Virgin Australia has entered a trading halt for the second time in as many weeks.
The Guardian Australia reports Virgin has hired insolvency experts from Deloitte to work on restructure scenarios and a debt expert from Houlihan Lokey.
The airline told ABC News Australia, “Virgin Australia has requested a trading halt as it continues to consider ongoing issues with respect to financial assistance and restructuring alternatives. This has arisen due to the unprecedented COVID-19 crisis which has particularly impacted the aviation sector. Virgin Australia has been keeping the air fair in Australia for 20 years and we want to continue to provide a valuable service to all Australians, the 16,000 people employed directly and indirectly, and enable the broader economy to restart quickly once we emerge from this crisis.”
The halt comes after a previous halt last week where the airline announced it had requested a $1.4 billion loan from the Australian government. The airline also announced it was cutting all flights except for a single SYD-MEL return flight 6 days a week.
Options that may be considered include existing creditors swapping debt for equity, priority debt to new creditors, restructuring or entering voluntary administration.
Australian Treasurer, Josh Frydenberg told media, “Australia’s been well served by having two major airlines operating in the domestic market. But Virgin and Qantas are both publicly listed companies, both with substantial shareholders.”
Australia’s Opposition Leader, Anthony Albanese told media, “Our two-airline system in Australia has served the country well. So today I say to the government, stop the bits and pieces support, provide support for our airline industry, if that needs equity injections … then the government should go down that route. And it should go down that route sooner rather than later. Because we know the pressure on these airlines isn’t about to become less for a long time. There’s no reason why a government could not make a financial injection through equity and that to be sold down the track. What we know is at the moment … this is an ideal time, if anything this is the bottom of the market.”