The administrators of Virgin Australia have agreed to sell the dead broke airline to American private equity firm Bain Capital, after competitor Cyrus Capital Partners pulled its landmark bid.
In short: it appears Virgin Australia has secured a financial lifeline, but there are serious questions about what comes next.
The Australian Financial Review reports Deloitte, the firm appointed to handle the bankrupt airline’s sale, chose to pen a deal with Bain Capital after considering options from Cyrus and a bunch of Virgin bondholders.
Bain says it won’t hack and slash its way through the airline to cut costs, instead pledging to keep hard-hit employees on deck.
“Our investment and plan for the airline will support and celebrate Virgin Australia’s unique culture and protect as many jobs as possible for the short and medium-term in a way that will make significant jobs growth possible,” said Mike Murphy, the company’s Australian chief.
In a statement obtained by The Australian, Deloitte said the Bain deal will secure flight credits and fares already booked by Velocity frequent flyers, recognise employee entitlements, and whack a whole heap of capital into the airline.
But the folks at Cyrus said they only withdrew their bid after Deloitte ghosted them, effectively nixing communications at a pivotal point in the negotiating process.
Cyrus will be willing to return to its deal if “the administrators agree to re-engage in good faith,” said Cyrus founder Stephen Freidheim.
There’s another hurdle before Bain can start playing airplane, too. Any sale must be voted upon by the airline’s 15,000-ish creditors. That figure includes current employees, who may balk at Bain’s deal.
That vote will occur in August.
In any case, it doesn’t seem like Virgin Australia is going to operate at its original capacity any time soon.