LONDON – Creditors of Virgin Australia (VA) have voted to approve the sale of the airline to Bain Capital. This now ends what has been an ongoing and lengthy process since April this year, when the airline went into administration.
Trade unions at the airline supported the sale as well, even though it is going to cost around 3,000 jobs as a result. The sale also had the support of Virgin Group owner, Sir Richard Branson.
Branson said he looked forward to working with Bain “to revive and rebuild Virgin Australia into one of country’s leading companies once again.”
“The successful vote at the creditors’ meeting is a significant moment for the airline as it can now plan for the future and start work on getting back into the air and providing much-needed competition for Australian travelers.”
Bondholders Worse Off, Structure Switch-Up
Because of the substantive debts, amounting to around £2.55bn, bondholders will receive less than 10 cents on the dollar. Such bondholders are already owed around $2bn.
Trade creditors perform a little better out of this sale, receiving around 13 cents on the dollar. HNA, Singapore Airlines (SQ), and Etihad Airways (EY) are noted to be wiped out of the airline completely as shares are handed over.
Scrutiny Ahead for Bain
Whilst the unions have voted in favor of the sale, they will not forget the sacrifice made on the 3,000 jobs. Michael Kaine, the national secretary for the Transport Worker’s Union said that accountability will be held over the new owners.
“[There is] a long road ahead to ensure Virgin’s success and we will hold Bain Capital to account on its promises. We will do this through our usual channels but also through the union advisory council that Bain has agreed to set up so workers’ voices on governance can be heard.”
Scrutiny Will Be Acknowledged
However, Bain seems very aware of this. Mike Murphy, one of the Managing Directors at the firm, accepted that scrutiny will happen and that the company is open to it.
“[Bain] can now continue the rebuilding process from the strongest possible platform and with the least disruption. We are working closely with Virgin management to build a stronger, more profitable, and competitive Virgin Australia, and we look forward to the future with confidence.”
Lifesaver of a Day for Virgin
For Sir Richard Branson, this has been a day of significant success for the Virgin Group. With the recapitalization plan at Virgin Atlantic (VS) also approved, it means that Branson can begin to work on such recovery options for his brand alongside creditors.
Furthermore, even with the over 6,000 job cuts made across the two airlines, the preservation of the brand required such actions.
It will be interesting to see how the Virgin Group will now rebrand the two airlines and whether it can see a greater level of success post-COVID-19.
Featured Image: Virgin Australia Boeing 737-800. Photo Credit: Wikimedia Commons