Virgin Australia: Bain Capital plans Virgin, Velocity reset

Virgin Australia is expected to look more like the old Virgin Blue and reset ties with its frequent flyer program if final-round bidder Bain Capital’s plans play out.

Bain Capital says it plans to remake Virgin Australia to look more like the old Virgin Blue. Picture: AAP

Short-listed Virgin bidder Bain Capital is expected to relaunch Virgin Australia as a hybrid airline in the mould of the old Virgin Blue, with a low cost base but offering airport lounges, a more integrated Velocity frequent flyer program and regional, domestic and eventually, international services.

Along with US-based Cyrus Capital, Bain was named as one of the final two bidders for Virgin in an announcement made by the airline’s administrator, Deloitte’s Vaughan Strawbridge, on Tuesday afternoon.

Speaking to The Australian last week after he said Bain wanted to make “flying fun again” in the mould of the old Virgin Blue, Bain Capital’s Sydney-based managing director Mike Murphy revealed the firm wanted to make changes to Virgin’s Velocity frequent flyer scheme.

Bain is expected to negotiate bringing the Velocity and Virgin brands together in ongoing talks with Virgin Group, which currently receives about $15 million a year in royalty payments from the Australian carrier.

Mr Murphy said Bain would definitely retain the Virgin brand and revealed he would welcome Virgin Group as an ongoing shareholder in the airline following ongoing discussions on the nature of the current arrangement with Virgin Australia and “what that should look like on the other side” of the sale process.

He said the Velocity Frequent Flyer business, now 100 per cent owned by Virgin after it bought out its private equity partner last year, had more potential.

“One thing we would love to explore is whether there could be a closer brand relationship between Virgin and Velocity. We come at that from the customer experience, having those tied up a little closer could be a more seamless experience from both the web and app perspective for customers,’’ he said, noting one option would be to have one common app and website for both brands.

Bain has had a team of 60 advisers working on the Virgin deal and has been assisted by former Jetstar chief executive Jayne Hrdlicka, who would be viewed as a candidate for the CEO role or even an executive or board role in the relaunched airline.

But Mr Murphy said it was “premature” to speculate on Ms Hrdlicka’s future with Bain and Virgin after her consulting agreement with her former employer, A2 Milk, expired on June 30.

“I would love to think if we did this deal she would play some sort of meaningful role. But it is too early to determine who is doing what. The more interaction we have with (CEO) Paul (Scurrah) and his team, the more we are enjoying working with him as well,’’ he said.

Mr Murphy said Bain, which has about $10 billion of its $150 billion global portfolio invested in Australia after he established the firm’s Sydney office in 2016, had Virgin on its radar for some time ahead of its collapse into administration.

Mr Murphy is one of the 15 partners who manage Bain Capital’s suite of Asia Private Equity Funds, which have collectively raised $US11.5bn. There are no country specific allocations from the funds.