Creditors overwhelmingly back Virgin Australia sale to Bain Capital

Creditors vote overwhelmingly in favour of Virgin’s sale to Bain Capital, but union support had already sealed the deal.

Administrator Vaughan Strawbridge of Deloitte with Virgin Australia CEO Paul Scurrah. Picture: John Feder

Virgin Australia’s sale to US private equity firm Bain Capital has been confirmed by creditors, who voted overwhelmingly in favour of the $3.5bn deal.

Figures from the meeting show 6456 creditors voted in favour and 63 against. Another 257 abstained from voting.

The outcome was all but sealed when key unions declared their support for Bain Capital’s deed of company arrangement (DOCA) prior to the meeting.

In return for their support, Bain has promised to include three union officials on an advisory panel with senior management, which will meet fortnightly until the end of the year.

Virgin Australia CEO Paul Scurrah, senior administrator Vaughan Strawbridge and Bain Capital’s Mike Murphy all welcomed the outcome of the meeting, calling it an “important milestone and a significant step” in the airline’s recovery.

“We can now continue the rebuilding process from the strongest possible platform and with the least disruption,” Mr Murphy said.

“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.”

Mr Scurrah said the hard work was not over yet, with the impact of COVID-19 still “very challenging” for the business and industry at large.

“These are tough times and we must remain focused and adapt to this new environment,” said Mr Scurrah. “I’m pleased today gives us some more certainty around the company’s future.”

Virgin founder Sir Richard Branson said it had been a massive effort by the administrators and management team and the focus should now be building up the airline even better than it was before.

“We are excited to create that next chapter together with Bain and the airline’s wonderful team,” Sir Richard said.

His sentiments were echoed by Virgin Group CEO Josh Bayliss, who added that the revival of the airline was a priority for the group.

Transport Workers Union national secretary Michael Kaine said the vote signalled a “new beginning for Virgin Australia and for Australian aviation”.

“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,” Mr Kaine said.

“There have been long and difficult days and our thoughts are with the 3000 workers who will no longer be with the airline.”

TWU National Secretary Michael Kaine says Virgin’s survival will be achieved through cooperation with unions, not confrontation. Picture:Justin Lloyd

Under Bain, Virgin Australia will have a workforce of up to 6000 employees and a fleet of between 30 and 60 Boeing 737s as it emerges from administration.

The airline went into administration on April 21 with debts of $6.8bn.

Bain has promised to pay employees their full entitlements and to honour travel credits held by passengers as a result of cancelled flights.

Mr Kaine said there was a “long road ahead to ensure Virgin’s success” and the TWU would hold Bain Capital to account on its promises.

“The direction the board takes will be instrumental in ensuring Virgin’s long term survival and this can only be done through co-operation rather than confrontation with workers,” Mr Kaine said.

“We will also hold the federal government to account over its failure to support Virgin and the wider aviation industry. We will remember how the government sat on the sidelines and refused to give Virgin workers, the travelling public and the wider community the assurances they need on ensuring a strong second airline.”