Virgin Australia Holdings (VAH) said in a statement this week that to fund its restructuring and to cut debt, it will ask its shareholders to subscribe to a fully underwritten rights issue worth AUD852 million (USD628 million). Combined with China's HNA Aviation acquisition of a 13% stake for AUD159 million (USD115 million) announced late last month, VAH could raise as much as AUD1.011 billion (USD743.5 million).

Singapore Airlines (SQ, Singapore Changi), Virgin Group, Air New Zealand (NZ, Auckland International), and VAH's new Chinese investors, HNA Group and Nanshan Group, have all made binding commitments to take up their pro-rata entitlements. In addition, Singapore Airlines, HNA Group, and Virgin Group have all pledged to cover commitments not taken up by other shareholders, the largest of which is Etihad Airways (EY, Abu Dhabi International) which has deferred a decision on its involvement.

“Our renewed capital structure will strengthen our balance sheet, provide additional liquidity and help fund initiatives to improve earnings and cash flow," Chief Executive Officer of the Virgin Australia Group, John Borghetti, said. "Additionally, the new program of operational and capital efficiency initiatives will further deepen our focus on having a low, sustainable cost base."

As part of its restructuring, Virgin Australia (VA, Brisbane International) will, over the next three years, phase out its Embraer (EMB, São José dos Campos U.E. Stumpf International) Regional Jets and reduce its fleet of ATR - Avions de Transport Régional (EVX, Toulouse Blagnac) turboprops.

The Australian carrier, which currently operates fourteen E190s and fourteen ATR72-500/600s, says the move will assist it in simplifying its business while allowing it to become more "scalable and productive."

Virgin has already announced its fleet of six E170s, currently on sub-lease to Delta Air Lines (DL, Atlanta Hartsfield Jackson), will be sold by the end of the current financial year while its Virgin Australia Regional (VA, Perth International) subsidiary has now completed the retirement of its Fokker 50 fleet.

An unspecified number of jobs will also be affected by the retirements.