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Monday, 27 April, 2020, 10 : 15 AM [IST]

Virgin Australia owes creditors USD 4.4 billion: Administrators

Virgin Australia owes just over AUD 6.8 billion (USD 4.4 billion) to more than 12,000 creditors, its administrators have disclosed, reports Cirium. Meanwhile, Perth Airport has already moved to seize a number of Virgin Australia aircraft over outstanding payments.

“Virgin has significant outstanding invoices from Perth Airport for airfield and terminal use charges – money the airline has already collected from its passengers and the fly-in, fly-out sector,” the airport operator said in a statement on 24 April.

“While Perth Airport is working with the Virgin administrators, it also needs to protect its own interests,” it added.

The operator says the planes in question have been parked at the airport for “some time now” and adds that it will continue to facilitate Virgin Australia’s fly-in, fly-out (FIFO) flights through terminal 2, of which there are currently 180 per week. FIFO flights are crucial to western Australia’s resources sector.
Virgin Australia entered voluntary administration on 21 April after failing to secure agreement on financial support. Its administrator Deloitte says there has been interest from over 10 parties in a recapitalisation of the business.

Deloitte listed the carrier’s debts in documents published on 23 April. It said lenders are owed AUD 2.3 billion, unsecured bondholders AUD 2 billion, aircraft lessors AUD 1.9 billion, trade creditors AUD 167 million, landlords AUD 71 million. Employees, who account for some 9,020 of the total number of creditors, are owed USD 451 million.

Virgin has around 144 aircraft, Deloitte said, and it intends to ask lessors for waivers over lease payments while it works through the voluntary administration process.

“Next week we will be wanting to engage with you to firm up on interim arrangements with the administrators to support the process being followed to achieve a recapitalisation and sale, which will include a request for a three-month waiver of rent and other financial payment obligations,” Deloitte writes in a letter to lessors.

The administrators are also asking the court for four weeks, rather than the standard five days, to give notice to lessors over whether they wish to disclaim the leases, because to disclaim the leases sooner could be detrimental to its plans to recapitalise and sell the airline.

Singapore-based Avation is the lessor with the highest exposure, by number of aircraft, to Virgin Australia, which has entered voluntary administration.

A first creditors’ meeting will be held on 30 April. (Source: Cirium)

 
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