Administrators for Virgin Australia have denied borrowing funds to prop up the airline while it works towards a sale by the end of June.
Last week, The Australian reported that Virgin’s administrators would borrow roughly $200 million to help keep the airline afloat while the sale process plays out.
However, a Deloitte spokesperson told Travel Weekly that the administrators have not had to borrow funds for Virgin to remain operating.
The administrators have also temporary paused the issuing of new travel credits or refunds for cancelled flights by Virgin Australia.
Deloitte’s spokesperson said the administrators have been logging customer requests for refunds and credits “while they work on a solution for affected customers”.
“The administrators will be able to provide more certainty on arrangements for those customers in coming days,” the spokesperson said.
“Flight credits held before the appointment [of Virgin Australia’s administrators] can still be used for future travel.”
Furthermore, a Virgin Australia spokesperson told Travel Weekly that there is no change to the validity of travel credits that have already been issued.
Meanwhile, credit ratings agency Standard & Poor’s has lowered its rating for Virgin to ‘D’ from ‘CC’ based on the administrators placing a moratorium on all creditor payments, including payments on Virgin’s $6.8 billion debt pile.
S&P also noted that the airline’s recent legal action lodged in the United States Bankruptcy Court also led to its ratings downgrade.
The bankruptcy petition has been lodged to prohibit “actions by creditors against any assets that the Virgin Australia entities in administration have or may have in the United States”, according to Deloitte.
A hearing on the recognition of Virgin’s administration proceedings in Australia as the “foreign main proceeding” is set for 22 May.
On a more positive noted, Virgin has welcomed the federal government’s decision to extend its international aviation network in order to transport essential freight and bring more Australians home.
As part of the underwritten agreement, the airline will operate one return service per week between Brisbane and Los Angeles between 16 May and 7 June 2020.
Virgin Australia Group chief operating officer Stuart Aggs said: “The federal government’s decision to extend the international aviation network will ensure key airfreight links remain open to support local and state economies and the repatriation of Australians abroad.
“In the past month, Virgin Australia has helped to bring hundreds of Australians home, and has transported approximately 380 tonnes of airfreight, including all-important medical and personal protective equipment from Asia to Australia, and perishable food supplies such as Australian meat and produce to the world.
“Despite what are undoubtedly challenging times for the aviation industry and the significant reduction in capacity due to COVID-19, we are pleased to be able to maintain this connection between Australia and the United States.”
Virgin’s services to Hong Kong, which are currently part of the international aviation network agreement, ended on Sunday 3 May.
Featured image: iStock/jax10289
