Virgin Australia needs more cash before sale

Virgin administrator Vaughan Strawbridge will borrow around $200m to help keep operations afloat.

The airline generates annual revenues of $5.5bn, which is its big selling point because actual assets on its books are largely held against debt. Picture: AAP

Virgin administrator Vaughan Strawbridge will borrow around $200m to help keep operations afloat pending a decision on the sale of the airline.

The loan indicates Virgin was not quite as liquid as imagined when the administrator was called in on April 21.

It is understood free cash stood at just $30m when Mr Strawbridge was called in.

A conga line of bidders is looking at the airline.

Strawbridge is likely to seek court approval to extend his term in chair beyond the indicative time of August 22.

Virgin Australia group administrator Vaughan Strawbridge. Picture: AAP

Bids for the airline are due on May 15 and consortiums are being filled to narrow bidders to around three when the final bids are called.

One consortium includes Brookfield, Macquarie Bank, and Wesfarmers with another forming around BGH with the possible inclusion of Lindsay Fox and the Victorian state government.

The latter is being sold as the local consortium, which will mean it won’t have to run the FIRB gauntlet to win approval.

The airline generates annual revenues of $5.5bn, which is its big selling point because actual assets on its books are largely held against debt.

The brand is rented from Richard Branson and aircraft leases, terminal lounges and airport slots all have liabilities attached.

While the airline is now loss making, the turnaround comes with federal government backing because while financial support is not in the bag it has made clear it wants a viable competitor to Qantas.