Flight credit, points at risk as Virgin D-day nears
Millions of dollars in flight credit, Velocity Points and thousands of jobs hangs in the balance with a four-month battle to save Australia's second-largest airline reaching its climax on Friday.
Virgin Australia's second, and likely final, meeting of creditors will be held on September 4 - 136 days after it collapsed into administration owing $7b to more than 12,000 creditors.
At the meeting creditors will vote on whether to endorse American investment giant Bain Capital's deed of company arrangement - it's plan to resurrect and run the carrier.
At stake are about $600m in flight credit, millions of Velocity Points and 6000 jobs.
If the sale is successful, the Virgin Group will provide customers with a new flight credit for an amount equal to any remaining value on their existing flight credit.
Customers with TigerAir credit can use it to book Virgin Australia flights, with the Tiger brand to be discontinued.
Future flight credits will be available for booking flights up to July 31, 2022 with travel valid until June 30, 2023.
However, if the sale to Bain is unsuccessful the business will likely be wound down and hundreds of millions of dollars in flight credit could be lost and customers would become unsecured creditors.
"This means that you will be unlikely to receive compensation for the value of your ticket or booking as we presently estimate there will be no return to unsecured creditors in this scenario," administrators say.
Creditors are expected to endorse Bain's plan, as recommended by Deloitte administrator Vaughan Strawbridge, however tensions have risen between the investment giant and unions representing the airline's workforce.
However, if creditors fail to back Bain's plan the airline's assets will be sold to the investment giant individually in a process which could take months.
Employees would lose access to JobKeeper and the airline would likely emerge with fewer aircraft if Bain's plan is defeated, Virgin Australia chief executive Paul Scurrah has warned.
Bain Capital plans to reduce Virgin's cost base, employ 6000 workers, fly a Boeing 737 fleet exclusively and suspend global flights until demand returns.
The Transport Workers Union oppose Bain's plan to make former Jetstar boss and Qantas executive Jayne Hrdlicka a director or chairman of Virgin, saying she would bring a budget mindset to the airline.
Originally published as Flight credit, points at risk as Virgin D-day nears