Virgin Australia Holdings has exited restructuring under the new ownership of US private equity firm Bain Capital. Virgin Australia (VA, Brisbane Int'l) now aims to take one-third of Australia’s domestic market as a newly oriented mid-market airline, new chief executive Jayne Hrdlicka said on November 18.

The era of competing with Qantas (QF, Sydney Kingsford Smith) as a full-service carrier has ended. Instead, Virgin Australia “will build its proposition around [...] price-conscious corporate travellers, small to medium businesses, premium leisure travellers and holidaymakers.”

The network will focus on “domestic and regional destinations” and the group will start “the restructuring of Virgin Australia Regional to become a more sustainable and profitable business following a comprehensive business review.”

Three choices of seating will be retained, but “a more accessible Business Class” will be created. Its array of airport lounges will be “reimagined” and some of them (in Cairns, Darwin, Mackay, and possibly Canberra) closed. But it will keep checked baggage in its economy-class fares.

“Australia already has a low-cost-carrier and a traditional full-service airline, and we won’t be either,” Hrdlicka summarised in a statement, referring to Qantas and its low-cost unit Jetstar Airways (JQ, Melbourne Tullamarine). “Virgin Australia will be a mid-market carrier appealing to customers who are after a great value airfare and better service.”

Early on November 19, it was revealed that Virgin Group had finalised a deal to become Virgin Australia Holdings’ second-biggest shareholder with a 5% stake, though this is half the size it had previously. Virgin Group and Bain Capital are already partners in the Covid-delayed Virgin Voyages cruise line.

Virgin Australia Holdings administrator Deloitte, which was appointed on April 20, announced the completion of the sale of the group to Bain Capital on November 17.

“This has been a very complex insolvency appointment further complicated by the fact that the process was undertaken and completed during Australia’s Covid-19 shutdown. [It] has involved significant amounts of work and innovative approaches to a wide range of tasks and issues, many of which have not been encountered previously in either Australian or international market contexts,” said lead administrator Vaughan Strawbridge.

The company previously revealed plans to make around a third of its workforce - about 3,000 employees - redundant, with about 6,000 staff to remain.

Although the Tigerair Australia brand has gone, Bain will retain the Air Operator’s Certificate (AOC) so it has the option of restarting a low-cost carrier in a post-pandemic scenario. Virgin Australia will keep an all-B737 mainline fleet, with other types restricted to regional routes and charters.

Virgin Australia currently operates fifty-one B737-800s and two B737-700s, with fifteen B737-8s and twenty-five B737-10s awaiting delivery, the ch-aviation fleets advanced module shows, while Virgin Australia Regional operates thirteen Fokker 100s and six A320-200s.

In related news, the Australian Competition and Consumer Commission (ACC) has granted interim authorisation to Virgin Australia and Alliance Airlines (QQ, Brisbane Int'l) allowing them to cooperate on 41 regional and two short-haul international routes.

The regulator said in a statement that its preliminary view is that these arrangements are likely to result in a public benefit by assisting in the re-establishment of Virgin Australia’s national network of routes, thereby promoting competition in airline services.

“Our preliminary view is that any public detriment resulting from reduced competition between Alliance Airlines and Virgin Australia is likely to be limited, given Alliance Airlines’ limited number of scheduled regular passenger services. We will consider this issue further in the course of our review of the substantive application,” ACCC Commissioner Stephen Ridgeway said. “We consider that other airlines, including Qantas Airways and Qantas-owned Jetstar, are likely to compete strongly with Alliance Airlines and Virgin Australia on many of the routes covered by the agreement.”

Rex - Regional Express (ZL, Wagga Wagga) had earlier urged the ACCC not to greenlight the Virgin Australia and Alliance Airlines partnership arguing its two rivals could give each other “highly-sensitive” cost and pricing data, a move that “carries significant risk as knowledge is not reversible.”