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Virgin Australia’s administrator, Deloitte, has already confirmed a number of investors are interested in saving the airline after it entered voluntary administration.
Partner Vaughan Strawbridge said in a statement to the ASX, “We have commenced a process of seeking interest from parties for participation in the recapitalisation of the business and its future, and there have been several expressions of interest so far.”
Strawbridge later said during a press call that there is, “an extraordinary number of parties keen to be involved”.
The airline group, including Tigerair but not Velocity Frequent Flyer, confirmed the collapse early on Tuesday morning, after the announcement leaked the previous evening. The business was struggling to service a $4.8 billion debt pile with little revenue coming in, and its attempts to secure a $1.4 billion loan from first the government, then states, failed.
Virgin Australia will continue to operate both domestic and international routes, including those underwritten by the government, during the administration process.
At the weekend, The Australian Financial Review speculated that BGH Capital, a private equity operator run by Ben Gray, was doing the numbers on the business.
Then, the SMH followed by reporting that, in fact, a number of private equity operators and hedge funds were interested.
One big private equity operator, it reported, said he knew of 20 funds looking for a deal but would only make a move if administration happened, and debts were therefore wiped out: “Nobody will put money in and be behind the existing debt.”
The company’s current shareholders include Singapore Airlines, China’s HNA Group and Nanshan Group, Etihad and Richard Branson’s Virgin Group, which together hold 90 per cent of the company.
Singapore Airlines has already had to reorganise its own finances to survive, while Virgin Group founder Sir Richard Branson, who retains a 10 per cent stake, hasn’t offered to put up any money.
He did, however, offer to use his private island, Necker, to help secure help for all struggling parts of his business, saying in an open letter, “As with other Virgin assets, our team will raise as much money against the island as possible to save as many jobs as possible around the group.”
It’s unlikely the federal government would allow China to increase its ownership stake, given the current politics around the coronavirus.
Just a few weeks ago, the airline “strongly rejected” claims its future was at risk, with a spokesman claiming, “Virgin Australia maintains a strong cash position in excess of $1 billion and our recent financial results last week showed an increase in revenue and passenger numbers.
“Any speculation about the future of the business is untrue and misleading,” it said.
