The sale marks the return of Australia’s second carrier, which had been facing the prospect of complete shutdown and liquidation if no willing bidder was found. Bain’s $3.5 billion deal to acquire Virgin will see the airline relaunched as a value carrier with limited international offerings.
It will also sack 3000 employees, or about a third of its workforce.
Mr Scurrah said he could not rule out having to further reduce staff numbers given the damage wreaked on the aviation sector by the COVID-19 travel restrictions.
“If the market is much slower coming back or if there’s changes to JobKeeper clearly our position on that will have to be reviewed. We cannot give any guarantees at this point in time.”
“It is our intention to resume an airline that has seventy-five-plus 737s as soon as we possibly can but there’s so many things outside of our control that will impact that.” He also emphasised that Virgin now had a strong balance sheet to withstand the current downturn and future shocks.
While there was no guidance on when the airline’s capacity would grow again, Mr Scurrah said he had expected capacity to reach 40 per cent or 50 per cent by August before the second wave of the pandemic hit
“Where we end up [in terms of capacity] by the end of 2020 is anyone’s guess,” he said.
“It is very reliant on decisions that are out of our control such as border openings. I’m personally advocating for a more fact-based decision making regime around border openings.”
“There are decisions that don’t seem to make sense. The example I have been using is Cairns and Perth. You know why not given Perth people love to go to Bali and they can’t get there at moment why would you not allow them to fly to Cairns when there’s no COVID in either location? This is the sorts of things we think need to be looked at a bit more closely.”
Virgin administrator, Deloitte partner Vaughan Strawbridge said Friday’s vote by creditors to support the Bain deed of company arrangement was a key milestone. Sources in the meeting said the vote passed with an approval of 99 per cent of creditors by number and 97 per cent by value.
“It really does showcase the support amongst all the creditor groups around Virgin,” Mr Strawbridge said.
He said the proposal by Bain would require court approval and he expected to complete the sale process by the end of October.
Deloitte’s approach to the administration was not without criticism or complaint. Bondholders were incensed by the 13 cent in the dollar return proposed by Bain and Deloitte’s use of a mechanism in insolvency law to effect a firesale of Virgin’s assets to Bain, even if creditors did not support the private equity firm’s proposal and voted instead for liquidation.
Bain Capital managing director Mike Murphy said he planned to build a stronger, a more profitable and a more competitive Virgin.
The union representing the bulk of Virgin staff, the Transport Workers Union, welcomed the sale on Friday, with the union’s national secretary Michael Kaine calling it “an important day for Virgin and for Australian aviation”.
Virgin founder Richard Branson said the rescue had been a “massive effort by the administrator, Bain, Paul Scurrah and the airline’s management team to get this far in the face of the global travel crisis.”
Sarah Danckert is a business reporter.
Business reporter at The Age and Sydney Morning Herald.