Virgin Australia boss John Borghetti slams analyst’s cashflow ‘crisis’ claim

Analyst firm Australinea purported to cite a Virgin memo saying the airline faced a “severe cash flow crisis”.

John Borghetti says the article contained ‘factual inaccuracies and false and misleading statements’. Picture: Darren England.

Virgin Australia boss John Borghetti has written to the airline’s entire roster of pilots telling them to ignore reports from a new analyst firm that the carrier claims has been spreading lies about its financial performance.

The analyst firm, Australinea — which bills itself as a Sydney-based “independent research firm” — ran an inflammatory article this week that purported to cite an internal Virgin memo alleging the airline was facing a “severe cash flow crisis” with “very limited ­options” for recovery. The article also suggested Virgin would face difficulties in financing its debt in the future.

Virgin has dismissed the ­article as factually wrong. Mr Borghetti on Wednesday emailed the airline’s pilots urging them to disregard the article, which he said appeared to come from a fake address and was “not from a legitimate or reputable business or reporting agency.”

“I am writing to highlight to you a number of both factual inaccuracies and false and misleading statements included in this article,” Mr Borghetti wrote in the email obtained by The Australian.

“Most importantly, I’d like to address the statement that Virgin Australia is facing a severe cash flow crisis and has very limited options for recovery. These statements are simply false.”

The article’s errors highlighted by Mr Borghetti also included references to Virgin’s fleet of aircraft and other spurious financial detail. The article said Virgin owns only eight aircraft when in fact it owns 61 of its 149 aircraft.

Mr Borghetti highlighted the airline’s financial results — including its cash balance of $1.1 billion — in a bid to debunk assertions in the report that Virgin was teetering ­on insolvency.

“Through a number of liquidity initiatives, including the equity raising and Better Business Program Virgin Australia has and is continuing to successfully improve its liquidity and reduce its leverage,” Mr Borghetti said.

“I encourage you to disregard this article due to it containing false information and assertions.

“This article is inaccurate, malicious and distracting at a time when Virgin Australia continues to strengthen its position.”

Virgin sent a tersely worded email to the site’s anonymous ­administrator on Wednesday which resulted in the offending ­article being taken down. By yesterday morning the entire site was no longer accessible.

Virgin said it was not responsible for the site being taken down, but it is understood the airline’s internal security team is trying to uncover the mysterious author of the website.

“It is important for companies to quickly shut down these sorts of misleading and factually incorrect stories,” said Virgin’s public affairs boss Danielle Keighery.

“Not only was the information contained in the story false, but when we attempted to contact the author of the article to correct the inaccuracies we found they had a fake address and phone number listed on their website and would not reveal their identity.”

Attempts by The Australian to contact the owner of Australinea.com also went unanswered.

Virgin this week posted an underlying before tax loss of $3.6 million as sluggish domestic conditions dragged it to a first quarter loss.

Virgin blamed the poor result on a softening domestic market that also forced Qantas to downgrade its profit outlook for the first six months of the financial year.