Virgin Australia shares suspended as the airline hovers on the brink of bankruptcy

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By the time you read this on Wednesday the situation may be clearer, but at the time of writing on Tuesday Virgin Australia shares had been suspended on the Australian Stock Exchange.

The suspension was to allow financial restructuring talks to take place.  It is unlikely that the airline will collapse entirely.  It is seeking a A$1.4 billion Government loan which would convert into equity if not repaid.  If this fails, the existing lenders are likely to agree a debt for equity swap which would see the airline survive but the existing shareholders wiped out.

Virgin Australia shares suspended

One problem is that the shareholder group is not exactly in great shape itself.  You are looking at HNA, the struggling Chinese conglomerate, Etihad Airways, which has been perfectly happy to see its other overseas investments fail, Singapore Airlines, which has just received its own bailout and Nanshan Group, owner of China’s Qindao Airlines.  Virgin Group itself controls only 10% of the airline.

Virgin Australia is not out of cash – it is sitting on A$900 million – but this is only enough to last 3-6 months given the interest on its existing A$5 billion debt pile.

You can read the Sydney Morning Herald story here.

Virgin Australia shares suspended

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Comments

  1. Waddle says:

    Morgan Stanley advising UK Government on £500m Virgin Atlantic bailout.
    Source: Sky News City Editor

  2. That accident is unfortunate. The ground handling agent, will have a hefty insurance bill to repair both aircraft. Fortunately the BA plane was only a cargo flight so no BA passengers were inconvenienced. Not sure if the Emirates plane was empty. About 12 years ago I was involved in an insurance claim after a LSG catering truck hit a brand new Qatar Airways 777 at LHR and punched a hole in the side (it had just flown its maiden flight to LHR and was preparing to fly back to Qatar). The bill for accomodating first & business class passengers on any available flight that night and the hotel bills and subsequent airfares for all other passengers over the following couple of days was about £250k and that was before the repairs to the aircraft and the parking and landing fees payable to LHR while the plane was moved to a remote stand for a few weeks while repairs were carried out.

    • Lady London says:

      Wonder how big was LSG Catering’s next insurance premium after that one? 🙂

  3. Just realised I forgot to cancel a Gatwick Parking booking for 8th April until 14th. Do I have any chance of getting this back given that my EasyJet flights were cancelled, would I be able to claim it through insurance? Was Gatwick parking even open between those dates?

  4. An A350 also suffered a heavy landing at TLV a few months ago in stormy weather and was put out of work for a few days,
    Some bad luck there

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