MIAMI – After filing for administration, Virgin Australia (VA) has today selected Bain Capital and Cyrus Capital Partners from five non-binding proposals as final bidders.

By now, Administrator Deloitte said that VA and both companies are seeking a binding agreement on future terms with the winning bidder to be chosen by June 30.

The next phase: a binding proposal for a bankrupted airline

Administrator Deloitte also said that the next step to agree final binding bids is to engage with VA’s stakeholders and aircraft financiers, as the company seeks to maintain its monopoly position in the domestic market alongside Qantas Airways (QF).

The carrier entered into voluntary administration in April due to the financial hit of the pandemic and a rejected £714m bailout request by the federal government.

As Virgin Australia (VA) filed for administration due to its bankruptcy on April 20, thousands of direct and indirect jobs were at risk.

Once the airline had made the decision to ask for government intervention, it cut 80% of its staff and suspended virtually all flights due to the COVID-19 travel restrictions.

In addition, by the time Q2 arrived, VA owed $4.76bn to creditors and was considering restructuring its debt to maintain its sustainability, a move that would affect 10,000 direct jobs and 5,000 workers employed in supply-chain operations.

Needless to say, the carrier’s struggling financials have the potential to highly affect the Australian inbound commercial market, being VA the second airline of the country; hence, today’s decision on the final bidders.

Besides Cyrus Capital, the other potential buyers to manage the airline’s creditors debt are BGH Capital, Indigo Partners and Brookfield Asset Management.

The winner would also have to take into account 2019/20 VA’s reported loss of A$315.4m and the nearly 10,000 direct and 5,000 indirect jobs affected by the current position of the airline.

Contrasting bidders

Regarding the chosen proposals, Cyrus was previously involved with the Virgin franchise. Before Virgin America was sold to Alaska Airlines (AS), the capital company invested on it alongside its founder Richard Branson. Additionally, Cyrus invested in the collapsed Flybe (BE) with Virgin Atlantic (VS).

In contrast, Bain is the former owner of Trans Maldivian Airways (M8) and its binding offer is being advised by the CEO of Jetstar (JQ), Jayne Hrdlicka. JQ is also a QF subsidiary, so the move would bring some management expertise into the Australian market.

In an environment of constant change and adaptability for airlines worldwide in the wake of the pandemic, we still have to see what the final outcome will be in VA’s quest to stay afloat in the Australian market.