Virgin Australia sale deadline looms as bidders circle

Interest in the struggling Queensland airline has grown significantly in the past few days, as the first major deadline in the sale of Australia’s second-largest carrier fast approaches.

MULTIPLE bidders for Virgin Australia are putting the finishing touches on their first offers as the administrator of the Queensland airline commits to the sale of the carrier as a whole business.

Nineteen investors have lined up for an inside look at the embattled carrier, with Friday’s deadline for non-binding indicative offers fast approaching.

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Among those reportedly interested is Indian billionaire Rahul Bhatia, who founded the subcontinent’s budget carrier IndiGo, and Australian mining magnate Andrew Forrest.

The interest in Virgin Australia has grown since April 30, when eight bidders were signed up for a confidential look at company details after it entered voluntary administration last month owing creditors nearly $7 billion.

Virgin Australia has 117 leased planes and engines with monthly rentals of $40 million, of which only 50 are operational due to the low demand brought on by the coronavirus pandemic.

The interest in Virgin Australia has grown since April 30, when eight bidders were signed up for a confidential look at company details.

Deloitte administrator Vaughan Strawbridge said he was considering whether Virgin Australia would need interim funding to allow the business to keep operating until a second meeting of creditors, which is proposed for August.

He said the airline had also seen a rise in credit card charge-backs from customers seeking refunds, which may drain cash reserves.

It comes as Richard Branson’s Virgin Group plans to sell as much as 12 per cent of Virgin Galactic Holdings – the space-tourism venture – to shore up its other travel and tourism businesses.

Virgin Group said it would sell as many as 25 million shares in the company, to raise funds to support its portfolio of global leisure, holiday and travel businesses.

Those businesses, including a cruise line and two airlines, have been hit hard by a drop in demand amid the coronavirus pandemic.

The airline has also seen a rise in credit card charge-backs from customers seeking refunds, which may drain cash reserves.

The move by Virgin Group, which has a 10 per cent stake in Virgin Australia, to sell shares is unlikely to benefit Australia’s second-largest carrier.

UK-based Virgin Atlantic, a trans-Atlantic airline, is asking for financial assistance from the British Government.

Other Virgin Group businesses, such as a new cruise-line venture, and a US hotel group have also been hit hard.

Virgin Galactic, which plans to take passengers to the edge of space to experience several minutes of weightlessness, has been a relative bright spot.

Despite a big drop with the rest of the stock market, shares in the company are up 68 per cent this year to date.