The global airlines that own more than half of Virgin Australia have lent the company $90 million as it fell to a $98.1 million full year loss.
The move by the companies to become Virgin’s lenders has raised concerns that the Australian airline is effectively controlled by foreign airlines with different interests to ordinary shareholders.
Air New Zealand, Etihad Airways and Singapore Airlines own 53.4 per cent of Virgin.
Virgin’s chief executive John Borghetti said the loan was a good thing and the company would not necessarily draw down on it.
“I am very humbled by the fact that three of the world’s biggest airlines believe in our strategy so much and support us,” he told reporters in a teleconference.
The unsecured one year loans would supplement and diversify its liquidity, said Virgin, as cash flow more than halved to $184 million during the year.
Invast analyst Peter Esho said the spectre of international airlines trying to control another airline through equity and debt was a reason for investors to stay away.
“Now it doesn’t really matter for Virgin, it’s just a matter of what its owners want,” he told AAP.
Richard Branson’s parent Virgin Group’s 13 per cent stake leaves only about a one-third free float for other shareholders.
The price war the airline has been engaged in with bigger rival Qantas ultimately weighed heavily on earnings as it fell to a loss from a $22.8 million profit the previous year.
Qantas shares soared on Thursday as it scraped together a small $5 million full year profit this week, defending its 65 per cent share of the domestic market compared to the low 30s Virgin attracts.
Virgin’s shares fell 1.5 per cent to 39 cents as it followed Qantas in declaring no dividend or guidance for the financial year.
Chief executive John Borghetti argued that while the financial result was disappointing, it had been a pivotal and necessary year of restructuring and milestones that positioned Virgin for future major growth.
The takeovers of airlines Skywest and a 60 per cent stake in Tiger Airways Australia were made to challenge Qantas.
A major dent in profit was the $105.1 million spent on restructuring, the majority going on installing a new reservation system, with another $25 million lost in waiving ancillary fees.
“We did this during the most aggressive competitive period in probably the last two decades in Australian aviation,” Mr Borghetti said.
He also cited the price war and general weak Australian economic environment of the last 12 months as making it harder to recover the extra $47.9 million cost of the carbon tax.
