The administrators to stricken airline Virgin Australia have chalked up a minor victory after striking a deal to stop the carrier’s fleet being repossessed by angry financiers mid-way through the group’s sale process.
The airline’s administrators Deloitte said in court documents filed on Monday in the Federal Court they had reached an agreement with the groups that provide aircraft leasing finance to Virgin.
Virgin entered administration in late April after becoming unable to service its large debt pile in the wake of the shutdown of most aviation travel due to the coronavirus pandemic. It owes its creditors, including 10,000 staff, a total of $7 billion.
Virgin’s aircraft lessors are collectively owed $3.7 billion by the airline, according to legal letters filed with the Federal Court. The court documents show the cost of repaying the leases is $40 million a month in administration, while the gross revenue of the operating fleet has shrunk to $25 million a month due to coronavirus restrictions.