US private equity giant Bain Capital has agreed to buy collapsed airline Virgin Australia Holdings Ltd., making it one of the biggest deal of the industry since it was damaged by the coronavirus pandemic.
The deal would leave creditors owed $6.8 billion with less authority in the future to contribute in any decisions-related to the airline unless they take legal action to overturn the deal.
According to the administrators, partners at Deloitte, the deal was signed on Friday morning that would retain thousands of jobs as well as honour all employee entitlements. It will also uphold passenger travel credits and frequent flyer points.
Deloitte confirmed in a statement that it had entered into a sale and implementation deed with Bain Capital, which, subject to approvals including a vote by creditors in August, will result in the sale and recapitalization of Virgin.
“Bain Capital has presented a strong and compelling bid for the business that will secure the future of Australia’s second airline, thousands of employees and their families and ensure Australia continues to enjoy the benefits of a competitive aviation sector,” joint administrator Vaughan Strawbridge said.
Virgin went into voluntary administration in April setting off the eight-week sale process.
While the global travel industry has been decimated by COVID-19, those facilitating the sale said that interest in the airline showed a recovery was possible.
“We have certainly been heartened by the levels of interest shown by parties, in spite of the prevailing COVID-induced market conditions,” Strawbridge said.
Virgin Australia collapsed under its $6.8 billion borrowings in April, as the pandemic shut all doors for the airline’s revival. Even before the pandemic-hit the global economies, the company was already struggling for seven consecutive years.
This deal could be marked as a major bet on the airline especially when the Australian government has hinted that the international borders may remain restricted until 2021.