Virgin Australia shares on a tear after a debt deal with major shareholders

Graham Denholm/Getty Images

Shares in Virgin Australia soared after the airline announced a 12-month $425 million loan from major shareholders Air New Zealand, Etihad Airways, Singapore Airlines and Virgin Group.

A short time ago, the shares were up more than 7% to $0.375.

The deal gives the company breathing space to improve its balance sheet.

“The board is focused on optimising the group’s balance sheet and capital structure to support the ongoing execution of its strategy and will lead a capital structure review,” says chair Elizabeth Bryan.

“The group has secured loan facilities from its major shareholders that provide a flexible source of funding while the review is undertaken.”

Virgin has returned to profit, with better returns per seat, after a long seat battle with Qantas. Last month it posted a $62.5 million half year profit compared to a loss of $47.8 million the year before.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at