even the next 12 months' earnings, how are investors supposed to make a decision?'
In this way, the path of rival Qantas' stock functioned as a proxy for sentiment for the Australian aviation sector, including Virgin. Qantas' stock rose from about $5.78 a share on August 5, to more than $10.27 on June 20, on growing optimism for the outlook for aviation.
Virgin was priced at a discount to Qantas, $2.90 a share, with the understanding that Virgin, while a competitor, remained the junior player.
As June 24 approached, unwelcome clouds gathered. While markets had largely priced in the Middle East conflict, Iran and Israel began lobbing missiles at each in earnest only a week before. On Monday morning (AEST), Qatar, the home of Qatar Airways, closed its airspace in response to Iranian missile attacks, the very hub of the airline Virgin was now linked to.
Emerson said the geopolitical tensions 'underscore' the advantages of being a 90 per cent domestic Australian airline. The local market had been incredibly resilient and, historically, demand had ridden right through geopolitical shocks, he said.
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Still, Emerson has been peppered by questions about how the Middle East tensions would affect the IPO.
Speaking before the stock relisted, Emerson noted: 'There's always the ability to amend the schedule down [the number of wet lease flights with Qatar] if we jointly decide that's in our interest. There's nothing in the agreement that requires us to fly all these flights forever.'
When the day came, the sentiment was mixed. Headlines from the Middle East couldn't be worse, but the ASX 200 rallied on expectations that peace would prevail and oil prices fell.
The Virgin IPO would be a test of the feeling around the Australian aviation industry. Was the glass half-full, or half-empty? A steady outlook or turbulence ahead?
Share listed at $2.90 noon on the ASX. Then they rose. Virgin ticked up by days end to $3.23. They closed down at 2.2 per cent on Friday to $3.18.
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A person with knowledge of the deal, said Bain was successful in part because it wasn't 'trying to sell too much' of the stock. 'They kept the shares scarce and the price was compelling.' Virgin also had a 'very clear competitor' in the form of Qantas, which also reassured investors looking to understand the metrics of the smaller airline's performance.
Virgin's successful launch also signalled a market 'very open to IPOs now' which is, as one investor said, 'a relatively new thing'.
Bain Capital veteran and Virgin director Mike Murphy rated the IPO the 'most complex Bain has ever done in Australia and among the most complex that even global Bain has done'.
He thinks future competition with Qantas will be 'rational' but 'the Australian aviation market is extremely competitive and it is closely watched by the ACCC'.
Even former Virgin chief executive Paul Scurrah called it 'a proud day for the team to see what we envisaged during the [2020] sale process come to fruition'.
Asked if the IPO was the biggest undertaking of his career, Emerson said working with the team at Virgin had been 'the capstone of what has been 30 years in aviation, and I couldn't be more proud and excited about it'.
One Virgin crew member with more than a decade's experience with the company noted that aviation was an 'inherently unstable industry'.
Remembering back to 2020, when his former colleague Cassy Appleton posted her farewell video before Virgin essentially stopped flying, he said those videos were almost 'a form of grief'.
Having said that, Virgin appeared much sounder on the day than the decade earlier when he began working for the company.
'To be completely honest,' he said, 'it is kind of surprising that we've gone from point A to point B and become relatively stable and quite profitable in such a short space of time.'