Virgin Australia: From Turbulence to Triumph

“We had an airline on the verge of disappearing.”

So noted Virgin Australia CEO David Emerson in a recent interview, and he wasn’t exaggerating. Even before the Covid-19 epidemic brought the travel industry to its knees, Virgin Australia was in serious trouble. A combination of high product costs, inflated overheads, a burgeoning workforce, the complexities of a multimodel fleet, and a host of operational issues and strategic missteps caused it to enter voluntary administration early in 2020.

But the airline was about to make the sort of dramatic comeback usually found only in sports or Hollywood movies. It emerged from administration just seven months later, and by the summer of 2025, it had turned things around to such a degree that its relisting on the Australian Securities Exchange valued the airline at $2.3 billion and its share price rose 15% in its first two days on the market. It’s now solidly profitable and firmly ensconced as Australia’s second-largest airline.

What happened? Virgin embraced a full-potential transformation, championed by our private equity client and propelled by our expertise across virtually every facet of the company’s operations. “We had to change the entire business model,” Emerson says, “balancing the restructuring of the business with short-term cash flow needs.”

A multi-phased turnaround

We began with an intense focus on customer strategy and cost transformation, reducing costs by nearly 30% by optimizing procurement, redesigning the organization, boosting operational productivity across every area of operations, and ultimately developing a blueprint to lower cost per available seat kilometer (CASK). Virgin exited its unprofitable long-haul business, simplified and reduced its fleet, and restructured thousands of existing contracts for everything from engine leases to catering services.

We then addressed growth acceleration, redefining Virgin’s customer value proposition to focus on profitable segments while also addressing ancillary revenue opportunities and major improvements to its loyalty program. This included designing a digital marketing program around a refined brand promise, optimizing direct channel distribution, and massively improving the airline’s website and app conversion.

Equipping the airline for continuous improvement was another priority, which we addressed by training more than 300 executives in Agile ways of working and change management capabilities, through our Bain Academy programs.

With its focus on the domestic market firmly established, Virgin looked for additional growth opportunities. Beginning in June, a strategic alliance with Qatar Airways now enables Australian passengers to reach any number of international destinations via dozens of weekly flights from Australia’s major cities to Doha. Virgin Australia also has partnerships with United Airlines, Singapore Airlines, Air Canada, and other carriers to similarly expand international options in a cost-effective manner.

Clear skies

It’s difficult to overstate the scope of this transformation and our role in it. We worked closely with our private equity client and Virgin’s senior leadership to address corporate culture, customer loyalty, labor productivity, sales and marketing strategy, technology infrastructure, and more.

In addition to phenomenal growth in domestic passenger market share, Virgin has greatly improved its load factor (which recently neared 90%) and scheduled flight completion rates (>98%) while also boasting the lowest cancellation rate in the industry. Additionally, the airline is a leader in on-time performance, a testament to its operational reliability becoming a core differentiator.

Virgin Australia’s cost management efforts set the stage for a near-10% margin uplift in the fourth year of the transformation, while its focus on the domestic market and strong growth fundamentals were a key part of its successful IPO.

Now profitable for two years running, Virgin Australia has grown its fleet from 58 aircraft to just over 100, and the airline is well-positioned to build on its remarkable turnaround. Our close working relationship with both our private equity client and Virgin’s management enabled us to advise on, and execute, a long list of improvements and changes that have truly transformed the company—and, no doubt, the best is yet to come.

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