After being chosen as Virgin Australia’s preferred bidder late last week, many have been wondering what Bain Capital has planned for the struggling airline.
Will it inject as much as $600 million in cash to keep the airline running? Will it scrap Virgin’s VIP lounge and its contract with celebrity chef Luke Mangan, shifting its focus away from the corporate end of town?
How many aircraft is Bain planning for Virgin to operate on a day-to-day basis, and will Tigerair cease to exist?
How much does Bain plan to cut Virgin’s workforce by, and what role will former Jetstar CEO Jayne Hrdlicka (who was pivotal in the private equity firm’s bid) play in the reborn airline, now it has been confirmed that Paul Scurrah’s tenure as the boss of Virgin will continue?
Travel Weekly put all these questions to Bain and, while we didn’t receive any direct answers, were provided with a statement that offered some clarity around what to expect.
“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,” said Bain Capital’s Australian-based managing director, Mike Murphy.
“We appreciate how difficult the current situation is for Virgin Australia staff. They are the essence of the business, and we thank them for their perseverance through this challenging period.
“Paul Scurrah and his leadership team have also worked tirelessly during the administration period and are critical to our future.”
As well as fully funding employee entitlements, Bain plans to implement a support program for any team members who may leave the airline and establish an employee ownership/profit-sharing scheme.
Under Bain’s ownership, Murphy said the firm will strengthen Virgin’s regional services 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”.
We can also expect to see a closer integration of the airline and its Velocity frequent flyer program.
As previously promised, Bain will carry forward all existing travel credits, both direct purchased and through travel agents. Investment in “world-class digital and data technologies” is also on the priority list for Bain.
A Virgin spokesman told Travel Weekly that its management team will be working with the private equity firm this week “to discuss parts of the business moving forward”
“We’ll provide details when decisions have been made,” the spokesman said.
Of course, the sale process for Virgin isn’t done and dusted. Creditors will convene before the end of August to vote on the deal offered by Bain, and there’s still a chance that the airline’s bondholders could block it with their last-minute proposal.
Administrators deny “lack of engagement” with Cyrus
Meanwhile, unsuccessful bidder Cyrus Capital Partners has its knickers in a knot about the way Virgin’s administrators handled proceedings before Friday’s announcement.
Cyrus submitted a revised offer for Virgin to the administrators on Thursday, only to make the shock move of withdrawing its bid the very next day due to a “lack of engagement”, according to multiple media reports.
In response, a Deloitte spokesperson told Travel Weekly that the administrators “fully understand that the Cyrus team is disappointed in the outcome, but believe they and their advisors have engaged with Cyrus and its advisors strongly, including providing the feedback that allowed the submission of a revised bid as recently as last Thursday”.
“The administrators have thanked Cyrus Capital Partners for their strong engagement throughout this process,” the spokesperson said.
Featured image: iStock/Ryan Fletcher