Virgin Australia finds new owner in US private equity firm Bain Capital

Virgin Australia has found a new owner.

Administrators for the carrier announced Friday that it had selected Bain Capital, the US private equity firm, to take over the company, two months after its collapse. Terms of the deal were not disclosed.

Bain won out over Cyrus Capital Partners, a New York-based investment firm, which had also submitted a binding offer.

“Several proposals from other interested parties” were also submitted this week, including a proposal by some of the airline’s bondholders, according to the administrators.

Bain Capital says it wants to “protect as many jobs as possible” at Virgin Australia while supporting the airline’s “unique culture.” The airline employs about 10,000 people.

“We are determined to see that Australians have access to competitive, viable aviation services for the long-term,” wrote Mike Murphy, a managing director of Bain Capital, in a statement. He added that Bain will strengthen Virgin’s “regional services” while continuing to offer flights for business and leisure travelers.

The rescue comes as the coronavirus pandemic continues to hurt global demand for travel. The International Air Transport Authority has estimated that it could take more than three years for international travel to return to pre-crisis levels.

Virgin Australia, Australia’s second biggest airline, filed for voluntary administration in April after failing to receive the government support it had asked for. Earlier that week, billionaire founder Richard Branson had appealed to the national government for assistance, and even said he would offer his Necker Island estate in the Caribbean as collateral. (Virgin’s other major shareholders prior to administration included Etihad Airways, Singapore Airlines and Nanshan Capital Holdings.)

Josh Bayliss, CEO of the Virgin Group, said he intends to “work directly with Bain and closely with the administrator and management to finalize the recovery plan and bring Virgin Australia out of administration in the strongest form possible.”

“Time is now of the utmost importance, and we cannot afford delay in getting the company back in the air for the benefit of its customers, its employees and the wider Australian economy,” he added.

SYDNEY, AUSTRALIA - APRIL 22: Qantas planes are parked on the tarmac at Sydney Airport on April 22, 2020 in Sydney, Australia. Restrictions have been placed on all non-essential business and strict social distancing rules are in place across Australia in response to the COVID-19 pandemic. (Photo by Cameron Spencer/Getty Images)

Related article Qantas is cutting 6,000 jobs and raising $1.3 billion to survive the pandemic

Virgin Australia’s main local competitor, Qantas (QABSY), is also fighting to stay afloat. Qantas (QABSY), which is Australia’s flagship carrier, announced Thursday that it would slash 6,000 jobs and raise up to 1.9 billion Australian dollars ($1.3 billion) as it took on “the biggest crisis our industry has ever faced.”

While federal authorities in Australia have declined to provide a direct bailout for Virgin Australia, they have stressed the importance of the carrier’s survival.

“We want a competitive aviation market here in Australia. We want to see these two airlines [Virgin Australia and flag carrier Qantas] flying and competing,” Prime Minister Scott Morrison told reporters last month.

Virgin Australia’s administrators said Friday that the deal would likely face “minimal” regulatory scrutiny.

Bain has already received preliminary regulatory approval from Australia’s treasurer, and is now proceeding with the airline for its restructuring and eventual sale, administrators said.

— Angus Watson contributed to this report.