Virgin Australia ATR 72-600 at Brisbane Airport Photo: Duan Zhu.

MIAMI – Virgin Australia (VA) commercial passenger aircraft leasing company Avation PLC has updated its information and claims related to the carrier’s administration process.

According to the statement, the Administrator released a report to creditors on August 25 stating the expected return to unsecured creditors would be between 9% and 13% of the owed amount. However, this will be so if the Deed of Company Arrangement (DOCA) receives the approval from the creditors at a meeting scheduled for September 04.

Avation’s claims against VA correspond mainly to outstanding rent and lease end-return maintenance compensation. As such, its preliminary proof of debt amounts to US$74.7m.

So far, the majority of the claims should be settled before June 30, 2021.

Virgin Australia ATR 72-500 at Brisbane International Airport. Photo: Robert Frola.

Avation Claims in Detail

When VA went into Administration on April 20, it had 13 aircraft on lease from Avation. These included six ATR72-500, five ATR72-600, and two Fokker 100 jet aircraft.

With the carrier’s restructiring plans, the company then entered into new lease arrangements for five of the above aircraft.

Regarding the two Fokker aircraft, Avation reached finance leases for their sale. On the six ATR72-500 aircraft, it agreed on operating leases for two of them with an Australian airline and another with an Asian carrier.

Despite these arrangements, the three returned remaining ATR72-500 aircraft are still undergoing maintenance for the aforementioned later operations.

In contrast, the company has not sold any of its five leased ATR72-600 aircraft. Currently, these are still under the Administrator’s returning process. Therefore, Aviation seeks to reposition or sell eight ATR72 aircraft, totaling secured debt outstanding amounts to US$30.7m.

In addition to this debt, VA’s future outstanding rent was US$48.4m when the airline filed for Administration. As a result, Aviation claims US$74.7m from debts.

Virgin Australia ATR 72-600 at Sydney Airport. Photo: Bahnfrend.

Avation CEO Comments

According to Avation CEO, Jeff Chatfield, the company is fortunate that VA’s leases only had 1-3 years of the remaining duration. Thus, the associated unearned contracted revenue its less than 6% of Avation’s total revenue on related matters.

Chatfield also said that the low levels of debt regarding the aircraft returning will be further reduced by the expected payment to VA’s creditors. This follows the proposed DOCA green light.

On the remaining ATR72 aircraft sales, Chatfield is optimistic. Avation believes that regional aviation will be first to recover after the pandemic.

While the company considers how to redeploy these aircraft, the aircraft types are also amongst the lowest cost option to operate.

Featured image: Virgin Australia ATR 72-600 at Brisbane Airport. Photo: Duan Zhu.