Bain Capital reveals plan for Virgin Australia

Virgin Australia chairman Ryan Cotton has addressed speculation Bain Capital will be relisting the carrier on the ASX next year.

Virgin Australia CEO Jayne Hrdlicka appears to have caused some friction within the airline’s management with her approach to turning Virgin into a profitable carrier. Picture: Sarah Marshall / NCA NewsWire

Virgin Australia chairman Ryan Cotton has delivered his first address to the company’s 6000 employees, telling them a public listing on the ASX would be a vote of confidence in the airline.

Mr Cotton, a managing director of Bain Capital, was visiting the Virgin’s headquarters from Boston, where he heads the private equity firm’s global consumer and retail division. Bain was rebuilding the carrier for long-term success.

Addressing a town hall-style meeting streamed to employees across the country, Mr Cotton said Bain was committed to the airline for the “very, very long haul”.

“We didn’t sign up for six months – we didn’t sign up for two years,” Mr Cotton said, in reference to the $3.5bn deal Bain struck in November 2020 to bring Virgin Australia out of administration.

“We signed up for as long as it takes to rebuild a phenomenal airline and to set it up for phenomenal long-term success.” Addressing reports that Bain was considering re-listing the airline, Mr Cotton said: “If we’re so lucky in the future to have a liquidity event, a ­moment in time where we go ­public or something like that, that’s an incredibly good sign for the ­business.

“It means we’re healthy, it means we’re strong ... It means the market’s excited to welcome us back and participate in the journey along with us as partners.”

He added that an initial public offering would not be the end of Bain’s involvement but represent the “beginning of another chapter”. “And we’re here for a very long set of chapters,” he said.

“We’re here to see this airline through all the way to the other side and to make sure it can survive for generations after us.

“My personal ‘why’ in life is to build things that will outlive me and that’s what we’re all com­mitted to do here – to build an airline that will outlive all of us.”

The Australian revealed in December that Bain was considering a public listing just one year after it purchased Virgin. Bain had not made a decision to relist the airline, the company said at the time.

Virgin Australia is already well on the road to profitability after a decade of losses led to the airline calling in administrators in April 2020 with debts in excess of $7bn.

Since replacing Paul Scurrah as chief executive in late 2020, Jayne Hrdlicka has found $300m in cost savings, and delivered cheaper airfares to travellers.

The furious pace of restructuring has not come without a price, however. A string of senior managers have departed, including the chief pilot, chief medical officer, and heads of revenue and people safety and wellbeing.

Those who spoke to The Australian on the condition of anonymity cited the change in workplace culture as the reason for leaving. However, Ms Hrdlicka’s own team remains largely intact.

In coming months more consumer-facing announcements are expected from Virgin as the airline seeks to tighten its grip on a healthy 33 per cent of the lucrative domestic market.

Next month Virgin will reopen its invitation-only lounge previously known as The Club in Sydney, Melbourne and Brisbane. The move will coincide with the launch of a new loyalty ­program.