The battle for control of Virgin Australia is officially over after Bain’s proposal was rubber-stamped by creditors in a crucial vote on Friday.
Administrator Deloitte confirmed the news after a three-hour meeting that will see shares transferred by 31 October.
Vaughan Strawbridge, who oversaw the process, said the decision represented a “significant milestone” for Australian aviation but acknowledged the restructure meant hardship for those who would lose their jobs or investments.
While Bain beat out Cyrus Capital Partners in May to become the administrator’s preferred bidder, the decision needed to be waived through by parties owed money. The airline’s bondholders had threatened to table a rival bid, but pulled out late in August leaving Bain’s victory as a formality.
Virgin Australia chief executive Paul Scurrah, who will remain in charge, said, “It’s been an incredibly tough journey for our people and they should be commended for how they have handled themselves. I’m pleased today gives us some more certainty around the company’s future.”
The TWU, which initially held back on giving its public approval to Bain’s deal, praised the agreement but added it would “hold Bain Capital to account on its promises”.
National secretary Michael Kaine said, “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.
“There have been long and difficult days and our thoughts are with the 3,000 workers who will no longer be with the airline. Virgin workers stuck together and helped win important assurances from Bain Capital which will put the airline on the best track to survival.”
The TWU had fallen out with Bain because of the investors refusal to dismiss speculation former Jetstar chief executive Jayne Hrdlicka could be the new chairman.
Hrdlicka had a notoriously fraught relationship with unions in her role at the Qantas Group, and it remains to be seen if she will be appointed.
The deal, which was first unveiled on 25 August, will significantly see unsecured creditors, including bondholders, receive between just nine and 13 cents in the dollar on their investment, while shareholders will walk away with nothing.
However, employee entitlements and customer travel credits will be covered in full.
A comprehensive restructure of the business means it will emerge from administration with 3,000 fewer jobs and without the Tigerair brand.
However, it will significantly continue to fly international routes and continue to offer domestic lounges and business-class flying.
The new network will operate with a slimmed-down fleet, operating a 737 mainline fleet for domestic services but removing ATR, Boeing 777, Airbus A330 and Tigerair Airbus A320s. Its regional and charter fleet will also be maintained.
Bain’s managing director, Mike Murphy, said on Friday the organisation would be “working closely with Virgin management to build a stronger, more profitable and competitive Virgin Australia”.
In July, Australian Aviation revealed the total breakdown of money owed was:
- Secured lenders and aircraft financiers are owed $2,284 million;
- Unsecured bondholders are owed $1,988 million;
- Trade creditors are owed $167 million;
- Aircraft lessors are owed $1,884 million;
- Landlords are owed $71 million;
- Employees are owed $451 million (in the event of liquidation); and
- Customers entitled to credits for flights that were cancelled due to the pandemic are potentially owed $604 million.