VIRGIN AUSTRALIA: Bain Capital to be the winner in airline sale

We have known that Virgin Australia was set to re-enter the share market by listing on the Australian Stock Exchange (ASX) fairly soon. Well the prospectus dropped on Friday night before the long weekend. A lot in the prospectus is to be expected. But, the measure of reward for past and present CEO’s, and the ‘rescuer’ of the airline out of administration back in 2021is a surprise. Expecially considering what they put into the airline.

From administration to IPO in five years

Virgin Australia entered voluntary administration in April 2020, weighed down by debt and grounded by border closures. Bain Capital scooped it up for a tidy AU$730 million, promptly removed international routes, scrapped the Boeing 777s, and steered the airline back to a domestic and short-haul international operation.

The turnaround has been profitable. Virgin booked a $129 million net profit in FY2023, and after five years of costs cutting, the airline is seeking to relist on the ASX on 24 June 2025. It’s a return to public ownership, and a very profitable partial exit for Bain Capital. Like, 300% profitable, minimum.

Bain makes a motza

The long-weekend timing of the prospectus release – 12:30 pm Friday, no less – looked like an attempt to bury the IPO and remuneration details. The document does reveal plenty: Bain is selling down its stake from 70% to 40%, offering 30.2% of the airline to retail and institutional investors at $2.90 a share.

That price values Virgin Australia at $2.3 billion, with the float raising $685 million. Not a cent of that will be reinvested in the airline. The entire haul goes straight back to Bain, on top of the $1 billion in dividends and capital returns it’s already extracted. Bain also gets an undisclosed (but rumoured to be over $500 million) windfall from previously selling a chunk to Qatar Airways last year. All up, Bain Capital looks like earning north of $2.2 billion. Not bad for a $730 million outlay – and it still owns 40% of the airline.

Not a dollar of the $680 million float proceeds will be re-invested in the airline. They’ll go straight back to Bain, adding to the circa $1 billion it has already taken in dividends and capital returns and the undisclosed sum (which had to be north of $500 million) in last year’s sell-down to Qatar. That’s at least $2.2 billion back from its original $730 million cheque and, as mentioned, Bain still owns 40 per cent of the company.

Joe Aston, Rampart Newsletter 10 June 2025

Qatar and crew cash in too

Qatar Airways is keeping its 23% stake (originally 25% but devalued by this IPO). It’s playing the long game. It is at the beginning of a growing partnership with Virgin – which now includes wet-leased 777s and a Doha route launch.

Meanwhile, the employee shareholding pool nudges up to 8%, including the holding of former CEO Jayne Hrdlicka. She exited stage left in late 2023, but Hrdlicka’s still holds equity. It’s rumoured to be shares worth multi-millions.

Staff equity is estimated at AU$180 million overall, and 95% of employees have share entitlements. A few thousand dollars’ worth of shares is a nice thank-you for surviving job and pay cuts, network cuts, and the near-death experience that was 2020.

New CEO, new pay packet

Newly-minted CEO Dave Emerson, the ex-Bain aviation advisor now in the pilot’s seat, has share rights equivalent to 0.8% of the airline – on paper, a value of AU$19 million. That’s Alan Joyce levels of bonuses.

In addition, Dave scores an AU$1.35 million cash bonus just for overseeing the IPO, and that’s before his $1.3 million annual salary.

This isn’t just a good week for Virgin’s balance sheet – it’s a great one for its boardroom. Bain gets a windfall, the execs get cashed up, and the public gets the chance to own a slice of Virgin 2.0.

2PAXfly Takeout

The IPO leaves the airline with no new capital to expand or renew the fleet. That seems like a mistake at birth, right there. It means any new investment will need to come from cash flow, further capital raising, or more extensive partnerships. On the plus side, the airline boasts a solid 34% domestic market share. It also claims its loyalty scheme, Velocity Frequent Flyer, is booming.

With Bain still holding 40%, will Virgin really behave like a public company, or just a PE-controlled one. And will the new shareholders, mum-and-dad investors and super funds, see growth? Or will they just gain tidy dividend streams as Bain and Qatar call the shots behind the curtain?

As an airline geek, like with other Australian-based airlines, I will probably buy a few shares. Lets just hope Virgin Australia 2.0 does not go the way of REX, and I do my money.

Time will tell. But for now, Australia’s number-two airline is back on the ASX. Bain is happy, Qatar is happy, and the CEOs, now and ex, plus staff, will soon be happy with their holdings. The question is, will all the new shareholders be happy in a couple of years’ time?