The company that operates Velocity Frequent Flyer is to pursue Virgin Australia as a creditor to recoup a $150 million loan extended in 2014.
The Australian Financial Review also reveals Velocity Rewards will be seeking $10 million worth of pre-bought seats set aside for frequent flyer members.
It comes as administrator Deloitte is set to appoint Morgan Stanley to oversee the airline’s sale, and more details have emerged on potential frontrunner Indigo Partners.
Velocity Rewards told the newspaper in a statement that it still hopes to have a strong relationship with the airline moving forward, but that it had a legal duty to seek the money it’s owed.
“Velocity has always had a strong partnership with Virgin Australia, and it’s our hope that this is able to continue well into the future,” a spokesperson said.
“The Velocity Frequent Flyer program has always had a trust to protect the interests of members. The independent trustee, Velocity Rewards Pty Limited, has general fiduciary duties which exist as a matter of law and a governance structure that includes an independent director and policies directing how trust funds can be invested.”
Meanwhile, adviser Houlihan Lokey will work with Morgan Stanley to oversee any sale, and the team will be familiar with the situation as they were approached by the business before administration to find a rescue package.
Finally, American airline investor Indigo Partners, thought to be one of the frontrunners to save Virgin, actually came close to a controlling stake 18 months ago.
The Sydney Morning Herald revealed on Tuesday morning that it agreed to buy a 20 per cent stake from Chinese conglomerate HNA, but pulled out after being unable to buy out fellow shareholders Eithad and Nanshan.
Indigo was said to want full control in order to be able to make changes to the company.
Other shareholders include Singapore and Sir Richard Branson’s Virgin Group.
Yesterday, Australian Aviation reported that Perth Airport had impounded four Virgin Australia aircraft with heavy machinery to help it recover $16 million in outstanding invoices for airfield and terminal charges.
It came as Deloitte administrator Vaughan Strawbridge revealed the airline’s total debt is $6.8 billion – far higher than previously reported.
"It's a standard practice for debt recovery. It sounds dramatic but it's actually very normal," @PerthAirport CEO Kevin Brown tells @GeoffHutchison on Drive.
The airport is using heavy machinery & vehicles to block four @VirginAustralia planes, over unpaid debts. #perthnews pic.twitter.com/Ux1LJiFWZJ
— ABC Perth (@abcperth) April 24, 2020
The airline group confirmed its collapse last week. After the announcement, Strawbridge and Virgin chief executive Paul Scurrah revealed more than 10 parties have expressed interest in recapitalising the company, which they described as being “very sophisticated parties”.
For more of our in-depth coverage, click the links below:
- Velocity Frequent Flyer points have been paused, but won’t be cancelled;
- Sir Richard Branson hits out at the Australian government as he pays tribute to Virgin staff;
- The TWU and opposition urges the government to make a ‘bold’ move to save the airline;
- Chief executive Paul Scurrah has revealed more than 10 parties have expressed interest in recapitalising the company.
- Australia’s states have entered an apparent bailout bidding war to help Virgin Australia – on the condition the reborn business shifts its base away from Brisbane.
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