SIA, other major shareholders extend A$425m loan to Virgin Australia

SINGAPORE Airlines (SIA) and three other major shareholders of Virgin Australia Group have extended a 12-month A$425 million (S$439 million) loan facility to provide the airline with additional financial flexibility in the short term.

The facility, which is subordinated to Virgin Australia's existing debt, is provided by the four shareholders - Air New Zealand, Etihad Airways, SIA and Virgin Group - based on the proportion of each of their shareholding to the total shareholding of all the major shareholders, said Virgin Australia in a release to the Australia Stock Exchange. The release was posted on the Singapore Exchange by SIA.

The funds were provided as an initial step in the group's capital structure review, which commenced on Monday, to ensure that the Virgin Australia Group has an "appropriate structure to sustain access to capital and improve cash flow generation and profitability", said Virgin Australia.

"The board is focused on optimising the group's balance sheet and capital structure to support the ongoing execution of its strategy," said Elizabeth Bryan, chairman of the Virgin Australia Group.

"The group has secured loan facilities from its major shareholders that provide a flexible source of funding while the review is undertaken ... to generate long-term growth and value for shareholders," she added.

The review will include an assessment of the appropriate mix of debt and equity capital and operational initiatives to enhance cash flow and profitability.