Investment group Bain Capital was named Friday (26 June) as the winning buyer of Virgin Australia by the airline’s administrator giving new hope to the carrier and ensuring Australia has two competing airlines. Administrator Deloitte named Bain as the new owner on Friday after rival buyout firm Cyrus Capital Partners withdrew its bid. Financial details were not disclosed but Deloitte said Bain will inject “significant” capital in the airlines.
Virgin Australia filed for administration in April with A$6.8 billion (US$4.68 billion) in debt as the COVID-19 pandemic shut down air travel throughout much of the world. The company had a sketchy history and had lost money for seven consecutive years. Deloitte said it was not possible to determine how much of Virgin Australia’s debt can be recovered, though more details will come in a report to creditors that’s due before the end of August.
Shareholders, though, will probably get nothing, Deloitte said. Virgin Australia was almost entirely owned by four foreign aviation groups including Singapore Airlines, Etihad Airways, HNA Group and Nanshan Group. Each owned 20 percent stakes. Richard Branson’s Virgin Group owned about 10 percent.
In a separate statement, Bain said it will strengthen Virgin Australia’s regional services and continue serving business travellers. Bain is backing Virgin’s Managing Director Paul Scurrah, who had already started to cut costs and simplify the airline when the virus struck. The carrier’s headquarters will stay in Queensland, the state government said.
Bain’s deal may face a further challenge from Virgin Australia’s bondholders, who this week submitted their own plan to swap their debt for new shares under an independent board. The sale agreement with Bain still needs to be approved by creditors.
0 Comments