Virgin creditors tipped to receive less than owed

Creditors of Virgin Australia Holdings will almost certainly receive less than they’re owed, ratings agencies say, after Australia’s second-largest airline went into administration and now battles to find a buyer.

CREDITORS of Australia’s second-largest airline are tipped to lose out financially as administrators of the financially embattled Virgin Australia work to find a buyer.

Ratings agencies say creditors of Virgin Australia Holdings will likely receive less than the money they are owed after the carrier was put under the control of Deloitte administrators on Tuesday.

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Creditors of Virgin Australia will wait until April 30 for their initial look at the state of the company when administrators hold the first meeting.

Ratings agency Fitch believes Virgin’s balance sheet would be restructured and those creditors would be forced to “take a haircut on outstanding debt” if the company is to remain solvent and lucrative to a buyer.

“Virgin’s restructuring would need to result in the airline’s profitability and cash generation improving in order to secure financing from a third party and enable the airline to continue as a going concern,” its assessment said.

“We believe that, in this case, the airline will focus on bringing pack profitable routes and realigning its cost structure.”

Virgin Australia CEO Paul Scurrah and Deloitte administrator Vaughan Strawbridge.

It comes as the Coalition faced fresh calls from its backbench to intervene and ensure Virgin remained viable so jobs and regional services would be protected.

Queensland LNP senator Matt Canavan called on the Government to “get our hands dirty to save not just those jobs, but also those services that people up in here in regional areas … rely on so keenly”.

His call follows similar rumblings from NSW National David Gillespie and Liberal Jason Falinski and was seized on by Queensland Labor senator Murray Watt.

Senator Watt said Queensland’s 28 other Liberal National MPs and senators had to say if they were willing to “do the same for the people they claim to represent”.

“I commend Senator Canavan for standing up to his own government to remind them that areas like Cairns, Rockhampton, Gladstone, Mackay and Townsville rely on having a strong aviation market, not just for attracting tourism dollars, but so that regional Queenslanders can visit family and access healthcare in cities including Brisbane,” he said.

Treasurer Josh Frydenberg said Virgin's move into voluntary administration had put it on a “path to recovery” through a market-led solution as more than 10 potential suitors circled the airline.

“We’re not in the business of owning airlines and we’ve made that very clear,” Mr Frydenberg told the ABC.