Virgin Australia restructuring team wins global business turnaround award has been saved
Virgin Australia restructuring team wins global business turnaround award
15 September 2021: Deloitte Turnaround & Restructuring’s administration and sale of Virgin Australia Group companies in 2020 has been named the winner of the "International Company Turnaround/Transaction of the Year” award by the global Turnaround Management Association.
The award is a first for an Australian headquartered organisation and recognises firms, and insolvency practitioners, that materially assist in the turnaround of companies struggling to survive.
The highly complex Virgin Australia engagement commenced in April 2020, and after a rapid-fire restructuring and sale process – in the midst of a global pandemic – culminated in Bain Capital taking control of the business a little more than six months later.
The outcome saved thousands of jobs, provided certainty for customers and suppliers, ensured the continuation of the Virgin Australia business and, importantly, maintained a competitive airline industry in Australia for the benefit of consumers.
On their appointment as Voluntary Administrators, the Deloitte team, working closely with Virgin management, oversaw the airline’s operations in the midst of the global pandemic, and developed a complex restructure of the business. Within 10 weeks, they had concluded an international, competitive sale process.
Deloitte Turnaround & Restructuring partners Sal Algeri, John Greig, Richard Hughes and Vaughan Strawbridge led the turnaround. They were supported by fellow partners David Orr, Grant Sparks, Tim Heenan, Matt Donnelly, Sam Marsden, and Kathryn Evans, and a team of up to 100 business restructuring and insolvency specialists from across Australia, and connected globally.
Algeri, Greig and Hughes continue today as Trust Administrators of the Volar Creditors' Trust, and are in the process of finalising creditor claims.
The Deloitte team also worked closely with investment bank Houlihan Lokey and lawyers from Clayton Utz.
Deloitte Australia CEO, Adam Powick, said: “This is a prestigious award and global acknowledgement of the incredible work done by our people.
“The team faced multiple challenges managing a rapid fire restructure and sale process that was also the subject of so much stakeholder and public interest and scrutiny.
“They saved a business, they saved jobs, and they have ensured Virgin Australia remains a viable and competitive force and contributor to the Australian economy. As Australia emerges from COVID, and the airline really begins flying again, the results of their efforts will be there for all to see.”
Deloitte partner and Turnaround & Restructuring national leader, Sal Algeri, said: “This was the biggest and most complex administration ever undertaken in Australia, and our work being recognised by our peers globally is humbling.
“Most airline restructures and administrations take many years to conclude, and many, if not most, never fly again.
“But in our minds, not keeping Virgin Australia flying was never an option – there was no half-way house. The runway to save it was short, and I sincerely thank our team for their efforts and support. Collectively we achieved so much in such a short time and in such extraordinary circumstances.
“As Administrators, our focus was always on the interests of creditors, but we recognised that as Australia’s only alternate national airline, it was extremely important that Virgin had the best possible opportunity to re-emerge as a viable contributor to Australia’s future.
“We recognised our challenge was not just succeeding in a sale of the business to a new owner and operator – we also needed to enable and accelerate the transformation that Virgin management had started before our appointment.
“We knew that a successful Administration had to first ensure the eventual buyer would have a viable airline business in order to maximise value protection, and address the interests of multiple stakeholders – from employees, unions, governments and regulators, to investors, aircraft lessors and airports.
“An airline without employees, without aircraft and without a viable loyalty business would not be the mark of a successful process and outcome.
“So, achieving success lay in two simultaneous strategies. One was recognising the stakeholder value opportunity in making the airline more operationally cost efficient and viable to maximise optionality for a new owner. And the second was designing and driving the accelerated sale structure that provided optionality, certainty and competitive bidding from interested parties.
“That combination is what enabled us to achieve the sale and to successfully end the formal Administration in record time of just a little over two months. With Virgin now flying under Bain Capital’s ownership, that goal we set ourselves on day one has been well and truly achieved.”