SYDNEY (Reuters) – Virgin Australia Holdings Ltd’s (VAH.AX) creditors voted on Friday in favour of the purchase of Australia’s second-biggest airline by U.S. private equity group Bain Capital, administrator Deloitte said, paving the way for a strategic overhaul.
Virgin Australia’s creditors agreed Friday to sell the airline to Boston-based Bain Capital in a deal that will see the carrier cut 3,000 jobs and end many of its international flights.
Co-founded by British businessman Richard Branson, the airline in April became the world’s largest to seek bankruptcy protection after the coronavirus pandemic grounded much of the aviation industry. It plans to reemerge with cheap fares as a value-based carrier.
Another airline founded by Branson, Virgin Atlantic, last month filed for protection in U.S. bankruptcy court as part of a process in the United Kingdom to carry out a restructuring plan.
Virgin Australia said the deal with Bain, worth 3.5 billion Australian dollars ($2.5 billion), would see unsecured creditors get paid between 9 and 13 cents on the dollar for their claims. Virgin’s creditors are owed a total of about AU$7 billion.
Before the pandemic, Virgin had spent a decade transforming itself from a low-cost carrier to a full-service rival to Qantas competing for corporate travellers, but that came at the cost of years of losses.
Virgin will still seek corporate business but it plans to market itself more as a value-for-money option rather than chasing large accounts at any cost, Scurrah said at the CAPA Australia Pacific Aviation Summit on Wednesday.
“Travel budgets are going to be under more pressure than ever when things come back,” he said. “Our lower cost base allows us to compete more aggressively as a value carrier.”
($1 = 1.3759 Australian dollars)
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