Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Virgin Australia lessors agree in principle to delay plane repossession -administrators

Published 25/05/2020, 02:23 pm
Updated 25/05/2020, 02:24 pm
© Reuters.

© Reuters.

SYDNEY, May 25 (Reuters) - Virgin Australia Holdings Ltd's VAH.AX administrators have reached in-principle agreements with aircraft lessors covering the bulk of its fleet to wait until after Aug. 31 to repossess planes, to allow them to complete a sale, an affidavit showed.

The administrators at Deloitte are not paying aircraft and engine lessors but have asked them to sign standstill agreements to refrain from repossession to let the buyer decide on the future fleet, showed the affidavit published by the Federal Court of Australia on Monday.

Lessors would normally be able to repossess planes from June 19, which is 60 calendar days after the appointment of administrators.

But the coronavirus pandemic has decimated travel demand, giving lessors few alternative options for placing the planes.

"Negotiations with the Aircraft Lessors have been advanced to the point where an indicative in-principle agreement has been reached with lessors representing the vast majority of the Virgin Companies' fleet which are subject to lease or financing arrangements," administrator Salvatore Algeri said.

Bain Capital and Indigo Partners have confirmed they are among parties looking to buy Australia's second-biggest airline, which entered voluntary administration last month owing nearly A$7 billion ($4.57 billion). Capital and Cyrus Capital Partners have also been shortlisted, people with knowledge of the matter previously told Reuters.

Binding offers will be required from a smaller set of short-listed candidates by June 12 and a sale could be approved at a creditors' meeting in August, the administrators have said.

The bidders have not publicly revealed plans for the fleet but the winning party will be responsible for negotiating with lessors about whether to keep some or all aircraft, potentially on altered contract terms, the Deloitte documents showed.

Virgin Australia has a monthly rental liability of A$40 million for the 117 leased aircraft and engines in its fleet, but is only bringing in A$25 million of monthly revenue due to the collapse in demand, the documents showed. ($1 = 1.5314 Australian dollars)

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Bain Capital confirms second-round bid for Virgin Australia

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.