Fitch Ratings has downgraded Virgin Australia Long-Term Foreign-Currency Issuer Default Rating to 'D' from 'CCC-', following the carrier's announcement it has entered voluntary administration.
Virgin said on April 21 that it will continue to seek financial assistance - but to date has not successfully secured the required support - to shore up its liquidity and ongoing financial position as the majority of its planes remain grounded due to the travel restrictions imposed in Australia to combat the coronavirus.
“We understand that the administrators and the Australian state and federal governments, alongside VAH, are seeking a new buyer for the airline to ensure two viable airlines remain in Australia, although we expect the footprint of VAH emerging from the administration proceedings to differ from its historical form,” said Fitch in a note on the downgrade.
Fitch said it expects Virgin’s balance sheet to be restructured as part of this process, and creditors will likely be required to take a haircut on its outstanding debt. Once the airline exits the administration proceedings, we will assess its new strategy and restructured financial profile and re-rate the carrier accordingly.