Virgin Australia digs deep
Virgin Australia has tapped its deeppocketed shareholders on the shoulder, with Etihad, Singapore Airlines, Air New Zealand and Virgin Group to provide a new $425 million loan. The 12 month facility is on “arm’s length commercial terms” and aims to provide the carrier with “additional flexibility in the short term”. The funds will bolster Virgin Australia’s financial position, with the
company yet to see the full benefits of its ongoing Virgin Vision transformation program. It’s not the first time Virgin has sought additional working capital, with a $350 million rights issue in 2013 fully supported by the major shareholders. VA chief executive officer John Borghetti said the new $425 million facility would give space for a review to ensure the group has a “capital structure that supports its strategic objectives”. Analysts say the cash requirements of the business are in part a reflection of its hedging policies which have seen Virgin Australia unable to fully participate in the massive decline in fuel prices.