The proposal will be put forward to the airline’s creditors for their approval SYDNEY: US private equity group Bain Capital said on Friday it has agreed with the administrator of Virgin Australia Holdings to buy Australia’s second-biggest airline for an undisclosed sum, banking on an aviation industry recovery. Bain’s bid was chosen over a rival offer from Cyrus Capital Partners and a recaptalization proposal put forward by Virgin Australia bondholders, administrator Deloitte said. Deloitte said it was not yet possible to estimate the return to creditors and did not expect any return to shareholders. An update on the return will be provided ahead of a creditor’s meeting in August, it said. Many contracts with suppliers and aircraft lessors must be renegotiated before the return to creditors can be finalized, a source with knowledge of the matter told Reuters on condition of anonymity. The deal will need to be approved by 50 percent of creditors by value and 50 percent by number to be finalized. A spokesman for the 6,000 unsecured bondholders owed A$2 billion ($1.4 billion) said that despite Deloitte’s selection of Bain, they would continue to push for genuine consideration of their rival debt-to-equity swap proposal. Bain is using private equity as well as its distressed and special situation funds for the deal, according to Deloitte, which said the deal provided a “significant” injection of capital into the airline. The Australian, the newspaper which carried the report, said Bain would inject A$600 million of cash up front, A$600 million to cover travel credits held by customers and A$450 million to cover employee entitlements, without saying where it got the information. Deloitte and Bain declined to comment. Bain plans to strengthen Virgin’s regional services and ensure the airline offers good value for leisure customers while continuing to serve business travelers, Mike Murphy, an Australia-based managing director at Bain, said in a statement. Virgin Australia entered administration in April owing nearly A$7 billion to creditors, but is viewed as an attractive investment given the Australian domestic aviation market duopoly it shares with larger rival Qantas Airways. Cyrus on Friday morning said it had pulled out of the bidding, citing Deloitte’s unwillingness to engage in meaningful talks. The Bain proposal supports Virgin Australia’s current management team, led by Chief Executive Paul Scurrah, and its improvement plan for the airline, Deloitte said in a statement. Virgin Australia has about 9,000 employees and Bain plans to keep 5,000 to 6,000 and operate 60 to 70 of its Boeing Co. 737 planes, Murphy told The Australian Financial Review on Friday, adding the airline could break even by February. Qantas on Thursday said it would cut more than 20 percent of its 29,000-strong workforce because of the bleak international travel outlook associated with the coronavirus outbreak. Virgin Australia has a smaller international business than Qantas and is more exposed to the domestic market.