Bain Capital to buy Virgin Australia after creditor’s approval on Friday
- Bain Capital to buy Virgin Australia after creditor’s approval on Friday.
- The deal offers 9% to 13% return to unsecured creditors.
- Virgin Atlantic to cut over 1,000 jobs due to COVID-19 disruptions.
Deloitte revealed in an announcement that Bain Capital will buy Virgin Australia Holdings Ltd. after the airline’s creditors approved the transaction on Friday.
Virgin Australia had entered voluntary administration in April due to the Coronavirus pandemic that brought air travel to a near halt in recent months. At the time, the company owed £3.77 billion in total to its creditors. The agreement with the U.S. private equity group, as per Deloitte, will help the airline pull out of administration.
The deal offers 9% to 13% return to unsecured creditors
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The deal with Bain Capital that involves £1.92 billion of financial commitment pledges 9% to a 13% return to unsecured creditors. Virgin’s shares, Deloitte added, will go under the umbrella of the private equity group before the start of November.
Managing Director Mike Murphy of Bain Capital commented on Friday that approval from Virgin’s shareholders was a crucial milestone that will potentially streamline airline’s recovery in the upcoming months.
Under Bain’s umbrella, Virgin is likely to slash its workforce by roughly 33% as the airline commits to short-haul, domestic routes and compete with Qantas Airways Ltd. But the air carrier had still expressed plans of returning to the United States and New Zealand earlier this week. Sources also confirmed on Friday that Virgin Australia will now be an all Boeing 737 airline. According to CEO Paul Scurrah of Virgin Australia:
“Travel budgets are going to be under more pressure than ever when things come back. Our lower cost base allows us to compete aggressively as a value carrier.”
Virgin Atlantic to cut over 1,000 jobs due to COVID-19 disruptions
In related news, Virgin Atlantic received approval from the court earlier this week to proceed with its restructuring plan that is likely to cut over 1,000 jobs. In response, BALPA (U.K. pilot union) said on Friday that it plans on holding discussions with the airline next week and explore ways to help pilots keep their jobs. General Secretary Brian Strutton of BALPA remarked:
“Our reps are meeting with Virgin next week, and I am hopeful that we will find a way through to avoid any further pilot redundancies. Every single job lost to this crisis is a tragedy, and we are doing everything we can to mitigate job losses across the board.”
In related news, Irish low-cost air carrier, Ryanair, reported to have boosted its balance sheet by £357 million via a share placement on Friday.