Virgin Australia administrators eye $238m in restricted cash to help keep the airline flying

Virgin Australia currently has just over $100m in cash, which could potentially tide it through to the end of July.

Deloitte’s Vaughan Strawbridge is overseeing the Virgin Australia administration. Picture: Joel Carrett/AAP

Virgin Australia administrators have their eye on $238m in restricted cash to help keep the airline flying and competing with Qantas, until a sale is finalised.

The first committee of inspection meeting as part of the administration process heard Virgin Australia currently had just over $100m in cash which could potentially tide it through to the end of July.

The federal government has refused to help out, so additional funds are being sought from state governments with Houlihan Lokey chasing commercial lending options.

Administrators Deloitte are also investigating the possibility of accessing restricted cash tied up against hedging and in merchant and credit card facilities, totalling $238m.

Failing that, Deloitte also suggested to the committee one of the final two bidders could enter into some funding arrangement, prior to settlement.

The 35-member committee consisting of unions, airports, bondholders, banks and other creditors peppered administrators with questions about employee entitlements to the role of federal government “go between” Nicholas Moore.

Few details about the interested bidders were shared, but Deloitte revealed the final two would be decided by next Friday with binding bids due by June 12.

Coming weeks will be critical for Virgin Australia, with government subsidies for domestic flights due to end on June 11.

The ability of the carrier to continue flying will likely depend on further financial support becoming available, a situation that has unions concerned.

Transport Workers Union secretary Michael Kaine said it would be a tragedy if Virgin Australia was forced into liquidation weeks short of a sale being finalised.

He said it was imperative the federal government acted now to ensure competition continued in Australia’s aviation market.

“It’s one thing about getting a notional sale through, it’s another thing that a company’s fit enough and ready enough to take on Qantas, which is strutting around already like it’s a monopoly player,” Mr Kaine said.

“That’s a very real concern and another reason why the government should do what it did when it put in place the JobKeeper package and push to one side their ideological tendencies.”

Virgin Australia went into administration on April 20 with debts of $6.8bn, owed to banks, aircraft lessors, landlords including airports, employees and a host of others.

Despite its dire financial position, Deloitte has been confident of attracting a buyer with four groups short-listed from an initial 20 interested parties.

They include private equity firms Bain and BGH Capital, Arizona-based airline investor Indigo Partners and New York-based hedge fund Cyrus Capital.

Unions and governments have both expressed their desire for Virgin Australia to continue as a full-service carrier with its own low cost partner in Tigerair.

Currently about 8200 of the airline’s 10,000-strong workforce are stood down and receiving fortnightly Jobkeeper payments.

On Wednesday, Deloitte secured a federal court order, absolving it of any personal liability for overpayments of the Jobkeeper allowance to workers, which have already totalled $24.8m.