Virgin passes into hands of US private equity group

After seven months of turmoil under voluntary administration, Virgin Australia has passed into the hands of new owners but many questions remain about exactly how the airline will operate.

Virgin Australia’s costs have been slashed and the airline set up to be a “fierce competitor” to Qantas as it’s $3.5bn sale to US private equity giant Bain Capital was finalised on Tuesday.

Deloitte lead administrator Vaughan Strawbridge confirmed Bain Capital had “taken custody” of Australia’s second airline, closing a chapter of seven months of turmoil for Virgin after it collapsed in April when the COVID pandemic wiped out 95 per cent of its revenues.

Bain Capital becomes new Virgin Australia owner after Cyrus Capital withdraws bid

Bain’s hand-picked CEO Jayne Hrdlicka will have the job of turning around the airline’s fortunes after its massive restructuring and cost dump under the administrators.

Virgin Australia’s new owners Bain Capital have taken the controls of Australia’s second largest airline following seven months of voluntary administration. Picture: NCA NewsWire / Christian Gilles

Mr Strawbridge said the goal from day one of administration was for Virgin to survive and come out of administration but also to “maximise the level of employment” for its 10,500 staff.

About 6000 direct and indirect jobs have been saved under the restructure.

Mr Strawbridge said Virgin was set up to come out of administration and “be a real fierce competitor in the market”.

Virgin Australia Group Administrator Vaughan Strawbridge has confirmed the airline’s sale to US private equity giant Bain Capital has been completed. (AAP Image/Joel Carrett)

“This rigorous and competitive administration, restructuring and sale process now provides certainty for employees and customers, a return to creditors, opportunities for suppliers and financiers to continue trade with Virgin Australia, as well as maintaining a competitive Australian aviation industry for the benefit of customers,” he said.

Mr Strawbridge said undertaking the administration and sale process under the cloud of the pandemic had created a range of issues, “many of which have not been encountered previously in either Australian or international market contexts”.

“If you compare Australia to the other countries around the world, they have not seen the same level of reduction in domestic travel and that has been … from the state borders closing so it is incredibly unique,” he said.

Former Jetstar CEO Jayne Hrdlicka has taken the controls of Virgin Australia after it’s $3.5bn sale to Bain Capital was completed. Photographer: Brendon O'Hagan/Bloomberg

Ms Hrdlicka said Virgin had a “strong future because of the rigorous voluntary administration process”.

“Virgin Australia Group’s employees have also played a vital role in securing the airline’s survival,” she said.

“It’s been a hard journey, and they’ve shown incredible resilience and commitment to the future under the toughest circumstances. It’s a privilege to join such a dedicated, hardworking, and passionate team tomorrow as their CEO.”