Virgin Australia Airline (ASX: VAH-AU) was officially bought out by U.S. private equity company Bain Capital on Friday. The company had filed for bankruptcy protection back in april as a result of the pandemic and global economic downturn. Amid the deal, 3,000 jobs are set to be cut.
As travel demand descended and restrictions were implemented globally, the airline was severely impacted by the downfall. The airline began voluntary administration in April, and Deloitte, a multinational professional services network, was appointed administrator as it was not able to gather financial backing for the company.
The transmission of shares to Bain Capital, if approved by the Federal Court of Australia, is anticipated to be done by October 31, according to a statement.
“This is an important outcome for Virgin Australia, which brings us closer to exiting administration and allows us to focus on the future,” said Paul Scurrah, group chief executive and managing director.
“It’s been an incredibly tough journey for our people and they should be commended for how they have handled themselves. I’m pleased today gives us some more certainty around the company’s future,” he said, adding that it is “vital” for Australia to have two major airlines.
However, Scurrah emphasized that the COVID-19 dilemma is still “very challenging for our business and industry,” and the airline will need to adapt to its new setting.
Peter Harbison, chairman emeritus at CAPA Centre for Aviation stated that Virgin’s model can be categorized between low-cost and full-service carriers
“I think what you’re going to see is an airline which is going to go for the business market, but it’s going to go for probably a much more price-sensitive business market,” Harbison told “Capital Connection” on Friday.
Written by Rebecca Urena.
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