Regional Express executive chairman Lim Kim Hai has claimed Virgin Australia is headed for yet another financial disaster under the current administrator.
According to Lim, the restructuring provided a “wonderful opportunity” to make “deep-seated changes to Virgin”.
However, the Rex chairman has been scathing in his assessment of the Deloitte team headed up by Vaughan Strawbridge, stating that the administrator has no intention of making any structural changes to the business model.
“It would appear from his timeline that he [Strawbridge] just wants a quick sale and he actually leaves the problems to the buyer to solve,” Lim told The Australian Financial Review.
Lim has put forward a number of changes he would make to the airline during this period, including:
- Rewriting the enterprise bargaining agreements;
- Restructuring the aircraft leases;
- Cancelling outstanding orders for the Boeing 737 MAX; and
- Converting all debt to equity.
The Singaporean entrepreneur obtained a 32 per cent stake in Ansett Australia’s two regional airlines – Kendell Airlines and Hazelton Airlines – after the airline entered administration in 2001, before merging them to form Regional Express.
Other analysts have predicted that under new management, Virgin will likely need to undergo significant changes in terms of its day-to-day operations.
Neil Hansford, chairman of Australian airline consultancy group Strategic Aviation Solutions, said that potential buyers would likely look to extensive redundancies as a means to cut costs. Hansford also suggested that a new owner would have to “slash long haul international routes” and transform the airline into an ultra-low-cost carrier.
Deloitte administrators and Virgin executives reportedly pitched the business to bidders this week based on an earnings before interest, taxes, depreciation, and amortization (EBITDA) figure of $1.2 billion per year by 2022.
If true, the 2022 EBITDA forecast would amount to nearly 350 per cent of figures recorded for the 2019 financial year.