Administrators Deloitte said that after a comprehensive sale campaign supported by the Virgin management team and their advisors a sale and implementation agreement had been initiated with Bain Capital.
The announcement was light on details of the deal including a price, but Premier Annastacia Palaszczuk said on Twitter “Virgin Airlines will continue as Australia’s second national carrier and its headquarters will stay in Queensland”.
“Keeping Queensland jobs in Queensland as we deal with the economic fallout of the global coronavirus pandemic is part of our plan to restore our economy and create jobs,” Palaszczuk said.
Deloitte said the agreement with Bain would result in the sale and recapitalisation of Virgin Australia Holdings and its subsidiary businesses which operates the Virgin Australia and Tiger airlines.
“Completion of the transaction will occur after the second meeting of creditors, which is currently scheduled to occur before the end of August,” Deloitte said
“Bain Capital has received necessary regulatory approvals under the Australian Government’s foreign investment laws to complete the transaction.”
Deloitte said the deal supported the current management team led by Paul Scurrah and their improvement plan for the airline.
It committed to the retention of thousands of jobs, carried forward all travel credits and Velocity frequent flyer booked flights and honoured all employee entitlements.
While it committed to keeping thousands of jobs, it did not rule out job losses and the ACTU said there was likely to be some people who lose their jobs.
Deloitte said the deal also provided a significant injection of capital to see the business recapitalised and well-positioned for the future.
Joint administrator Vaughan Strawbridge said it was an important milestone and a significant achievement.
“Bain Capital has presented a strong and compelling bid for the business that will secure the future of Australia’s second airline, thousands of employees and their families and ensure Australia continues to enjoy the benefits of a competitive aviation sector,” Strawbridge said.
“The Virgin Australia Group entered administration as a direct result of an unprecedented global pandemic which all but grounded its operations whilst in the midst of a major transformation of the business led by Paul Scurrah and the management team.”
No return to shareholders is anticipated and it was not possible to determine the estimated return to creditors, however an update will be provided ahead of the second meeting of creditors.
“From day one of our appointment, we have focused on achieving the best possible outcomes that a restructured, sustainable and profitable airline can deliver to all stakeholders.
“In just over eight weeks, this is a very positive outcome. We have certainly been heartened by the levels of interest shown by parties, in spite of the prevailing COVID-induced market conditions, how our final two groups have approached their bids, and how support for the business has come from so many quarters.
“This result could not have been achieved without the support and hard work of the Virgin Australia team, who we have had the privilege of working with over the last eight to nine weeks. We would also like to thank them for their ongoing support and engagement.”
The decision followed the withdrawal this morning of the second bidder, US hedge fund Cyrus Capital after it complained of a lack of engagement from Deloitte.
The decision by Cyrus to walk away was seen as a strategic withdrawal from a company that had realised it was not going to win the bid, according to Airline Ratings Geoff Thomas.
“I think it was extraordinary and totally out of left field,” Thomas said.
“Cyrus was considered to be the frontrunner.”
However, he said both Cyrus and Bain had been “two very good bidders”.
Virgin Mk2 is likely to be a smaller airline with full domestic and short-haul international services. It is expected to start with about 40 planes and grow to about 70.Jump to next article