Virgin's future revealed as new owner confirmed
VIRGIN Australia is set to become a smaller domestic airline following the announcement Bain Capital has been selected as the new owners of the Queensland carrier.
Bain Capital, an American private investment giant, was revealed as the winner this morning just hours after rival bidder Cyrus Capital announced its shock withdrawal.
The sale will be completed after the second meeting of creditors, which is scheduled for the end of August.
KEY SALE POINTS
- The sale supports the current management team led by Paul Scurrah and their improvement plan for the airline
- Retains thousands of jobs, but how many will go is unclear
- Honours all travel credits and Velocity frequent flyer booked flights and employee entitlements
- Provides a significant injection of capital to see the business recapitalised and positioned for the future.
Deloitte Administrator Vaughan Strawbridge said the sale was an "important milestone and a significant achievement" for the airline.
"Bain Capital has presented a strong and compelling bid for the business that will secure the future of Australia's second airline, thousands of employees and their families and ensure Australia continues to enjoy the benefits of a competitive aviation sector," he said.
"The Virgin Australia Group entered administration as a direct result of an unprecedented global pandemic which all but grounded its operations whilst in the midst of a major transformation of the business led by Paul Scurrah and the management team."
A return to shareholders has not been determined.
It comes after Cyrus Capital said this morning it would pull out of the sale "due to lack of engagement" by Virgin Australia administrator Deloitte.
Bain Capital's Australian-based Managing Director Mike Murphy said Virgin would return to its "core strengths" and re-establish itself "as an iconic Australian airline".
"Our investment and plan for the airline will support and celebrate Virgin Australia's unique culture and protect as many jobs as possible for the short and medium term in a way that will
make significant jobs growth possible," he said.
"We appreciate how difficult the current situation is for Virgin Australia staff.
"They are the essence of the business, and we thank them for their perseverance through this challenging period.
Bain Capital has pledged to strengthen Virgin's regional services and focus on offering low-cost services while also servicing business travellers.
New York-based Cyrus Capital said that after submitting a final bid for the airline on Monday, "administrators have not returned calls, emails, or meaningfully engaged with Cyrus to progress its offer".
Another "unsolicited package" of value improvements to increase the value of the transaction was handed to the administrators on Thursday morning.
"This too received no response other than an acknowledgment of receipt," a Cyrus spokesman said.
Cyrus Founder Stephen Freidheim was "disappointed that it has become necessary to withdraw our offer" but said it was willing to renegotiate.
"Cyrus firmly believes that the Australian aviation industry has a bright future and would be willing to reinstate our offer if the Administrators agree to re-engage in good faith, productive discussions with a view to concluding a transaction that will benefit all key stakeholders - employees, customers, Velocity members and bondholders," he said.