Virgin Australia is the second-biggest airline in Australia. However, it was struggling with long-term debt of A$5 billion ($3.17 billion) even before the coronavirus pandemic. However, the pandemic created additional problems for the country’s second-biggest airline.
As a reminder, Virgin Australia filed for voluntary administration in April after failing to receive the government support. Interestingly, the same month founder Richard Branson had appealed to the national government for assistance. Moreover, Branson was willing to offer his Necker Island estate in the Caribbean as collateral.
Importantly, Virgin’s other major shareholders prior to administration included Etihad Airways, Singapore Airlines, and Nanshan Capital Holdings.
It is worth noting that, Virgin Australia has a new owner. Based on the information provided by the administrators of the carrier the new owner is the U.S. private equity firm called Bain Capital. Apart from Bain Capital, a New York-based investment firm Cyrus Capital Partners also wanted to become the owner of the carrier. However, last week more precisely on Friday, Cyrus Capital Partners changed its decision.
Moreover, the rescue comes at a time when the coronavirus pandemic continues to hurt global demand for travel. Based on the information provided by the International Air Transport Authority, it could take several years for international travel to return to pre-crisis levels.
The government of Australia achieved several goals. The most important is that Virgin Australia was saved without state intervention. Moreover, Qantas wouldn’t become the monopolist. The deal would likely face minimal regulatory scrutiny. Moreover, Bain Capital already received preliminary approval from Australia’s treasurer. The equity firm is now proceeding with the airline for its restructuring and eventual sale. This information came from the administrators of the carrier.
Virgin Australia and coronavirus pandemic 
Importantly, Virgin Australia is not the only carrier struggling to deal with financial problems. Australia’s flag carrier Qantas also decided to reduce the number of employees. Qantas plans to reduce the number of employees by 6,000 which equals 20% of Qantas’ total workforce of 29,000 people.
The cuts announced by the country’s flag carrier will primarily affect the airline’s corporate, ground as well as flight staff. Furthermore, another 15,000 employees will remain on furlough.
According to the plan, most of the carrier’s international aircraft or up to 100 places will remain on the ground for a year. Furthermore, Qantas plans to retire six Boeing 747 six months ahead of schedule. The company expects to lower costs by $10 billion over three years. It won’t be easy for Qantas as well as Virgin Australia to return to pre-crisis levels.
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