Union official urges Virgin Australia workers not to vote down Bain in spite

Virgin Australia employees facing the axe have been urged by a key union not to vote against the sale to Bain Capital out of spite.

Virgin Australia plans to retrench a third of its workforce as it emerges from administration. Picture: Darren England

A key union official has warned employees facing the axe in the Virgin Australia deal with Bain Capital not to vote down the transaction out of spite.

Virgin Australia chief executive Paul Scurrah revealed last Wednesday the airline would retrench a third of its workforce, or 3000 employees, in an effort to return to profitability and survive the current pandemic.

Many of those will come from the crews of Boeing 777, A330 and ATR aircraft that are being cut from the Virgin Australia fleet.

Australian Licensed Aircraft Engineers Association secretary Steve Purvinas said he was disgusted to see talk by some of those workers suggesting a “no” vote to the deal with Bain.

“It amounts to ‘if I can’t have a job, I will go out of my way to make sure you don’t have one either’,” Mr Purvinas said.

“A ‘no’ vote by them does not increase their lot and I would be extremely disappointed if any union supports a position based on spite.”

Mr Purvinas said backing a proposal by bondholders over that of Bain Capital, which was already providing financial support to Virgin Australia, would not help employees.

Significant bondholders Broad Peak Investment Management and Tor Investment Advisers sent the proposal to the airline’s 6000 noteholders on Friday, promising a return of up to 67c in the dollar for those who supported an $800m capital raising.

The bondholders are owed $2bn by Virgin Australia, which went into administration on April 21 with debts of $6.8bn.

Virgin Australia chief executive Paul Scurrah. Picture: Glenn Hunt

The proposed deed of company arrangement (DOCA) also offered the carrot of board representation for employees, payment of all entitlements, a workforce of about 6000 and a single aircraft-type fleet.

Although administrators Deloitte said they could not consider the proposal due to the binding agreement with Bain, bondholders were adamant creditors including employees should be able to vote on the DOCA at their next meeting in September.

Mr Purvinas indicated the bondholders would get no support from his union, describing their proposal as “fanciful”.

“Their only interest rests in the amount of money they can escape with,” Mr Purvinas said.

“They have no genuine interest in the ongoing concerns of the airline. The late proposal only creates an illusion they have a long-term interest.”

Transport Workers Union national secretary Michael Kaine was more accommodating, suggesting it was the union’s responsibility to look at every possibility.

“So we will look at this,” Mr Kaine said.

He said the plan to give employees a seat on the board was a smart strategic move by the bondholders.

“It’s logical for the bondholders to put that out there because at the moment the only thing that has been announced about governance by Bain is that (former Jetstar CEO) Jayne Hrdlicka might be on the board,” said Mr Kaine.

“Someone whose history is not well aligned with worker interest versus a worker voice on the board is a pretty powerful contrast that is hard to ignore.”

A bondholders’ spokesman said they had been overwhelmed by the strong support for their proposal from a wide range of Virgin stakeholders, not limited to bondholders.

“In addition to the positive response, stakeholders have made it clear they want the opportunity to hear more about our proposal,” he said.

“The widespread support has encouraged us to keep progressing our proposal, which will likely result in the best return for all creditors and employees, and has the highest prospect of success in being approved at the second creditors’ meeting.”

The ACTU had not yet seen the bondholders’ proposal when contacted by The Australian on Sunday but indicated it was certainty that employees needed most at this time.