Bain Capital set to land Virgin Australia as unions approve deal

Virgin Australia’s creditors meeting is set to confirm Bain Capital as the airline’s new owners with unions pledging their support.

Sir Richard Branson in Brisbane in November 2019 to promote Virgin Australia’s flights to Tokyo. Picture: Liam Kidston

US private equity firm Bain Capital is set to be confirmed as the new owner of Virgin Australia, with the largest group of creditors voting in favour of the sale.

Unions representing many of the airline’s 9000 employees will vote yes to the firm’s deed of the company arrangement (DOCA) at Friday’s creditors meeting.

Transport Workers Union national secretary Michael Kaine said their members had decided to support the bid but warned they would be holding Bain to account over promises to co-operate with workers to rebuild the airline.

“We will vote to accept Bain Capital as the new owners of Virgin and we look forward to working with them to put Virgin back into the sky, stronger and better than before,” Mr Kaine said.

“But to do this Bain must listen to workers and use their skills, energy and experience in rebuilding the airline.”

The Australian Federation of Air Pilots and Virgin Independent Pilots Association also pledged their support, along with the Australian Licensed Aircraft Engineers’ Association.

Bondholders who launched an eleventh-hour legal bid to derail the sale to Bain declined to comment on which way they would vote at Friday’s meeting.

Under the Bain DOCA, bondholders can expect a return of between 9c and 13c in the dollar on their investment, but will get nothing if the DOCA is rejected and the airline liquidated.

On Thursday, Virgin founder Richard Branson also publicly declared his support for Bain Capital and said he would help rebuild the airline when it emerged from administration.

The 20-year-old carrier went into voluntary administration on April 21 after its major shareholders, including the Virgin Group, declined to provide funding.

A full-throttle sale process by Deloitte found a cashed-up buyer in Bain, who stumped up $125m in interim funding as part of a $3.5bn commitment.

Talks continuing

The Australian understands talks are continuing with the Virgin Group about an investment in the airline in return for a board seat, as well as licensing arrangements for the name.

Speaking ahead of Friday’s meeting, Sir Richard said he had confidence in the revival plan for the carrier.

“Virgin will be working closely with Bain to rebuild the airline and ensure it retains the spirit and character that has always marked it out from its rivals,” he said.

“We have a strong relationship with Bain, having built Virgin Voyages, and together we will ensure the airline provides exceptional experiences for its customers and team.”

Virgin Group chief executive Josh Bayliss thanked Deloitte for managing the administration process and ensuring a positive outcome.

“Australia needs two competitive airlines and Bain has the resources, aviation experience and long-term vision to bring this plan to life,” Mr Bayliss said. “We look forward to working with them and the Virgin Australia team to help the company become a force in Australia and realise its true ­potential.”

Bain indicated the airline would emerge from administration as a smaller version of its previous self, with about 6000 workers and a fleet of between 30 and 60 Boeing 737s.

The firm also committed to retaining CEO Paul Scurrah and will hand pick a board of “experienced, high-quality directors to help guide Virgin Australia to long-term success”.

Former Jetstar CEO Jayne Hrdlicka is expected to be on the board, possibly as chairman, following on from her advisory role to Bain during the bidding ­process.