The company being reborn through a deed of company arrangement struck in administration is “the airline’s only chance”, said a source familiar with Virgin’s struggles.
In administration, an independent party will assess Virgin’s position and negotiate with shareholders and creditors about the best outcome for the business.
That could include finding new owners to take over the airline and keep it operating or, if that is not possible, selling its remaining assets to pay off as many creditors as possible.
Creditors – including banks, aircraft lessors, customers with credits from cancelled bookings or frequent flyer points and staff owed entitlements – may only receive cents in the dollar for what they are owed.
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The already financially struggling Virgin was paralysed by the coronavirus crisis. It asked the federal government for a $1.4 billion loan to see it through the crisis but was rebuffed, while its major airline shareholders – also rocked by the pandemic – would not put more cash into the company.
Singapore Airlines, Etihad Airways, the Chinese conglomerates HNA and Nanshan, and Richard Branson’s Virgin Group own 90 per cent of company, with the remainder owned by investors on the ASX.
Simon Lutton, executive director…
