Virgin Australia enters trading halt over restructuring talks

Virgin Australia enters trading halt over restructuring talks

After announcing the suspension of all domestic passenger flights except a daily Sydney-Melbourne service, Virgin Australia (ASX: VAH) has requested an immediate trading halt today as it explores options to stay aloft.

As most air travel grounds to a standstill due to coronavirus-related restrictions, the airline's last reported available cash balance was $2.95 billion; a figure that is just under its ordinary half-yearly net operating expenses.

Those expenses have been slashed recently though after Virgin Australia stood down around 10,000 staff last month, cutting domestic capacity by 90 per cent and suspending all Tigerair Australia domestic services. International flights have also been suspended until mid-June.

The group has proposed a $1.4 billion bailout from the Federal Government, and over the long weekend Deputy Prime Minister Michael McCormack told the ABC he had been in discussions with the bosses of VAH and Qantas (ASX: QAN) about possible subsidies to ensure vital routes were maintained.

Today the group announced a trading halt would be in place for up to two days or before an announcement is made.

"Virgin Australia requests a trading halt as it continues to consider the issues brought about by the Covid-19 crisis including discussions with respect to financial assistance and restructuring alternatives which are ongoing," company secretary Sharyn Page wrote in a letter to the ASX.

In the airline's announcement last week, Virgin Australia noted a few major flight routes continued to be in place.

"We continue to support the Australian Government with flights between Los Angeles and Hong Kong to help bring Australians home and maintain important freight links in and out of the country," the group said.

"Demand for charter services in the resources sector remains strong and we continue to support our customers with services. We also remain open to charter opportunities or any flying the Australian Government needs support with.

"We stand ready to support Australians flying to their destinations again when travel restrictions ease."

Updated at 10:18am AEST on 14 April 2020.

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