Branson bonanza in Virgin Blue deal

SIR Richard Branson could make more than £400m from the flotation next year of Virgin Blue, his 18-month-old Australian budget airline. Branson today sold 50% of Virgin Blue for A$260m (£95m) to Australian ports and rail group Patrick Corp.

The deal is a precursor to Virgin Blue acquiring assets in bust rival Ansett and then aiming to expand out of the domestic market and take on Qantas and Air New Zealand by launching low-cost services between Australia and New Zealand and Papua New Guinea.

Virgin Blue needs to be majority-owned by an Australian corporation to gain the licence, a key strategy in the flotation of the airline by the end of 2003. Today's deal includes a ratchet agreement under which Patrick will pay Branson a further A$30m for every $100m that Virgin Blue is valued at over A$600m at flotation.

The airline is aiming at a float value of between A$1.2bn and A$1.5bn next year when Virgin Blue's profits are forecast to touch A$100m against this year's A$30m

A spokesman for Virgin confirmed that the deal means Branson will make about £400m.