Virgin Australia to cut 3,000 jobs as carrier slims down under new owners
Embattled airline Virgin Australia is set to cut 3,000 staff as it seeks to streamline its business under prospective new owner Bain Capital.
Back in June Bain bought the carrier out of administration, with creditors due to vote on the sale on 4 September.
If the deal is approved, the airline will focus on the domestic and short-haul international market, targeting the profitable value-for-money market.
Alongside the job cuts, which account for a third of its staff, Virgin will get rid of its largest planes and instead concentrate its fleet operations on Boeing’s 737.
After seven years of losses, the coronavirus pandemic was the final straw for the carrier, which went bankrupt as air travel collapsed around the world.
Administrators selected Bain to take over the company after an auction, pending approval from the firm’s bondholders, who are owed AU$7bn (£3.8bn).
Sister airline Virgin Atlantic yesterday filed for Chapter 15 bankruptcy in the US yesterday as part of a process to recapitalize the business after it agreed a bailout package with investors in July.
In a filing, the airline said it had negotiated a deal with stakeholders “for a consensual recapitalization” that will get debt off its balance sheet and “immediately position it for sustainable long-term growth.”
A spokeswoman for the airline said that the process was proceeding “with the support of the majority of our creditors”.
Non-US companies use Chapter 15 filings to block creditors who want to file lawsuits or tie up assets.
The £1.2bn deal will need to be approved by creditors on 25 August, with the airline’s lawyers yesterday warning that it could run out of cash in September if the package was not approved.
Speaking at the High Court in London, David Allison QC said that the firm would run out of money altogether by the week beginning 28 September.