SYDNEY (Reuters) – Virgin Australia Holdings Ltd’s
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).
BGH 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)
(Reporting by Jamie Freed and Paulina Duran; Editing by Christopher Cushing)
