Virgin Australia: Strategic acquisition, restructuring and value creation
In April 2020, Virgin Australia — Australia’s second-largest airline — entered Voluntary Administration due to structural challenges compounded by the impact of COVID-19.
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Aviation & TransportIn April 2020, Virgin Australia — Australia’s second-largest airline — entered Voluntary Administration due to structural challenges compounded by the impact of COVID-19. Bain Capital emerged as a key bidder in a competitive sale process, seeking to acquire and transform the airline into a streamlined, competitive carrier.
At the same time, Virgin faced significant cost pressures, particularly from aeronautical fees — its second-largest expense after employee costs, aircraft leases and employee costs. With more than 20 airport contracts approaching expiry, over 140 aircraft in the fleet and c. 9,000 employees, there was both risk and opportunity to reset and optimise all commercial arrangements.
How we helped
Our role
We were appointed by Bain Capital to lead the acquisition and support Virgin’s turnaround. Our role spanned strategic advisory, operational restructuring and complex contract negotiations.
Acquisition & restructuring:
- Developed bid strategy and provided financial and legal guidance to secure the acquisition.
- Led stakeholder engagement across Bain, Virgin’s Executive team and the Administrators.
- Supported the DOCA process and post-acquisition restructuring.
- Rationalised fleet operations and renegotiated supplier contracts.
- Secured government support, including a 10-year Brisbane agreement.
- Established finance facilities to underpin the transformation.
Contract negotiations:
- Led renegotiation of more than 20 airport contracts with a focus on commercial rigour and strategic discipline.
- Developed a negotiation playbook and contract register to support ongoing engagement.
- Delivered targeted negotiation sprints, driving high-value outcomes and operational improvements.
- Redesigned the Airports team operating model and embedded clear reporting frameworks.
- Co-led development of aircraft lease strategy and execution with lessors.
- Assisted with development of industrial relations strategy and support bargaining through out redesign of enterprise agreements.
Outcomes acheived
- Successful acquisition of Virgin Australia by Bain Capital, positioning the airline for long-term competitiveness.
- ~$70 million in cost avoidance through renegotiated aeronautical contracts, including:
- Resolution of a major dispute, delivering ~$50 million in cash uplift.
- Avoidance of pricing increases and secured growth incentives worth ~$5 million.
- Embedded a culture of evidence-based decision-making, strengthening internal capability.
- Reset the lease and employee cost base on flexible terms suitable for an airline emerging from COVID and thereafter.
- Virgin Australia emerged from administration as a streamlined, resilient airline, ready to compete across domestic and international markets.
