Credit ratings agency Moody's says Air New Zealand's sale of a 19.98 per cent stake in Virgin Australia will be good for the Australian carrier.
Moody's said the agreement to sell the shares to China's Nanshan Group was credit positive for Virgin because it resolved uncertainty about the company's key shareholders, which had impeded Virgin's capital structure review and balance sheet strengthening that was announced 21 March.
Nanshan is a large privately owned Chinese conglomerate with interests across a diverse range of industries, including its own emerging airline in China, Qingdao Airlines, which was launched in April 2014. "Nanshan's willingness to support the outcome of Virgin's capital structure review is clearly positive," said Moody's.
"To date, Virgin's credit quality and rating have benefited from its strong shareholders, which have provided liquidity and capital support in the past, increasing our tolerance for the company's weak leverage metrics relative to our expectations for its B2 rating. If, as a consequence of Virgin's review of its capital structure, its financial metrics improve to below the stipulated guidance of 6.5x for the B2 rating, we would likely affirm the rating," said Moody's.
