Virgin Airlines Secures $425 Million Loan
The group has undertaken a transformation program over the past five years, and has evolved itself from a low cost carrier to a diversified airliner group.
Virgin Australia Holdings Ltd (ASX:VAH) announced that the group has commenced a review of its capital structure, as it targets to achieve a sustained access to capital and improved cash flow generation and profitability.The airliner also obtained a $425 million loan from its major share shareholders.
The group has undertaken a transformation program over the past five years, and has evolved itself from a low cost carrier to a diversified airliner group. The group states that it has improved its financial performance, delivering strong earnings growth in the first half of the 2016 financial year. The group also posted its highest statutory profit after tax since the first half of the 2010 financial year.
Chairman of the Virgin Australia Group, Elizabeth Bryan commented on the program: “The board is focused on the group’s balance sheet and capital structure to support the ongoing execution of its strategy and will lead a capital structure review. The Group has secured loan facilities from its major shareholders that provide a flexible source of funding while the review is undertaken. This review will ensure the Virgin Australia Group has the best capital structure in place to achieve its strategic goals and generate long-term growth and value for shareholders.”
This review will include an assessment of the debt and equity capital and operational initiatives to improve cash flow and profitability.
Secured 12 Month Loan for $425 Million
The group has secured a new 12 month A$425 million loan facility with its four major shareholders Air New Zealand, Etihad Airways, Singapore Airlines and Virgin Group. The group anticipates this loan to provide it with additional flexibility in the short-term.
VAH Forms Partnership with AQZ
The airline carrier recently announced the formation of a long-term strategic partnership with Alliance Aviation Services Ltd (ASX:AQZ), in order to leverage each other’s strengths in terms of network, brand, product and service offering, and technical expertise.
VAH is up 7.9% to $37.8 as at 11:03 AM (AEDT).
Author: Kaivalya Kandarpa
Mar 21, 2016
Kaivalya is an equity analyst and a client advisor at Wise-owl. She specialises in fundamental and technical analysis for large and mid-cap companies. Having completed her bachelor's degree in Business Administration majoring in Finance, Kaivalya has a comprehensive understanding of international stock market movements. She tracks local and overseas markets and compiles analytical reports for various industries.