Virgin Australia will be sold to American private equity firm Bain Capital, its administrator has confirmed.
The sale should be completed in August as minimal conditions are attached, administrator Deloitte said.
"Bain Capital has presented a strong and compelling bid for the business that will secure the future of Australia's second airline, thousands of employees and their families and ensure Australia continues to enjoy the benefits of a competitive aviation sector," Virgin administrator Vaughan Strawbridge said.
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The airline is likely to concentrate first on the Australian domestic market and it is unknown whether it will resume transtasman operations.
The transaction carries forward all Velocity frequent flyer booked flights, honours all employee entitlements, and supports the current management team led by Virgin Australia chief executive Paul Scurrah and their improvement plan for the airline.
"We believe Bain Capital's proposal offers the best possible future for Virgin Australia, its employees and its customers," Scurrah said.
"We are aligned in our vision for Virgin 2.0 and look forward to working with them to secure the airline's future."
Boston-based Bain was named buyer today after its bidding rival Cyrus Capital Partners, a New York-based hedge fund, made a surprise announcement it would withdraw its bid, citing "lack of engagement" by Virgin administrator Vaughan Strawbridge.
Cyrus said it had not heard from Strawbridge since it lodged its formal binding offer for the airline on Monday.
Virgin Australia went into administration in April with close to A$7 billion owed to creditors.
Deloitte said it does not expect any return to shareholders, and at this stage it isn't possible to estimate the return to Virgin's creditors.
Mike Murphy, an Australian-based managing director of Bain Capital, said Bain's plan for Virgin would see it return to its core strengths.
He said Bain appreciated how difficult the current situation had been for Virgin staff.
Australian Council of Trade Unions president Michele O'Neil said she understood the agreement provided 100 per cent protection for employee entitlements but would result in some job losses.
Earlier today, Cyrus said it had withdrawn its bid, complaining Virgin Australia's administrators "have not returned calls, emails, or meaningfully engaged with Cyrus to progress its offer".
Cyrus founder Stephen Freidheim said he was "disappointed that it has become necessary to withdraw our offer".
"Cyrus firmly believes that the Australian aviation industry has a bright future and would be willing to reinstate our offer if the Administrators agree to re-engage in good faith, productive discussions with a view to concluding a transaction that will benefit all key stakeholders – employees, customers, Velocity members and bondholders," he said.
Cyrus' surprise announcement comes a day after Virgin Australia rival Qantas said it was shedding at least 6000 jobs across Qantas and Jetstar as part of a drastic Covid-19 survival plan.
Both airlines have struggled to cope with an unprecedented downturn in domestic travel and bans on international travel due to the pandemic.
Federal Finance Minister Mathias Cormann said this morning it was a long and difficult road ahead for Australia's airlines.
"I don't think that it's any surprise to anyone that the outlook for the aviation sector is going to be a challenge for some time," he told Sky News.
"We do have to face the facts that over the foreseeable future the level of activity in that sector is going to be significantly less."
- with Reuters