Bain muscles Branson out of half his Virgin stake

Virgin Australia’s new owner Bain Capital has muscled co-founder Richard Branson out of his 10 per cent shareholding in the airline, with the billionaire entrepreneur agreeing to own only half that going forward.

Mr Branson’s Virgin Group wanted to own one-tenth of Australia’s second airline, which was the amount it held before the COVID-19 pandemic pushed the carrier into administration in April.

Virgin Group founder Richard Branson, pictured in 2009, was a co-founder of Virgin Australia and will own 5 per cent  of the airline in the future.
Virgin Group founder Richard Branson, pictured in 2009, was a co-founder of Virgin Australia and will own 5 per cent of the airline in the future.

But US private equity firm Bain, which got the keys to Virgin on Tuesday after winning a fierce bidding war for the airline, wanted as much of its equity as possible to position itself for maximum upside from its investment and turnaround plan.

The Virgin Group confirmed on Thursday it would own 5 per cent of the company, saying it was “very pleased” to be the airline’s second-biggest shareholder.


“I’m delighted that Virgin Australia is ready for take-off once more, soaring out of administration, with a clear future direction to fly towards,” Mr Branson said in a statement.

“We’re very optimistic about the future and enormously proud of all of the Virgin Australia team.”

The Queensland government’s investment arm QIC will meanwhile have a small equity stake through its $200 million support package to keep Virgin based in Brisbane. None of the parties would confirm the size of the government’s stake, but sources close to the dealings said it is about 2 to 3 per cent.

Bain and Virgin Group have also re-signed a new licensing agreement for the use of the Virgin brand, which was worth around $15 million a year pre-administration.

In another major development in Virgin’s relaunch plans, the Australian Competition and Consumer Commission granted interim approval for a tie-up with the ASX-listed charter carrier Alliance Airlines to cooperate on 41 regional routes.

Virgin said the approval would mean it could re-launch a number of regional routes that were suspended or cancelled in response to the COVID-19 crisis.

The ACCC said Virgin and Alliance working together would promote competition and benefit the public by helping Virgin re-establish its national network.

Alliance previously operated some regional Queensland flights on Virgin’s behalf and the pair had a code-sharing arrangement on a small number of other routes.

Under the latest tie-up, they will be able to share information, co-ordinate on capacity levels and scheduling and potentially share revenue on some routes.

The agreement covers 41 domestic routes mostly between capital cities and regional destinations, as well as two international routes between Brisbane, Honiara in the Solomon Islands and Port Moresby in Papua New Guinea.

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