Bain Capital has been annointed as the new owner of Virgin Australia, following this morning's shock withdrawal of challenger Cyrus Capital.
In a statement issued this morning, administrator Deloitte confirmed it has "now entered into a Sale and Implementation Deed with Bain Capital which will result in the sale and recapitalisation of the businesses of (the Virgin Australia Group)."
Deloitte notes that "no return to shareholders is anticipated. At this stage, it is not possible to determine the estimated return to creditors however an update will be provided ahead of the second meeting of creditors."
Bain Capital says it is committed to protecting as many Virgin Australia jobs as possible, will "invest in and see closer integration of Virgin Australia and the Velocity program", and also honour all all existing travel credits.
Staff who remain with the airline will be offered the chance to be part of an "employee ownership / profit sharing scheme," while those who are let go will see their entitlements fully funded.
Bain Capital's local managing director Mike Murphy said the firm's flight path for Virgin Australia would see a "return to its core strengths both strategically and operationally and reestablish itself as an iconic Australian airline."
Bringing back the Virgin vibe
“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."
Virgin Australia CEO Paul Scurrah, who is expected to remain in that role while Bain Capital advisor and former Jetstar CEO Jayne Hrdlicka steps into the boardroom, said Bain's proposal offered "the best possible future for Virgin Australia, its employees and its customers."
"We are aligned in our vision for Virgin 2.0 and look forward to working with them to secure the airline’s future."
The deep-pocketed investment and capital equity colossus will now be assisted by Deloitte in fine-tuning its takeover plan ahead of a meeting with the collapsed airline's creditors – who are owed almost $7bn between them – in late August.
This could however pit Bain against a cohort of Virgin Australia bondholders who are owed some $2 billion and want to see that debt converted to equity, and are offering an additional $1 billion to recapitalise the airline and keep it listed on the share market rather than be taken private by Bain.
Final approval for the sale needs the nod from two majorities of creditors: one with the largest value, that being secured lenders owed $2.3 billion (fifty aircraft lessors are owed some $1.9 billion); and one with the largest number, which is Virgin's 9,000-strong workforce (owned an estimated $450 million).
However, if those votes are split, the administrator will cast the deciding vote.
Bain's Virgin vision
Bain has previously said that it intends to reposition Virgin as a mid-market or 'hybrid' airline with a smaller and simplified fleet, flying mainly domestic routes except for short-range trips such as to New Zealand.
Longer-term international flying would be taken up by a new fleet of Boeing 787 Dreamliners, which would replace the current Boeing 777-300ER and Airbus A330 jets.
However, Bain's desire to step away from chasing the very top end of the corporate and government travel market could also mean the axe for Virgin's invitation-only The Club, created by former CEO John Borghetti as the airline's answer to the Qantas Chairman's Lounge.