Virgin Australia handed over to Bain
Lucas BairdReporterUS private equity giant Bain Capital has formally taken control of Virgin Australia and started paying the distressed airline's bills, as of Wednesday, with concerns growing among trade unions that the new owner may renege on some of its promises to workers.Neither Bain Capital nor Virgin would comment when contacted by
The Australian Financial Review,
although conversations between the pair are continuing over precisely what the relaunched operation looks like.
Trade unions, which are representing Virgin's 9000 staff, are increasingly worried that Bain Capital may not adhere to promises issued to the workforce. James Brickwood
And -
as predictions circle about Bain Capital cutting up to 5000 staff - Transport Workers' Union national secretary Michael Kaine feared the buyer could institute a "cut-throat regime".
"This sale will have a profound impact on thousands of committed Virgin workers and the travelling public," he said.
"We need right-minded people at the helm who care about shaping the future of the airline, rather than implementing a cut-throat regime."
Worries among the trade unions, which are representing Virgin's 9000 staff during the voluntary administration procedure, are growing that Bain Capital may not adhere to promises issued to the workforce.
"Bain made important workforce commitments prior to its announcement as recommended bidder, and these must be honoured," Mr Kaine said.
Bain Capital's bid included commitments to pay all $450 million of owed worker entitlements, give staff staying with the business equity in the new airline, and retrain staff facing redundancy.
One union source felt Bain and its representatives were softening them up to renege on some of its commitments by saying the situation at Virgin was significantly worse than initially believed.
There are additional concerns among the group because of the involvement of ex-Jetstar boss Jayne Hrdlicka,
who is likely to take a leadership role at Virgin 2.0.
The union source felt Ms Hrdlicka would likely approach the bargaining table in a disingenuous and narrow-minded manner due to her history at Qantas, which has a history of bad blood with unions and infamously grounded the airline and locked out workers during a 2011 industrial dispute.
Ms Hrdlicka, who is also a former Bain & Company consultant, also did not attend meetings with the unions - at their request - in the week before Bain Capital lodged its final offer for Virgin with the airline's administrator, Deloitte.
Meanwhile, discussions continue between Bain Capital and Virgin Australia's management team about the new-look airline.
The fleet will likely be simplified to focus purely on the single-aisle Boeing 737 jets, while the number of operational aircraft is expected to be halved to around 70 planes.
Bain Capital has issued its support for current chief executive Paul Scurrah and his team, meaning they are likely to keep their jobs.
The Virgin Australia branding is also expected to remain, as the Virgin Group looks to take an equity stake in the relaunched airline.
Virgin Australia first entered voluntary administration in April, with the COVID-19 pandemic proving a step too far for the heavily geared company.
The airline appointed Deloitte as its administrator, which on Tuesday warned shareholders – including the five foreign carriers invested in Virgin - would see nothing from the sale.
Etihad Airways, which has held a stake of more than 20 per cent in Virgin since 2015, said it remained committed to the Australian market even though its investment would be wiped out.
"Etihad was not in a position to infuse further funds into Virgin Australia or participate in the bidding process under voluntary administration," an Etihad spokesman said.
"We are pleased that Bain Capital has been confirmed as the successful bidder, securing the future for Virgin Australia and its employees.
"Etihad remains committed to its commercial co-operation with Virgin Australia ... Australia remains an important market for Etihad. As a long-term partner of Virgin Australia, we will continue to pursue opportunities to create value for our joint customers."