New Virgin owner expected to cut staff and routes
VIRGIN Australia will return to the skies as a smaller, low-cost Queensland carrier following a dramatic twist in its sale, which saw US investment giant Bain Capital emerge as the airline's new owner.
Bain Capital was anointed the winning bidder for Virgin Australia yesterday morning, just hours after its fierce rival, Cyrus Capital, announced its shock withdrawal from the process, claiming there was a lack of enthusiasm from administrators.
Cyrus's withdrawal handed the cockpit keys of Australia's second-largest carrier to Bain Capital, 66 days after the bankrupt airline collapsed into administration owing almost $7 billion to 12,000 creditors.
Bain is expected to send the airline back to its Virgin Blue roots, promising a low-cost carrier that makes "flying fun again".
Queensland also stands to benefit from Bain's victory, with the Queensland Investment Corporation confirming it had struck a deal to keep the airline based and flying in the state.
However, Virgin Australia's new owner is expected to cut staff, aircraft and unprofitable routes as it moves to strengthen the airline's future and prevent it from collapsing again.
Bain will be formally handed the keys to the company and the airline will emerge from administration at a meeting of creditors in August.
It will return to the skies with about 40 Boeing 737s, with scope to expand to closer to 70 as demand returns to normal after COVID-19. But 70 aircraft is still down from about 133 the airline operated in the last financial year.
Hundreds of millions of dollars worth of travel credits, tickets and Velocity Points will be honoured by the airline's new owner, providing major relief for consumers.
Bain's Australian managing director, Mike Murphy, said Virgin Australia 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," Mr Murphy said.
The Virgin Australia Group's chief executive, Paul Scurrah, said the sale was "a significant step forward in securing the airline's future".
"Bain's investment will cement our future as a major Australian carrier, secure thousands of direct and indirect jobs, and ensure we can continue to bring competition to millions of customers for many years to come," he said.
Queensland will provide as much as $200 million to Bain, but what form the investment will take has not been revealed by Queensland Treasurer Cameron Dick.
"We've made a commitment in relation to the airline and of course we've still got to keep the maroon cards close to the chest because the transaction is not complete yet," he said.
Deloitte Administrator Vaughan Strawbridge said Bain presented a "compelling" bid which would secure the future of the airline, thousands of jobs and ensure the nation had a competitive aviation sector.
■ New owner is Boston-based Bain Capital - manages $149bn in assets.
■ Bain will return the airline to its 'Virgin Blue' roots, with Bain promising to create a low-cost carrier which puts the fun back into flying
■ Business class seats will remain on key capital city routes
■ Flight credits, tickets and Velocity Points will be honoured
■ Virgin Australia to remain based in Brisbane
■ Some job losses likely with Virgin's aircraft to be reduced
■ Controversial low-fare airline TigerAir dropped
Originally published as New Virgin owner expected to cut staff, routes