Virgin Australia bidders have been narrowed down to just two, US funds Bain Capital and Cyrus Capital Partners, after Ben Gray's BGH Capital was knocked out of the race for the failed airline in an unexpected development.

Private equity fund Bain Capital, which owns Camp Australia, Retail Zoo and bought a stake in Webjet in April, has been aggressively public about its plans for the airline in past weeks in a bid to win over Virgin's 9000 employees, the largest creditor group by number.

The administrator, Deloitte, flagged the possibility that Bain or Cyrus may partner with some of the sidelined bidders, or others including Richard Branson's Virgin Group, state governments and other investors such as Oaktree.

"Both Bain Capital and Cyrus Capital Partners are well funded, have deep aviation experience, and they see real value in the business and its future.".

In another twist, Morgan Stanley banker Julian Peck, who is advising on the Virgin sale process, will join APA Group on September 1.

While Bain Capital is an established force in Australia, fellow foreign raider Cyrus Capital Management is unknown to most

Virgin Australia's administrators have determined just Bain Capital and Cyrus Capital Partners will get the chance to lodge offers for the stricken airline on June 12