Virgin Australia has a new three-year plan to raise some $852 million to repay debt, improve earnings and cash flow as well as support new opportunities for growth.
The plan, unveiled this morning after a structural review, will see the carrier sell stock at 0.21 cents a piece – a discount of 16.8 percent to the Theoretical Ex Rights Price (TERP).
Shareholders, including Singapore Airlines, Nanshan Group, HNA Group and Air New Zealand, will take up their pro-rate entitlements, while Singapore Airlines, HNA and the Virgin Group have signed agreements to contribute to the sub-underwriting of entitlements not taken up by other shareholders.
Additionally, the Australian carrier said it was looking at several new operational and capital efficiency initiatives such as selling off aircraft. Among the planes to be sold off over the next three years are the E190 aircraft. There’ll also be a reduction in ATR planes.
Other initiatives to help save funds will include improving in crew and ground operations to minimise the impact of operational disruptions; measures to increase efficiency in scheduling for maintenance and engineering teams; plus a reduction of costs in major contracts, fuel handling, catering and heavy maintenance.
Virgin expects the successful implementation of the program will increase net free cash flow to $300 million per annum by the end of the 2019 financial year.
“The program of initiatives is in addition to operational and cost efficiency initiatives already being undertaken by the Group as part of its ongoing focus on maximising value for shareholders.”
Virgin Australia
