Virgin Australia creditors vote in favour of airline's purchase by Bain Capital

Creditors okayed the sale of Virgin Australia on Friday morning

Creditors okayed the sale of Virgin Australia on Friday morning

The Bain deal gives unsecured creditors a return of nine percent to 13 percent of their investment and involves a financial commitment of 3.5 billion Australian dollars (2.5 billion US dollars), according to administrator Deloitte, which said Virgin shares should be transferred to the private equity group by October 31.

Virgin Australia creditors have approved Bain Capital's $3.5 billion acquisition of the airline. It plans to reemerge with cheap fares as a value-based carrier.

Virgin entered administration in April owing A$7 billion to creditors after suffering from a sharp plunge in demand because of the coronavirus pandemic.

Due to the pandemic, the creditor meeting was held online.

Bain Capital, an American investment giant founded by U.S. Presidential candidate Mitt Romney, now has full control over the running of Australia's second-largest airline.

Three dead, 147 infected after COVID super-spreader wedding
Local officials also linked the wedding to an outbreak at Maplecrest Rehabilitation & Living Center in Madison, Maine. Eight residents and 11 staff there have tested positive for the coronavirus.

Virgin Chief Executive Paul Scurrah said on Wednesday that the airline was likely to cede some market share to Qantas as it exited unprofitable routes.

"We can now continue the rebuilding process from the strongest possible platform and with the least disruption", Mike Murphy, a managing director of Bain Capital, said in a statement.

Virgin's administrator Deloitte said creditors had voted overwhelmingly in favor of the deal in what have been challenging circumstances.

With Virgin planning to market itself more as a value-for-money option, Scurrah expects budget airlines to be under more pressure with the lower cost competition they will provide. Once flights resume fully after COVID-19, the airline will be operating a smaller fleet of Boeing 737s. "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.

Qantas argued that it had three times more revenue than Virgin and was therefore entitled to a AU$4.2 billion loan if the smaller airline was not to gain an unfair advantage.

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