Virgin Australia: Workers’ futures hinge on outcome of Friday meeting
The futures of 6000 workers at troubled Virgin Australia hang in the balance, with a crucial meeting of creditors set to determine whether the sale of the collapsed airline will finally go through.
QLD Business
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It’s crunch time for thousands of Virgin workers this week, with their future dependent on the outcome of a meeting on Friday to approve the sale of the collapsed airline to Bain Capital.
Bain on Sunday offered a sweetener to unions with plans to set up an advisory council with worker representatives if the deal is given the green light.
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Virgin Australia chief executive Paul Scurrah has warned stood down employees that the risk losing access to JobKeeper if Friday’s creditors meeting votes against the US-based investment firm taking over the carrier.
Virgin Australia announced earlier this month that 6000 of its 9000-strong workforce would remain at the carrier with a view to grow it back to 8000 when international flying resumes.
Virgin Australia announced international flying would remain suspended, however, the airline has kept its Los Angeles and Tokyo slots for when flights eventually return.
Mr Scurrah told a Tourism Australia webinar that the size of the workforce and fleet were reliant on the Bain’s deed of company arrangement (DOCA) winning approval on Friday.
The airline’s 9000 employees represent the majority of Virgin Australia’s creditors and their support will be critical to the vote.
“If the DOCA is voted down, people won’t get access to JobKeeper and it will take longer (to emerge from administration) and we’ll probably end up with less jobs and less aircraft if that’s the case,” Mr Scurrah said in a report in The Australian newspaper.
“But it’s looking pretty good for the DOCA and as of next Friday I think there will be a high level of confidence in the market about our future existence.”
Bain Capital on Sunday sent a letter to Virgin workers offering to set up an advisory council with three union representatives and senior management “seeking input and engagement on critical matters that impact Virgin Australia’s people.” The council would meet fortnighly until the end of the year.
Bain said the approval of the DOCA would ensure approximately 6,000 direct jobs and an estimated 35,000 indirect jobs are secured, the entitlements for all employees made redundant would be paid in full and continued access to JobKeeper.
Voluntary Administrator Vaughan Strawbridge, of insolvency firm Deloitte, said the sale process had resulted in an “excellent outcome in securing a future for Virgin Australia.”
“We have set out our opinion to creditors that it is in their interest to approve the deed of company arrangement as it provides for the best return to creditors in what are extraordinary circumstances, and that were impossible to foresee,” Mr Strawbridge said. “It achieves all the objectives of the voluntary administration process that we sought from the outset.
“Now we just need to bring the airline out of administration as soon as possible.”
The airline collapsed in April, owing $6.8bn to its creditors, who range from mum and dad bondholders to aircraft lessors to service providers.
In the event the DOCA is not supported, an asset sale would be undertaken to transfer ownership of Virgin Australia to Bain Capital; a process that could take several months.
