Virgin Australia plans to cut a third of its workforce as part of an overhaul to focus on being a domestic and short-haul international Boeing737 operator, under prospective new owner Bain Capital.

Virgin Chief Executive Paul Scurrah said the airline was renegotiating costs with lessors and suppliers as it targets the value-for-money market for business and leisure travellers.

"We have the opportunity to reset some of the onerous costs we had on us which gives us the opportunity to immediately lower that cost base without bringing the product downmarket," Scurrah said, referring to the airline's current status in voluntary administration.

Virgin's board selected Bain as the winning bidder in late June of an auction that followed the airline's entry into voluntary administration in April.

Creditors, who are owed nearly 7 billion Australian dollars, are due to vote on the sale on 4 Sept.

Support from employee creditors and the administrator's deciding vote in the event of a deadlock are expected to overcome some objections from bondholders.

The Covid-19 pandemic was the final straw for Australia's second biggest airline, which had been unprofitable for seven consecutive years.

The airline expects a three-year recovery to return domestic and short-haul international demand to last year's levels.