Virgin Australia is set to soar again, this time under the ownership of US-based global investment giant Bain Capital, which will pay a multi-billion dollar bounty to buy the airline, bail out its debt and reboot the challenger onto a new course.
And Bain says it's a stayer, not a player, with local managing director and former Olympic diver Mike Murphy attesting "we are determined to see that Australians have access to competitive, viable aviation services for the long-term... and ensure the airline emerges offering exceptional experiences at great value while continuing to service business travellers, as well as those of us travelling for fun or to visit loved ones."
And to ensure there's plenty of goodwill to go around, Bain will honour all travel credits held by passengers on cancelled flights.
So what will Bain's new Virgin Australia look like? Here's what we've been able to piece together based on previous statements by Bain, Murphy and airline administrator Deloitte.
Virgin Australia goes mid-market
Murphy early on spooked many travellers with comments that Bain's Virgin would make "bring back the best parts of the Virgin Blue culture and make flying fun again," raising the spectre of a return to Virgin's original low-cost roots.
Since then, Bain has made it clear that it sees Virgin 2.0's best chance for success as a mid-market 'value-based' airline with a dash of that on-brand Virgin flair, rather than entering a dogfight with Jetstar in the budget space or going head-to-head with Qantas as a full-service airline for corporate travellers.
"We are not looking to take Qantas head on, especially in their corporate part of the market," Murphy has said, noting that Virgin's previous battle for the high-end, suited-and-booted business travel brigade "wasn’t a happy outcome for anybody."
"There will always be different segments that will want the much more high spend Qantas experience," but Bain's Virgin will stake out the broad middle of the market and put an emphasis on value.
"I think largely the positioning from a customer perspective will be very similar to where it is, but maybe a little more value focused," Murphy tells The Financial Review.
"We interviewed six or seven thousand customers over the past couple of months to figure out what they really care about. You know, aside from the table stakes of safety, obviously price and scheduling, convenience are No. 1 and No. 2 by a country mile."
Virgin stays, Tiger gone
The 'Virgin Australia' brand will remain. Not only does Bain have solid connections to Sir Richard Branson – such as being a join venture partner in the Virgin Voyages cruise line – but Branson is known to have been in discussions with Bain (and competing but unsuccessful bidder Cyrus Capital) about the scope of his support.
Branson's Virgin Group is reportedly willing to stump up $50-$100 million for a new stake in the airline, having seen its former 10% shareholding wiped out in the administration process, and mulling a reduction in the $15 million annual brand licensing fee until the airline is profitable.
But the low-cost Tigerair operation – which former Virgin Australia CEO John Borghetti acquired over 2013-2014 for $35 million – won't be returning.
Tigerair was shut down in the early days of the pandemic, with its pilots retrenched and cabin crew stood down.
Deloitte lead administrator Vaughan Strawbridge has confirmed Bain's intention to operate a "single-branded" airline without the baggage of the budget Tigerair brand.
A smaller airline
There's no mistaking that Virgin will become a smaller airline, in line with reduced demand due to the Covid-19 pandemic and the general 'shrink to survive' imperative.
Bain's Murphy has said he expects the sweet spot for relaunching Virgin to be around 60-70 planes, compared to the total fleet of the Virgin Australia group – including the 14 aircraft assigned to Tiger – standing at 108.
Fewer planes means fewer flights, with Bain set to axe some routes and in other cases trim the frequency of services, while focussing on the busiest and most profitable routes such as the 'golden triangle' between Brisbane, Sydney and Melbourne.
That said, Bain has notably promised that "under our ownership we will strengthen Virgin’s regional services" – no doubt to assuage the concerns of regional Australia, especially in Queensland, where the airline has a strong intra-state network.
That regional coverage is likely to include a mix of Virgin's own flying and partnerships with other airlines such as Alliance.
A streamlined fleet
Bain has long maintained the make-up of that smaller fleet will centre on the workhorse Boeing 737, of which Virgin Australia has 85 (including Tiger's tally) in its hangars, and that number evenly split between owned and leased jets.
There's been no discussion on the role of smaller regional aircraft, although this is where regional partners are likely to slot in, so that Bain can focus on the increased efficiencies and reduced overheads of a single type of jet compared to the current five varieties.
The obvious downside to this would be the loss of the Airbus A330, all six of which are leased (at what are said to be above-market rates) and which largely ply the transcontinental routes between the east and west coast capital cities.
Virgin's international-grade A330 business class – with spacious seats, lie-flat beds, large video screens and direct aisle access for every passenger – was crucial to competing against Qantas and the Red Roo's A330 Business Suites.
But with Virgin Australia 2.0 eschewing the chase for monied corporate travellers in favour of the more value-oriented mainstream, the A330 would be an odd fit in the fleet.
Lounges stay open, The Club to close
Expect Virgin's airport lounges to remain – they're a vital part of the airline's overall appeal, even as a mid-market rather than full-service operation.
"Things like a fancy club and fancy meals and all of that are relevant to a very small portion of customers," Murphy has said. "But for the vast majority of customers, they just don't value that as much. We will work with Paul (Scurrah) and his team to put a finer point on this."
Bain intends to not only keep the Velocity Frequent Flyer program intact – along with all the points currently held by members and the "pricing architecture" of redemptions – but to "bring the Velocity and Virgin brands closer together."
That's expected to include integrating them into the same website and smartphone app, while investing in data analytics to learn more about members and their behaviour.
Domestic-only, for now
No surprise that the new Virgin, like the 100-year old Qantas, will for the short term be a domestic-only airline.
Some reduction in overseas flying was always part of Paul Scurrah's plan to, in his words, "turn a great airline into a great business", but the impact of Covid-19 has taken this to the extreme.
Short-range international to follow
As Australia's near neighbours open their borders in the form of travel bubbles and Covid-safe corridors, Bain says it will bring back a limited amount of overseas flying.
New Zealand is the logical first step, but what other destinations – if any – will be up next remains to be seen.
Long-range international, later still
Bain's team will clearly have been paying attention to Qantas CEO Alan Joyce's statement that he doesn't expect the bulk of international flying to resume until mid-2021.
Before Virgin collapsed into administration, its sole long-range international destinations were from Sydney, Melbourne and Brisbane to Los Angeles, and those are expected to resume when demand returns.
Current Virgin Australia CEO Paul Scurrah had already put the knife through the unprofitable Sydney-Hong Kong and Melbourne-Hong Kong routes and was counting down the days to the March 29 launch of Brisbane-Tokyo, although the coronavirus pandemic saw that suspended before the first flight took off. Whether Tokyo returns to Virgin's network map is a decision that's well in the future.
Bain is also aligned with Scurrah's own plan to replace the five Boeing 777-300ER jets used for Australia-US flights, along with the six Airbus A330s, with eight Boeing 787 Dreamliners – another move to the efficiencies of a single type of jet.
Paul Scurrah at the helm
The presence of Bain Capital alumni and former Jetstar CEO Jayne Hrdlicka on Murphy's bid team led many to suspect that Paul Scurrah would be ousted.
However, Bain has made it clear that – at least in the short term – it wants to keep Scurrah in the corner office, given his own work to date on the Virgin turnaround and his strong support among staff and unions, while Hrdlicka is instead expected to take a seat in the boardroom, if not as the Chair herself.
Brisbane to remain as Virgin's base
Although Brisbane found itself in a tug of war with Sydney and Melbourne over where the airline would hang its shingle, Queensland's bold Project Maroon gambit paid off.
Bain has locked down a $200 million package of benefits with the state-owned Queensland Investment Corporation which will keep Virgin Australia based in the sunshine state's capital as a generator of jobs, not just for head office staff and crew but also the repairs, maintenance and overhaul sector, as well as a driver for tourism.
It's not known if Virgin's corporate headquarters and Velocity Frequent Flyer division will continue to be based in Sydney or will make the trek north to bring all arms of the airline under one roof.