Virgin Australia bought by Bain Capital

Struggling airline Virgin Australia has been sold to US private equity group Bain Capital by administrators after the coronavirus pandemic and associated travel restrictions hammered revenues.

Australia’s second biggest airline, already lumbered with a AUD 5bn (£2.55bn) debt pile, had been refused a government bailout after asking for a AUD$1.4bn (£700m) rescue from Canberra as the crisis forced carriers to ground fleets globally.

Accountants Deloitte were in April appointed to look for new investors to recapitalise the business. They expect a deal to be done by the end of August.

Bain and another US firm, Cyrus Capital Partners, had been in the running to buy the airline before Cyrus pulled out on Friday.

"Bain Capital has presented a strong and compelling bid for the business that will secure the future of Australia’s second airline, thousands of employees and their families and ensure Australia continues to enjoy the benefits of a competitive aviation sector," Deloitte said in a statement.

Australia faced the prospect of Qantas as its main airline, prompting concerns about lack of competition in the industry.

Despite agreeing to talks, the government had always been wary of giving a handout to Virgin given the financial muscle of its foreign owners - Singapore Airlines, Etihad, HNA, China’s Nanshan Group and Richard Branson’s Virgin Group.

The government stood by its two-airline policy, and stressed "this is not Ansett", a reference to the carrier that went under in 2001.

"The government was not going to bail out five large foreign shareholders with deep pockets who, together, own 90% of this airline," said Australia's Treasurer Josh Frydenberg at the time.