Today, Virgin Australia Holdings Ltd (ASX: VAH) shares remained suspended as the company announced that its CEO would step down. The Virgin share price was 8.6 cents before trading in the company was suspended in April this year.
What was in the announcement?
According to the announcement, current Virgin CEO, Paul Scurrah, will step down upon the financial close of the company’s sale to United States private equity firm, Bain Capital. This is expected to take place in early November and former Jetstar CEO, Jayne Hrdlicka will take charge of the company.
The embattled airline has been in voluntary administration since April 2020 after COVID-19 restrictions effectively shut down the travel industry. Virgin has previously announced huge staff cuts and asset sales in preparation for the sale to its new owners, which has been approved by creditors.
Mr Scurrah commented on his departure stating; “I am proud of that work that has been completed to date to transition the business and remove complexity, allowing the airline to compete effectively once demand returns.”
After the business has been sold to Bain Capital and demand returns for travel services, Virgin will operate as a rebooted airline that is being referred to as Virgin 2.0. However, it has been reported that Virgin will not become a budget carrier, instead operating as a ‘hybrid’ airline that will offer the Virgin experience at competitive prices.
Deloitte partner and Virgin administrator, Vaughan Strawbridge, commented on the CEO’s departure stating; “It is a testament to his leadership that we have been able to complete this sale and the business is well positioned to play its vital role in the rebuilding of the Australian aviation industry and economy more broadly.”
Bain will pay $3.5 billion for Virgin which includes a capital injection of $125 million the private equity firm made in July to help Virgin remain solvent. Virgin bondholders will get around 13 cents in the dollar from the sale, according to media reports. Virgin shareholders will get nothing from the deal.