Virgin Australia gets new owner, Bain Capital

Four long months of uncertainty have finally ended, with Virgin Australia officially emerging from administration following a creditors’ vote on the airline’s future. Here’s what it means for employees and customers.

Millions of dollars in customer flight credit, Velocity Points and thousands of aviation jobs have been secured with Bain Capital officially endorsed as the new owner of Virgin Australia.

On Friday creditors endorsed Bain’s plan to resurrect the airline and end four months in administration.

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Bain Capital, an American investment giant founded by U.S. Presidential candidate Mitt Romney, now has full control over the running of Australia’s second-largest airline.

Deloitte administrators endorsed Bain on June 26 as the company best placed to save the airline and provide a return to creditors – a recommendation endorsed by those creditors on Friday.

The victory for Bain will ensure about $650m in customer flight credit and 6000 aviation jobs are protected.

Virgin Australia will this month relocate its headquarters from Bowen Hills to South Bank, where it will occupy five levels in Flight Centre’s Southpoint tower.

COVID-19 forced Virgin into administration in April owing 12,000 creditors more than $7bn. 

Creditors on Friday accepted 10 separate deeds of company arrangement covering all 41 of the entities in voluntary administration.

The arrangements will be signed, and completed, within 15 business days.

Unsecured creditors will receive between 13 and 9 cents in the dollar on their claims from a pool of funds of between $462m and $612m.

The value of all customer travel credits and prepaid flights provided post-administration will be honoured.

Administrator Vaughan Strawbridge said the process had been a “challenging one”.

“While the outcome of the meeting today is a significant milestone for both the future of Virgin Australia and Australia’s aviation industry more broadly, we also acknowledge those loyal Virgin Australia Group employees who will lose their jobs and the difficulties that this will cause them and their families as well as the numerous suppliers and investors who will not receive all of the monies owed to them,” he said.

Virgin Australia CEO Paul Scurrah at the airline’s Brisbane headquarters. Photo: Glenn Hunt / The Australian

Virgin Australia Group CEO and Managing Director Paul Scurrah said the decision brought the airline closer to exiting administration.

“It’s vital for Australia to have two major airlines for consumer choice, value airfares and to help support the recovery of Australia’s robust tourism sector after this crisis is over,” he said.

“While we can feel very proud that we have got to this point, the impact of COVID-19 remains very challenging for our business and industry.

“These are tough times and we must remain focused and adapt to this new environment.”

Bain Capital Managing Director Mike Murphy said it would start building a “stronger, more profitable and competitive Virgin Australia”.

Transport Workers Union National Secretary Michael Kaine welcomed the result.

“This is a new beginning and an important day for Virgin and for Australian aviation,” he said.

“I want to congratulate Virgin workers who have been instrumental in getting us to the point where Virgin has now been rebooted and is on a plan to get back to flying.”

Originally published as Virgin Australia gets new owner, Bain Capital