What is Happening to the Share Price of Virgin Australia Holdings Ltd?

What does Virgin Australia Holdings do?

Virgin Australia Holdings Ltd [ASX:VAH] operates international and domestic airline services, and also operates Tigerair Australia.

Virgin Australia has pushed hard into Australia’s aviation market, which is dominated by Qantas.

What’s moving the VAH share price lately?

What’s moving the Virgin share price and why the trend is dramatically down, is mainly on concerns over debt that the airline is carrying and news that the company’s credit rating could be downgraded by Moody’s. The downgrade is in regard to ongoing uncertainty over the airline’s capital structure and its inability to reduce debt.

On 11 February, the company released its half-year results. Revenue is improving, mainly on the back of its domestic division. However, the international division is still making losses.

The level of debt is a major concern. The company announced news on 21 March that it needed a loan from its four major shareholders for a further $425 million. News soon followed that Air New Zealand is considering selling its stake in the airline.

What now for VAH shares?

The competition against its rival Qantas has put the Virgin balance sheet in a weak position, and there is uncertainty over the future of the carrier. The VAH share price is reflecting that.

The recent $425 million loan may give the company some time to get its house in order, but if you bring up the stock chart of the company share price, it doesn’t give you much cause for optimism.

Terence Duffy,
Research Analyst, Cycles, Trends and Forecasts

Terence Duffy is an analyst and chartist, specialising in researching economic trends and cycles.  His primary focus is housing and land affordability. But you can also depend on him to offer his unique analysis of stock market charts. As Terence will show you, the charts often forecast, well in advance, the good or bad news to come — which he details in Cycles, Trends and Forecasts.

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