Dubai Aerospace Enterprise among Virgin Australia lessors

Virgin Australia is said to owe almost 10,000 creditors A$6.9 billion. (Supplied)
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Updated 25 April 2020

Dubai Aerospace Enterprise among Virgin Australia lessors

  • The Deloitte administrators are seeking court orders for an extension of up to four weeks from their appointment to decide if leased planes are required for continuing operations of the business

SYDNEY: Virgin Australia Holdings owes A$6.9 billion ($4.39 billion) to more than 10,000 creditors based on an initial review, and will seek a three-month payment waiver from aircraft lessors, its administrators said.

Virgin said this week it succumbed to third-party led restructuring that could lead to a sale, turning Australia’s second-biggest airline into the Asia-Pacific’s biggest victim of the coronavirus crisis.
The figure owed to creditors includes about A$2.3 billion of secured debt, A$2 billion of unsecured bonds, A$1.9 billion of aircraft leases, A$450 million owed to employees, A$167 million to trade creditors and A$71 million to landlords, according to an affidavit from administrator Vaughan Strawbridge.
The bankrupt airline’s administrators are liable to pay leases on its aircraft starting April 28, because they will not inform lessors whether they would renege on leases within five business days, as required by law, the documents, posted on the website of Strawbridge’s firm Deloitte, showed.
The Deloitte administrators are seeking court orders for an extension of up to four weeks from their appointment to decide if leased planes are required for continuing operations of the business.
“Next week we will be wanting to engage with you to firm up on interim arrangements with the administrators to support the process being followed to achieve a recapitalization and sale, which will include a request for a three-month waiver of rent and other financial payment obligations,” they said in a letter.
A document released by the Federal Court of Australia showed law firm King & Woods Malleson (KWM) said it was representing 17 aircraft lessors and financiers.
These include Aercap Holdings NV, Bank of China, SMBC Aviation Capital, ORIX Aviation, GECAS, Dubai Aerospace Enterprise, Bank of America Corp. and BNP Paribas SA.
The lessors with the biggest financial exposure to Virgin include Goshawk, Avation PLC, Aercap, ORIX and SMBC, each with estimated monthly income of at least $1 million from the airline, aviation data provider Cirium said.

HIGHLIGHTS

● Airline has more than 10,000 creditors.

● Entered administration due to virus crisis.

● To seek three-month rent waiver from lessors.

KWM said its clients wanted to work with the administrators, but required them to pay for regular maintenance and insurance and report on the use of aircraft.
Perth Airport said it had seized a number of Virgin Australia aircraft that were parked there not currently conducting flights to protect the airport’s interests, given the airline had “significant” outstanding invoices.
“Perth Airport has taken liens over a number of Virgin aircraft — a standard practice in these situations,” a spokeswoman said.
Sydney Airport and Melbourne Airport said they had not seized Virgin aircraft. “We prefer to work constructively with our airline partners through this period,” a Sydney Airport spokesman said.
For now, Virgin is flying a skeleton schedule under its regular management team as administrators seek a buyer for the entire operation.
Private equity and distressed situation specialists Apollo Global Management, Oaktree Capital Management and BGH Capital are among more than 10 firms to express interest in the restructuring, Reuters has reported, citing five sources.


Oil surges on hopes of new deal on output cuts

Updated 02 June 2020

Oil surges on hopes of new deal on output cuts

  • Brent price has doubled in five weeks
  • OPEC talks may be brought forward

DUBAI: Oil prices surged toward $40 a barrel on Monday as hopes rose for an early agreement to extend the big production cuts agreed by Saudi Arabia and Russia under the OPEC+ alliance.

Brent, the global benchmark, jumped by more 9 percent to nearly $39, continuing the surge that has doubled the price in five weeks — the best performance in its history. It recovered after record supply cuts agreed between the 23 countries of the OPEC+ partnership, and enforced cuts in US shale oil.

DME Oman crude, the regional benchmark in which a lot of Saudi Aramco exports are priced, rose above $40 a barrel for the first time since early March.

Market sentiment was buoyed by the possibility that the Organization of Petroleum Exporting Countries would agree with non-OPEC members to extend the cuts for a longer period than was agreed in April.

Oil analysts expect OPEC to fast track a “virtual” meeting to formally agree to maintaining cuts at the record 9.7 million barrels a day level. The meeting was scheduled for June 9, but bringing it forward would allow producers more time to set pricing levels.

Opinion

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An official with one OPEC delegation told Arab News there was consensus among the 23 OPEC+ members for the new date, which could be as early as June 4. The meeting will also consider how long the current level of cuts would be maintained. Some OPEC members want it to run to the end of the year, other producers would prefer a two-month extension.

Omar Najia, global head of derivatives with trader BB Energy, told a forum run by Gulf Intelligence consultancy: “I’d be amazed if OPEC did not extend the higher level of cuts. As long as Saudi Arabia and Russia continue saying nice things to each other I’d expect the rally to continue.”

A Moscow source close to the oil industry said energy officials there had come to the conclusion that “the deal is working” and it was important to keep prices at an “acceptable” level.

Sentiment was also affected by a comparatively high level of compliance with the new cuts, running at about 75 percent among OPEC+ members, with only Iraq and Nigeria noticeable under-compliers.

Robin Mills, chief executive of Qamar Energy, said: “That’s where I’d expect it to be after two months in such a fluid situation. It will be even better in June.”