Due to a little known international treaty, the Virgin fleet has been grounded in Australia since 20 April 2020, which was when Administrators were appointed to Virgin Australia Airlines.
But that grounding will end on 20 June 2020 because that is when the 60 day stand-still period ends under the Cape Town Convention which applies to international interests in aircraft. 'International interests' refers to lease finance and other finance for aircraft.
Almost all of the Virgin fleet is affected - 142 aircraft in the Virgin fleet of 144 aircraft are leased or financed. The 50 aircraft lessors are owed $1.8 billion and the 23 aircraft financiers are owed about $2 billion. They have not received any lease payments since April, but have been paid usage fees if their aircraft has been flown.
On 20 June 2020, the aircraft lessors and financiers can decide to terminate their leases with Virgin, re-fuel the 142 aircraft and fly them out of Australia, and no-one can stop them. If all of them did so, Virgin would be left with the 2 planes it owns.
The only reason why they may not choose the 'fly away' option is that they cannot get a better leasing deal with another airline because the COVID-19 pandemic has drastically reduced flights around the world.
Their other option is to wait until the creditors meeting on 22 August, to see if the successful bidder for the Virgin business needs their aircraft. If so, they need to be prepared to reduce the rent payable as an incentive.
The bottom line is that the Virgin Administrators might have precious little in terms of aircraft left to sell by the time of the creditors meeting. Time will tell.
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