Life Travel Virgin creditors meet as would-be buyers circle

Virgin creditors meet as would-be buyers circle

Dozens of Virgin aircraft lay dormant around the country's major airports. Photo: Brisbane Airport Corporation
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Virgin Australia’s administrator Deloitte is confident of attracting a buyer for the debt-laden airline but won’t reveal the identity of any potential suitors.

At least 20 parties have expressed interest in the sale of Australia’s second carrier, which slid into voluntary administration last week.

Deloitte revealed eight prospective buyers have signed non-disclosure agreements so far, at its first meeting with Virgin creditors on Thursday.

Negotiations are ongoing with another 12.

Among the parties to express interest in Australia’s second airline are Melbourne’s BHG Capital and US private equity firms Apollo Global Management and Oaktree Capital Management. It was being widely reported late on Thursday afternoon that Western Australian billionaire Andrew Forrest was another interested party.

Vaughan Strawbridge, of Deloitte, said he had been encouraged by the calibre of applicants.

“It’s still early days, yet I’ve been encouraged by the level of sophisticated party interest in the sale,” he told creditors.

It was revealed at Thursday’s meeting that Virgin Australia owes about $6.8 billion to 10,247 known creditors.

But this was likely to change as more information became available. The total number of creditors is thought likely to top 12,000.

After outlining the administration process, Mr Strawbridge reiterated his intention to keep Virgin in the skies.

“We remain strongly focused on restructuring and refinancing the business … bringing Virgin out of external administration as soon as possible in an outcome that will retain jobs and the airline’s contribution to Australia and its economy,” he said.

He maintains a sale by the end of June is achievable.

But Deloitte will make a Federal Court application to extend the convening period – before the second creditors’ meeting – until August 22.

A 69-member creditor committee was appointed on Thursday to represent their interests.

About 1300 people joined the call and question and answer session, which was held remotely due to coronavirus health measures.

Mr Strawbridge lay blame for Virgin’s recent struggles on the pandemic.

“This could not have come at a worse time for Virgin Australia,” he said.

Shares in Virgin lost nearly 44 per cent of their value in 2020 and were priced at just 8.6 cents per share when the airline suspended trading on the ASX on April 14.

It stood down 8000 staff in April to try to stay afloat but went into freefall on the back of strict coronavirus travel bans.

The federal government has repeatedly rejected calls from unions and Labor to buy a stake in the beleaguered airline, with senior ministers instead pressuring Virgin’s major shareholders to step in.

The company is 90 per cent foreign owned, with Singapore Airlines, Etihad Airways and Chinese conglomerates HNA Group and Hanshan owning 80 per cent between them. Richard Branson’s Virgin Group still owns 10 per cent.

More than 15,000 jobs are at risk should a decision be made to carve off assets to service the airline’s debts.

Deloitte has retained Houlihan Lokey and appointed Morgan Stanley to advise it on restructuring the company.

Virgin is piloting a skeleton 64 return domestic flights a week while assisting in international freight runs and federal government-supported evacuation of Australians in Hong Kong and Los Angeles.

-with AAP