Branson backs Bain but TWU silent on Virgin D-day

While Bain beat out Cyrus Capital Partners in May to become the administrator’s preferred bidder, the decision won’t be rubber-stamped until a final creditors’ meeting on 4 September.

The deal creditors are voting on would see unsecured creditors, including bondholders, receive between just nine and 13 cents in the dollar on their investment, but all employee entitlements paid in full.

Sir Richard and the wider Virgin Group threw its backing behind the plan on Thursday in a surprise intervention that hinted the new airline would keep the Virgin branding.

“I have confidence in the revival plan for Virgin Australia, and Virgin will be working closely with Bain to rebuild the airline,” Sir Richard said. “As the founding shareholder, I am extremely proud of what Virgin Australia has achieved over its first 20 years.

“We look forward to helping to create the next important chapter, as Virgin Australia get back to flying and connecting Australia once again.”

Virgin Group chief executive Josh Bayliss followed by saying the business would vote for the plan because it’s the “best way forward” for the airline to return.

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The Virgin Group is entitled to vote as a current shareholder in the company – though likely won’t see a return under the terms of the deal.

Yet as of Thursday evening, the TWU has remained silent – something that’s significant given union backing is likely to be crucial because the business’ employees together account for 9,020 of the total number of creditors and are owed $451 million.

Australian Aviation understands the union’s relationship with Bain is unravelling because of its refusal to dismiss speculation Hrdlicka could be the new chairman. Hrdlicka had a notoriously fraught relationship with unions in her role at the Qantas Group.

Last week, TWU national secretary Michael Kaine only said he would “meet workers and discuss the next steps” but added pointedly that the new business would only be successful “if the skills, experience and dedication of its workers are recognised as a valuable asset, not an expense”.

The TWU’s silence contrast to that of pilots union AFAP, which said in a statement on Monday that if Bain failed then its members could potentially lose millions in entitlements.

AFAP executive director Simon Lutton said, “Based on our assessment of the second creditors report, the AFAP will be voting in favour of the completion of the Virgin sale to Bain Capital.

“Even though many of our pilot members have lost their jobs, we need to at least ensure they receive their full entitlements and voting for the Bain DOCA achieves this.”

Lutton then referenced a statement by the administrator that said that, should Bain fail to win the creditors’ backing, the sale will go ahead anyway in a more messy asset sale agreement.

“This approach carries with it the increased risk of liquidation, which would mean millions in lost entitlements for thousands of employees,” said Lutton.

Deloitte’s Vaughan Strawbridge, who has overseen the administration process, has said the deal represents an “excellent outcome” for Virgin Australia.

“This will provide certainty for the business under new and committed owners. It provides certainty for employees and customers. It provides a return to creditors. And it can be completed sooner, and at less cost to creditors,” he said.