Virgin Australia enters trading halt for aid, restructuring talks amid coronavirus crisis

[SYDNEY] Cash-strapped Virgin Australia Holdings Ltd entered a trading halt on Tuesday, citing ongoing discussions involving financial assistance and restructuring alternatives to help it weather the coronavirus crisis.

The airline, which had requested A$1.4 billion (S$1.268 billion) of loans from the Australian government, said the trading halt on its shares and unsecured notes would remain in place either until an announcement by the company or two trading days, whichever was earlier.

Virgin remains in talks with the government about various aid options and has hired investment bank Houlihan Lokey to advise it on a potential debt restructuring, said a person with knowledge of the matter who was not authorised to speak with media.

Virgin and Houlihan Lokey did not respond immediately to a request for comment. The Australian newspaper first reported Houlihan Lokey's involvement.

Virgin's shares are tightly controlled by a group of foreign airlines including Singapore Airlines Ltd, Etihad Airways and Chinese conglomerate HNA Group that have also seen a sharp deterioration in revenue due to the coronavirus pandemic.

Fitch Ratings last month downgraded its long-term rating on Virgin to B- on rating watch negative from B+, which included removing a one-notch uplift it had previously received based on the expectation it would receive financial support from its shareholders, particularly Singapore Airlines.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

The Singaporean carrier is focused on its own financial health rather than rescuing Virgin, with which it could maintain a commercial partnership even if its equity stake was diluted, a person familiar with the matter told Reuters on condition of anonymity.

In a statement, Singapore Airlines declined to comment directly on whether it would provide aid for its partner, but said a strong aviation sector in Australia and globally would be key to support the recovery of trade, tourism and investment and Virgin would be central to ensuring that was possible.

Etihad and HNA declined to comment on whether they were willing to provide funding to Virgin.

Virgin last week grounded all domestic flights, except a single daily Sydney-Melbourne service through June 15.

The airline had already cut all international flights except government rescue charters, put most of its workforce on leave and permanently cut all pilots at low-cost arm Tigerair Australia and all crew based in New Zealand.

Virgin competes in the Australian domestic market against larger rival Qantas Airways Ltd, which has a stronger balance sheet.

REUTERS