Virgin Blue’s all white new Boeing 737 is reported to still be behind closed doors in a paint shop, leading to speculation as to whether it is being painted in a promotional livery for the airline’s winning the AFL contract.

Or, painted with a new name that will reveal the future identity of Virgin Who since the airline is officially to be soon rebranded, or not too soon, or whenever certain naming difficulties with Singapore Airlines can be overcome.

The all white Virgin Blue jet has been in Australia since early last December, awaiting its historic naming ceremony.

However when Singapore Airlines purchased 49% of Virgin Atlantic in 1999 it also picked up the right to veto the use of the Virgin name on any other international carrier, which is why both the Australian and New Zealand registered jets which fly regional international routes are called Pacific Blue, or in the case of a joint venture with Samoa and Aggie Grey’s hotel in Apia, Polynesian Blue.

And even if this jet is not intended to fly anywhere outside Australia, the new CEO of Virgin Who, John Borghetti, was quick to endorse his predecessor Brett Godfrey’s vision of Virgin Blue, Pacific Blue and V Australia being given a single identity.

So, if Singapore Airlines were to succeed in selling its 49% of Virgin Atlantic, we could have a Virgin Australia, or a Virgin Pacific, or a Virgin Great Southern Land, or whatever, assuming Richard Branson still wishes to be a shareholder in the operation, and there is no sign that he has changed his mind about an enterprise which has made him more money out of Australian aviation than any other individual entrepreneur in history, although we might leave the question as to just how much for another time.

Before yesterday’s raid by Air New Zealand the interesting factor in things Virgin was Branson’s affirmation in the UK financial media that he was prepared to sell down his stake in Virgin Atlantic if that facilitated a merger or exceedingly strong new relationship with another airline in order to withstand the triple north Atlantic operational merger of American Airlines, British Airways and Iberia.

And 2011 was set to be a huge year for Virgin Who anyhow.

Borghetti had already announced that as well as the new identity, there will be new product to lure corporate travel accounts away from the Qantas ‘full’ service offering, there will be A330-200s flying the transcontinental Perth routes, and there will be the first of a fleet of 18 turbo-props introduced to take on Qantaslink.  (Thinks, how would Virgin PropStar © work?)

Even if Virgin Who doesn’t get US approval for its Delta connection across the Pacific, it has a powerful new trans Tasman alliance with its surprise new substantial shareholder and in February begins flying its own Boeing 777-300ERs to the Etihad hub at Abu Dhabi, and the connections with its extensive and growing European and African and Middle East network.

As mentioned earlier today in a report in Crikey, if the Air NZ purchase of 14.9% of Virgin Blue is a blocking move to prevent, say, Etihad from acquiring a significant interest in the carrier, it may well be thwarted by ‘unintended consequences’.

One of them could be the division of Virgin Blue into a purely domestic Australian company, in which 100% foreign ownership is allowed, and the devising of an international arm in which the owners of Virgin Blue also own 51%, thus retaining its status in terms of air traffic treaties as an Australian flag carrier controlled by entities recognised as Australian.

However while such a structure is a fascinating conjecture (and one that was used by Ansett to set up Ansett International, in the unprofitable glory days of that brand before a different Air New Zealand 100% purchased and destroyed what was already a very badly run airline) the immediate story is that the NZ carrier is now sitting on a ‘can’t lose’ minority stake.

Air NZ stands to add value to its balance sheet from a well run and expanding Virgin Blue just by being a 14.9% minority owner, or by selling it for a better price to a more ambitious investor, keeping in mind that sovereign funds like those of the UAE states or Singapore are not airlines in their own right, and can probably finesse their way to significant holdings other than up front ownership of up to 49% of an Australian flag carrier.

They can for example, own the fleet, or the engines, or key debt instruments, yet not necessarily, too many shares, or even any shares at all.

And in any event, the numbers will change if Richard Branson sells down his equity to, say 10% of Virgin Blue from his 26% equity (as of yesterday). But then again, he might buy a higher stake.

Second-guessing Branson is risky business.

While the Virgin Who (and what) tease continues Qantas is expanding its Jetstar brand into a trans-border low cost franchise throughout Asia, and has began a longer term migration of its assets to a Singapore base which will host a substantial fleet of Australian registered Jetstar branded wide body jets in the near future.

Those changes represent the biggest medium term challenges to the future of Virgin Who and Air New Zealand that have yet emerged, and will require something more than re-branded jets and cabin changes if both are to survive or prosper beyond the end of this decade.

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