Virgin Australia on the verge of being sold – what does this mean for you?

The coronavirus pandemic precipitated The Great Shutdown, which has had detrimental impacts on the global economy. Large corporations have struggled to survive, and the Virgin Group is one of the most publicised. Virgin Australia went into voluntary administration in April 2020 and have been searching for a financial lifeline in the process. It now appears that this lifeline may have emerged in the form of two private American companies – Bain Capital and Cyrus Capital.

What does this mean for you?

If Virgin is bailed out by both/either companies, the airline will likely remain operational in Australia. However, there are a few conditions, and it certainly won’t be the same airline as before. The average consumer can expect Virgin Australia to likely strip the airline back and re-brand the entity as a mid-market offering. In the past, Virgin had competed directly with Qantas and have struggled significantly, having incurred a horrendous amount of debt before the pandemic had even begun (around $7 billion).

In other words, if Virgin is given a second chance, you can expect it to become a more low-budget airline. Cyrus Capital has links to the Virgin Group, while Bain Capital has a reported $149 billion AUD in assets, meaning they could put down several hundred million for a significant stake in the company. While this is hopeful news for Virgin Group workers, tourists and travellers shouldn’t be getting ahead of themselves. With the restructuring of the company, there’s a good chance that flight paths and coverage will be scaled back massively, which could hurt a lot of regional areas.