Virgin Australia sending planes back

Virgin has begun sending its aircraft back to their owners as the airline prepares for a much leaner operation under Bain Capital.

More than 60 Virgin Australia aircraft remain parked at airports around the country including Brisbane. Picture: Patrick Hamilton/AFP

Virgin Australia has begun sending its aircraft back to their owners as the airline prepares for a much leaner operation under Bain Capital.

Less than half of Virgin’s 142-aircraft fleet is likely to be retained by Bain which signed a deal with administrator Deloitte to buy the airline last week.

Virgin Australia went into voluntary administration on April 21 with debts of $6.8bn owed to more than 15,000 creditors.

Boston-based Bain Capital has already made a significant financial investment in the carrier, to help it increase domestic services and compete with Qantas and Jetstar.

On Thursday Virgin announced it would add 17 routes to its network by early August, expanding its operations to about 30 destinations and offering fares as low as $69.

Among the routes to be reinstated were services to the Gold Coast, Sunshine Coast, Coffs Harbour, Newcastle, Ballina, Cairns, Hobart and Proserpine.

A spokesman for Deloitte said to date 11 aircraft had been identified as “surplus to requirements” but future fleet options would be a matter for Virgin and Bain.

Among the 11 were five Embraers that had been idle for two years, and six ATR 72s predominantly used on regional routes.

The Embraer 190s have already been handed back to the lessor and arrangements were being made to return the ATR 72s. “There are no airline staff impacts,” the Deloitte spokesman said.

Virgin Australia is operating about 25 Boeing 737s on domestic and charter flights and planned to increase the number of aircraft in use to 40 by early August.

Another 60-plus aircraft including A330s, 777s and 737s remained parked at airports around Australia, with many not having flown since late March.

Bain Capital’s Australian CEO Mike Murphy had suggested Virgin could retain as many as 70 aircraft to allow for quick expansion in response to demand.

Virgin Australia chief commercial officer John MacLeod said the owners were hopeful of seeing confidence return in coming weeks and services take off accordingly.

“Many of our aircraft have been parked and our teams are preparing them to return to the skies, and with the increase in flights we’re announcing today, we’re looking forward to serving our guests as they travel to visit family and friends, or take a well-deserved break,” Mr MacLeod said.

Citi research released on Thursday showed domestic airline departures were already much improved, driven by increased travel from Perth and Brisbane in particular.

In the last week of June, flights climbed 34 per cent, from 87 a day to 117, still a long way off pre-COVID levels of 751 flights a day.

The administrators returned to the Federal Court this week for a closed hearing to provide confidential details of the sale and implementation deed signed with Bain Capital.

Orders issued by Judge John Middleton on Thursday determined that Deloitte would not be liable for any debts accrued by Virgin Australia if the deed was terminated, and the property and assets of the airline were not sufficient to satisfy those debts and liabilities.

Although Bain has now taken financial control of Virgin Australia, there is still the matter of the creditors’ meeting on August 22 to confirm the deal.

On Tuesday, Deloitte informed shareholders in the airline they would get nothing back, and said they did not expect to have sufficient recoveries to repay creditors in full.