US private investment firm Bain Capital has bought Virgin Australia after creditors to the airline voted to support its proposal for the future of the carrier at a virtual meeting in Sydney, Australia, on Friday.
Virgin’s administrators Deloitte recommended the proposal from Bain Capital, based in Boston, Massachusetts, as the best outcome for creditors who were owed A$6.8 billion by the collapse of Virgin Australia in April.
The sale marks the return of Australia’s second carrier, which had been facing the prospect of complete shutdown and liquidation unless a buyer was found. Virgin Australia and Flybe, Europe’s biggest regional airline, collapsed at the beginning of the lockdowns caused by the coronavirus pandemic.
Virgin Group founder Sir Richard Branson and members of the union representing the bulk of workers at Virgin Australia, the Transport Workers Union, voted in support of the offer by Bain Capital. Bain’s proposal also won the support from members of the Australian Federation of Air Pilots, Virgin Independent Pilots Association and the Australian Licensed Aircraft Engineers’ Association, the Sydney Morning Herald reported.
Bain Capital managing director Mike Murphy said in a short statement after the meeting that the vote was an important milestone.
“We can now continue the rebuilding process from the strongest possible platform and with the least disruption. We are working closely with Virgin management to build a stronger, more profitable and competitive Virgin Australia, and we look forward to the future with confidence.”
Today is a new beginning for #Virgin. I want to congratulate workers who have been instrumental in getting us to this point after many long and difficult days. Our thoughts are with the 3,000 workers who will no longer be with the airline
— Michael Kaine (@TWUMichaelKaine) September 4, 2020
Bain Capital’s A$3.5 billion deal to acquire Virgin will see the airline relaunched as a ‘value carrier’ with limited international flights. Virgin under Bain’s ownership will also sack 3000 employees – about a third of its workforce.
Bain Capital’s proposal was to provide returns of as much as 100 cents in the dollar in the case of workers and ongoing Australian Government financial support like JobKeeper. Virgin’s bondholders, who are owed nearly A$2 billion and sought an alternative proposal, will receive between 13 cents and 10 cents in the dollar.
Branson welcomed Bain’s new ownership of Virgin Australia.
“It has been a massive effort by the administrator, Bain, Virgin Australia CEO and Managing Director Paul Scurrah and the airline’s management team to get this far in the face of the global travel crisis.”
Scurrah and the lead administrator from Deloitte, Vaughan Strawbridge, thanked creditors for supporting the company during the sale process.