Another potential owner of a rebooted Virgin Australia has stuck their head above the parapet and outlined their plans for the airline. New York-based Cyrus Capital is one of four shortlisted bidders for Virgin Australia. Yesterday, word leaked out on the private equity group's ambitions for Australia's second domestic airline.

Virgin Australia collapsed in April, having suspended most of its flying and holding around US$4.6 billion in debt.

Cyrus to keep Virgin Australia flying as a full-service airline

The Sydney Morning Herald is now reporting that Cyrus Capital wants to give the region's dominant carrier, Qantas, a decent competitive poke by continuing to operate Virgin Australia as a full-service international airline.

That will be music to the ears of Virgin Australia's administrators, Deloitte. Their Virgin Australia point man, Vaughan Strawbridge, is working closely with Virgin Australia's senior management. They are all keen for the airline to be sold as a going concern and to continue flying largely as-is.

But most analysts and observers believe this isn't feasible. Two other shortlisted bidders Bain Capital and Indigo Partners have taken the unusual step of outlining their plans for Virgin Australia. But both have flagged taking the airline closer to its low-cost origins.

That only leaves the fourth bidder, local private equity firm BGH Capital, as not having outlined their plans.

A330s and 777s out, Dreamliners in

Cyrus Capital cites unnamed sources connected with the bid saying Virgin Australia would stay roughly the same size as before. The airline has a fleet of around 130 aircraft with roughly half on expensive leases.

But Cyrus Capital has indicated that many of those leased planes will go back to the lessors, including eight A320s, 14 Fokker 100s, and 14 ATR72 turboprops. Also set to go are Virgin Australia's fleet of widebody planes, including the six leased A330-200s and the five Boeing 777-300s (one of which is leased).

The private equity group has floated the prospects of replacing the existing widebody fleet with Boeing 787 Dreamliners. That's what Deloitte and Virgin Australia's current CEO want the new owners to do. It could be a remarkable coincidence, or maybe not. The sources also indicated some regional routes would go.

Deloitte is shortly due to whittle the existing four shortlisted bidders down to two. This outlining of plans, leaked or otherwise, is a kind of corporate beauty parade, with the various bidders posing and pirouetting before the stakeholders and decision-makers at Deloitte.

But it also offers some reassurance that Virgin Australia will not be broken up or let go bankrupt.

Branson's fingerprints on this proposed bid

Cyrus Capital was a surprise inclusion in the initial shortlist of four bidders. However, the private equity group has a history of investing in airlines and extensive ties with Richard Branson.  They helped fund Branson's Virgin America launch in 2005 and teamed up with Virgin Atlantic to buy and rebrand Flybe early in 2019.

Both Richard Branson and Cyrus Capital did okay out of Virgin America, selling it to Alaska Airlines five years ago. Their Flybe play didn't work out so well.

Richard Branson is keen to retain a link with Virgin Australia and has ties to more than one of the shortlisted bidders.  It has been noted around Sydney that he's keeping his options open and an eye on the main chance.

The next round of bids are due by Friday evening (Sydney time). The existing shortlist will be cut down to two over the weekend. Final, binding bids will be due on June 12 with a proposed deal later put a creditor's meeting. There are expectations that Virgin Australia will sell for around US$2.5 billion.