Virgin Australia boss Jayne Hrdlicka says Bain Capital in for long haul despite float talk

Virgin Australia boss Jayne Hrdlicka has moved to reassure the airline’s staff of Bain Capital’s commitment to the company after The Australian reported an ASX listing was in the air.

Virgin Australia CEO Jayne Hrdlicka: ‘No decisions have been made in relation to any potential relisting or other activity.’ Picture: NCA NewsWire/Sarah Marshall

Virgin Australia managing director Jayne Hrdlicka has moved to reassure the airline’s staff of Bain Capital’s commitment after The Australian reported the private equity group was considering listing the company on the ASX.

Ms Hrdlicka, in a note to employees on Wednesday morning, confirmed Bain had been “approached by investment banks who are proposing a relisting of Virgin” but that the group “regularly receives proposals like this”.

“No decisions have been made in relation to any potential relisting or other activity,” she wrote.

“If and when there is something to say about future capital structures of Virgin Australia, you will hear it from us.

“Bain Capital under every scenario will be our strategic partners and our major shareholder for many years to come.”

The Australian reported on Wednesday that Bain had been in discussions with investment advisers about a potential return of Virgin to the ASX in mid-2022.

That time frame was considerably faster than market expectations, given Bain had finalised the acquisition of Virgin in only November 2020 after a seven-month process run by Deloitte.

Virgin collapsed into administration in the early months of the Covid-19 pandemic, with bond holders owed almost $2bn alone.

Ms Hrdlicka, who replaced former chief executive Paul Scurrah despite Bain’s private denials that she would be given the job, wrote that it was “inevitable that there will be media reporting and speculation in relation to our company”.

“Ultimately, this is a reflection on how far we’ve come in the last 12 months and the great potential of our airline. I’d encourage everyone to stay focused on the task we have at hand: ramping up our operations while we continue our transformation journey.”

But the report that Bain had even considered a public listing for Virgin has alarmed the Transport Workers Union, which represents a large number of airline workers.

In a letter to Bain’s local chief Mike Murphy, TWU national secretary Michael Kaine said he and other union leaders were “once again in a position of doubting the commitments to which Bain Capital were voted in as new owners”.

“Commitments made both publicly and through correspondence with unions included that Bain Capital will remain with Virgin Australia in the long-term, and that long-haul international flying would resume once the global travel market recovers,” Mr Kaine and others including Australian Services Union assistant secretary Emeline Gaske wrote.

“We are reminded of the necessity to suspend enterprise bargaining in October 2020 following the departure of former Virgin CEO Paul Scurrah.”

The report that Bain is eyeing a listing on the ASX comes as Virgin prepares to restart international flights with its first service to Fiji.

The airline, which had previously flown to Tokyo, Los Angeles and Hong Kong, is not expected to have a significant long-haul schedule even as the rest of its services return to normal following the relaxation of restrictions on international borders.

Mr Murphy, shortly after Bain sealed the purchase – having outcompeted bidders including Oaktree Capital Management, BGH Capital and Cyrus Capital – said he hoped the airline would return to profitability by February.

However, financial accounts lodged with the corporate regulator in November show Virgin recorded an underlying loss of $76.8m as domestic and international revenues fell sharply because of tight health restrictions and limits on flights.

To June 30 this year, passenger revenues fell 70 per cent. The end of administration also wiped $4.4bn in claims owed to creditors from the company’s balance sheet.

While it is unclear which investment banks have approached Bain with the recent proposals, the private equity group had been advised by Goldman Sachs at the time of the Virgin sale process. Deloitte had engaged Morgan Stanley, while Virgin’s long-time advisers had been UBS.

On Tuesday, a Bain spokesman told The Australian that the group was “conserving the proposals in good faith and (had) not made any decisions”.