Virgin Australia has been bought by US private equity group Bain Capital after falling into administration due to coronavirus travel restrictions.
The airline was struggling with long-term debt of A$5bn (£2.55bn; $3.17bn) even before the pandemic struck.
Australia’s second biggest carrier had unsuccessfully asked for government loans before its collapse in April.
Virgin Australia is currently owned by a number of major shareholders including Sir Richard Branson.
Administrators for the airline, Deloitte, said on Friday that Bain would become the new owners, with the deal expected to be completed by the end of August.
A statement said Bain supports the airline’s current management team and its turnaround plan for the business. It has also committed to retain thousands of jobs.
In addition, a “significant injection of capital” would be made to help Virgin Australia recapitalise for the future, according to the statement.
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 the statement.
While there was plenty of interest in buying Virgin Australia, there’ll still be sighs of relief in the corridors of power that the airline has a new owner.
For the government this is a win. Virgin was saved without state intervention and the prospect of a Qantas monopoly has been avoided.
In the short term – if and when state borders open up – there’ll be pent up demand at both airlines (and their cut-price subsidiaries) from people desperate to fly around Australia to see family, do deals or have a holiday at home instead of abroad.
But Australia is in its first recession in almost three decades. Record unemployment and the inevitable tapering of Covid-19 welfare payments mean there’ll soon be limited dollars floating around for people to spend.
And the success of video conferencing will be making cash-strapped firms reconsider those Sydney-Melbourne business trips that have been the proverbial cash cow for both Qantas and Virgin.
So it’ll be interesting to see how the two airlines compete and, given they’re both flush with new investment, whether they go down the path of a price war.
Other than Sir Richard, Virgin Australia is currently owned by a number of shareholders including Singapore Airlines, the UAE government and China’s HNA airline.
Sir Richard has said he will sell a stake in his Virgin Galactic space tourism business to support his other businesses, including Virgin Atlantic. He also put up his luxury Necker Island as collateral to help secure a government loan.
On Thursday rival airline Qantas said it will axe 6,000 jobs as part of its plans to survive the coronavirus pandemic.