They will hold further meetings with Virgin’s management, workforce, airline lessors and creditors ahead of making binding offers for Virgin by June 12. A second meeting of creditors will be held in mid-August to vote on any proposed rescue deal.
The New York-based Cyrus has a history of investing in airlines alongside Virgin Group boss Richard Branson. They launched Virgin America together in 2005 before Alaska Air bought it for $2.6 billion in 2015, and Cyrus and Mr Branson’s 51 per cent owned Virgin Atlantic last year bought British regional airline Flybe, which has since gone into administration.
Mr Branson co-founded Virgin Australia (then Virgin Blue) 20 years ago and owned 10 per cent of the airline when it collapsed.
Canadian asset manager Brookfield was Virgin’s union representatives’ preferred bidder, but Deloitte could not address its concerns about the administration’s tight time frame and the airline’s dwindling cash balance.
Australian Council of Trade Unions president Michele O’Neil said on Friday that Cyrus and Bain each had “chequered histories with regards to workers’ rights”, and that any successful bid would have to protect as many jobs as possible, protect entitlements and secure a viable future for Virgin.
Cyrus intends to maintain Virgin as a full-service international airline, while Bain has said it will turn Virgin into a “hybrid” carrier positioned somewhere between Qantas and Jetstar. Bain is being advised on its bid by former Jetstar boss Jayne Hrdlicka, who could emerge as an executive or director of the relaunched Virgin.
BGH, led by former TPG boss Ben Gray and former Macquarie Capital boss Robin Bishop, had been circling Virgin the longest and discussed potential recapitalisation deals before it went into administration in April. One source close to BGH said it was surprised to be excluded.
Another source close to the sale said BGH’s plan to restart Virgin with as few as 15 planes before scaling up over time appears to have worked against it, with Deloitte favouring bidders that would get as many Virgin jets back in the sky as soon as possible.
Cyrus’ inclusion in the final shortlist also caught some observers by surprise, following reports on Tuesday morning that it was considered the least likely to go through.
Several of the bidders have had concerns about whether Virgin had sufficient liquidity to complete a complicated restructure and sale before August, with Deloitte previously saying it would run out of cash at the end of June. The federal government has knocked back at least one request for funding to keep the airline alive.
“This could still go down as one of the biggest anti-climaxes in the history of aviation,” said a source close to one of the spurned bidders on Tuesday. “It [could go] into liquidation and more employees end up on the scrap heap and none of the secured creditors get anything”.
Business reporter at The Age and Sydney Morning Herald.
Sarah Danckert is a business reporter.