Lessor Avation stakes $73.3mn claim against Virgin Australia

London-listed, Singapore-based lessor Avation has calculated that it has claims against Virgin Australia Holdings of AUD101.4 million Australian dollars (USD73.2 million) related to compensation for outstanding lease and end-of-term return maintenance, it announced on August 19.

It said it had been advised by the creditors’ trust of Virgin Australia administrator Deloitte, appointed to oversee last year’s restructuring, which the airline exited in November 2020, that its “claims against Virgin Australia and associated entities have been adjudicated by the trustee and admitted” for the above-combined sum.

The lessor added that it “anticipates that it will receive a proportional distribution from the proceeds of the creditors’ trust in due course” even though no information about timing or the final amount has yet been given, neither has it received information on the relevant proportion of claims to be distributed to creditors.

The Virgin Australia (VA, Brisbane Int’l) parent went into administration on April 21, 2020, and in early September its creditors agreed in an online meeting to sell the indebted carrier to Boston-based private equity group Bain Capital. As part of the deal, unsecured creditors would be paid a return of 9% to 13% for their claims, the airline said at the time. In total, creditors were owed around AUD7 billion (USD5 billion).

On August 31, 2020, Avation said it had been leasing 13 aircraft – six ATR72-500s, five ATR72-600s, and two Fokker 100s – to Virgin Australia when it went into voluntary administration, some of which were operated by Virgin Australia Regional (Perth Int’l). It estimated then that the carrier’s preliminary proof-of-debt claim to it was USD74.7 million.

“Avation is fortunate that the leases to Virgin Australia were mature with a range of only one to three years remaining duration on each lease,” the lessor’s executive chairman, Jeff Chatfield, said at the time. “The unearned contracted revenue associated with Virgin Australia represented less than 6% of Avation’s total unearned contracted lease revenue across all customers as at the date of the administration.”