Virgin Australia exits restructuring as mid-market airline

Virgin Australia Holdings has exited restructuring under the new ownership of US private equity firm Bain Capital. Virgin Australia (VA, Brisbane Int’l) now aims to take one-third of Australia’s domestic market as a newly oriented mid-market airline, new chief executive Jayne Hrdlicka said on November 18. The era of competing with Qantas (QF, Sydney Kingsford Smith) as a full-service carrier has ended. Instead, Virgin Australia “will build its proposition around […] price-conscious corporate travellers, small to medium businesses, premium leisure travellers and holidaymakers.” The network will focus on “domestic and regional destinations” and the group will start “the restructuring of Virgin Australia Regional to become a more sustainable and profitable business following a comprehensive business review.” Three choices of seating will be retained, but “a more accessible Business Class” will be created. Its array of airport lounges will be “reimagined” and some of them (in Cairns, Darwin, Mackay, and possibly Canberra) closed. But it will keep checked baggage in its economy-class fares. “Australia already has a low-cost-carrier and a traditional full-service airline, and we won’t be either,” Hrdlicka summarised in a statement, referring to Qantas and its low-cost unit Jetstar Airways (JQ, Melbourne Tullamarine). “Virgin Australia will be a mid-market carrier appealing to customers who are after a great value airfare and better service.” Early on November 19, it was revealed that Virgin Group had finalised a deal to become Virgin Australia Holdings’ second-biggest shareholder with a 5% stake, though this is half the size it had previously. Virgin Group and Bain Capital are already partners in the Covid-delayed Virgin Voyages cruise line. Virgin Australia Holdings administrator Deloitte, which was appointed on April 20, announced the completion of the sale of the group to Bain Capital on November 17. “This has been a very complex insolvency appointment further complicated by the fact that the process was undertaken and completed during Australia’s Covid-19 shutdown. [It] has involved significant amounts of work and innovative approaches to a wide range of tasks and issues, many of which have not been encountered previously in either Australian or international market contexts,” said lead administrator Vaughan Strawbridge. The company previously revealed plans to make around a third of its workforce – about 3,000 employees – redundant, with about 6,000 staff to remain.