VAH flies into history, taking billions in lost investments with it
Virgin Australia’s VAH code will disappear from the ASX today as the company moves into private ownership under Bain.
Virgin creditors have voted voted strongly in favour of the Bain Capital deal for Virgin. (Photo: Array)
Also consigned to history will be one of Australia’s most expensive and ill-conceived strategies for an airline.
Virgin Australia was a financial disaster and much of it can be attributed to the capacity war former chief executive John Borghetti undertook with Qantas a decade ago.
It lost more than $1 billion in a handful of years and at the end it owed $7 billion to its creditors. Last year it posted a $349 million loss and cut 750 staff so the end was visible.
Its shares tanked and shareholder funds evaporated. It listed at $2 in 2003 and before the plug was pulled earlier this year it was trading at 8 cents, supported by overseas airlines that owned the majority of shares.
Under Borghetti’s control, Virgin lost a total $997.9 million and its share price has lost two-thirds of its value.
The capacity war with Qantas was judged a failure mostly because Qantas was able to restructure and restore its earnings. Virgin didn’t.
COVID-19 may have been the last straw, but Virgin’s continued existence was under threat well before the Wuhan outbreak.
