Virgin Australia, the airline that filed for bankruptcy in April is reportedly attracting many potential buyers, despite its repeated failures to generate profits in the lucrative Australian market.
Globally airlines have struggled to survive the chaos and disruption wrought by the Covid-19 pandemic with Virgin Australia one of many airlines that have been forced to file for bankruptcy or business protection.
But despite the ongoing uncertainty caused by the pandemic, it appears as though Virgin Australia is looking attractive to a number of investors – with several private equity firms having put their names forward on a list that initially had as many as eight companies expressing interest in purchasing the company.
According to a report in The Sydney Morning Herald, the number of potential buyers has now been pared down to four. Those in bidding contention are said to be Cyrus Capital, a New York-based investment fund, American budget airline owner Indigo Partners, local fund BGH and American private equity firm Bain Capital.
Virgin’s brand equity a big plus for bidders
A quick analysis of the market suggests that potential buyers are drawn to the airline for a number of reasons. These include the enormous equity in the Virgin brand, the lack of direct competitors in the Australian domestic market and the fact that Qantas is likely to be hit by major losses due to a lack of global travellers. The reboot afforded by the Covid-19 crisis also allows the airline to get back to basics and do away with many expensive and failed ideas.
Administrators happy with calibre of potential buyers
Commenting on the list of prospective buyers Vaughan Strawbridge, the lead administrator for management-company Deloittes who are handling the proceedings said, “We are delighted by the strength of each of those on the shortlist.
“We’ve got more interest than we expected and the process is working and the parties we’ve got shortlisted are massively engaged and are keen to work with us.
“We are comfortable with who our bidders are… and we’re comfortable with their financial capacity and their experience,” he said.