The search for a new owner of Virgin Australia is finally over with Bain Capital, a U.S. private investment firm based in Boston, announced as the successful bidder. The other bidder in the running, Cyrus Capital Partners, reportedly withdrew this morning after submitting its final offer last Monday.
Virgin’s administrators have now entered into a sale agreement with Bain Capital, which plans to turn Virgin Australia into a “hybrid” airline that targets both corporate and leisure travellers. This means Virgin Australia’s domestic lounges and business class offering are likely to stay.
Bain would also honour all Virgin Australia flight credits and Velocity Frequent Flyer points, as well as investing to integrate Velocity more closely with Virgin Australia – a welcome development for frequent flyers.
Bain says that part of the deal is also a commitment to retain thousands of jobs and employee entitlements. However, they cannot guarantee that there won’t be any job losses. Given current market conditions, and after yesterday’s announcement that Qantas will axe 6,000 jobs, some cuts to the workforce unfortunately seem inevitable. Paul Scurrah would remain as CEO of the Virgin Australia Group.
It was further announced that Virgin Australia has agreed to keep its headquarters in Queensland in exchange for $200 million worth of incentives for the Queensland government.
There are still no guarantees that the sale will go through. The proposal will need to be voted on in a meeting of creditors – some of which stand to lose most of their investments – in mid-August. A counter-bid by major bondholders remains a possibility.
Nonetheless, this does seem to be a promising step in the right direction.
“Bain Capital has spent many hours over the past weeks speaking to us and getting a deep understanding of our business and working to secure a deal with our administrators,” Virgin Australia CEO Paul Scurrah said.
“We know they are committed to investing in the airline and we are thrilled to be working with them into the future.”
Virgin Australia entered voluntary administration owing $6.8 billion on 21 April 2020.
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