Virgin Australia’s restructuring plan to raise fresh equity and downsize its fleet and workforce

Virgin Australia is seeking an equity infusion of $852m and looking to cut its fleet and jobs as part of a major corporate restructuring program.

The capital raising has so far been supported by key shareholders Singapore Airlines, Air New Zealand and Chinese companies HNA Innovation and the Nashan Group, although 24% shareholder Etihad Airways has yet to commit any additional capital.

The group will also cut its smaller fleet of ATR turboprop aircrafts and decommission all of its E190 aircraft from its fleet over the next three years in an attempt to assist the group in simplifying its business and increasing its productivity.

Virgin also announced it would undertake a new efficiency drive aimed at cutting up to $250m in discretionary expenses, as well as flagging impairment charges of between $150 to $200m through to 2019.

Virgin Australia’s chief executive John Borghetti said there was no target for job losses in the restructure, as the focus was a realignment of existing jobs.

The $852m capital raising will be a fully underwritten on a 1 for 1 non-renounceable pro-rata offer. The raising along with an earlier $159m placement to HNA will pump up Virgin’s balance sheet with $1.01bn of fresh equity.

The new shares will be offered to existing shareholders at $0.21 per share, a 28% discount to its previous day’s closing price of $0.26 a share.

The money raised would be utilized towards repaying a $425m unsecured loan made by its airline shareholders Air New Zealand, Etihad Airways, Singapore Airways and the Virgin Group. The balance of the raising will be used to pay down the existing $3bn debt on Virgin’s books.

The cost-cutting and efficiency drive aims to boost free cash flow by $300 million dollar a year by 2019.


Fashion retailer Ralph Lauren to cut jobs and close stores amid dwindling sales

U.S.-based retailer Ralph Lauren Corp. plans on cutting about 1,000 jobs and shutting about 50 of it’s stores amid a sluggish retail market and to lower operating costs and revive sales growth.

The retailer has been negatively impacted by department stores which offered heavy discounts whilst selling excess inventory.

Competition from rivals like Zara, H&M, which have a shorter production time, also affected Ralph Lauren’s sales which now plans to reduce the time taken to launch new product lines from 15 months to 9.

The company now plans to focus on its luxury Ralph Lauren line of clothing and lower-end Polo and Lauren brands.

The company expects full year revenue to decline by double-digits (lower end) amid store shut down, competition and weak sales volumes.

Further, the company expects to incur $400m in restructuring charges and about $150m in inventory spill back related charges, helping the company achieve $180-220m in annualized savings.

Source: Reuters

Goldman Sachs said to have conducted lay-offs at its investment banking unit

According to sources, Goldman Sachs Group Inc. conducted lay-offs at its investment banking division in the last few weeks.

As part of the job cuts, the bank eliminated dozens of managing directors, executive directors and vice presidents across the mergers, debt and equity capital markets unit in cities including London, New York and Hong Kong.

These cuts were termed to be in addition to the bank’s annual 5% percent planned layoffs of employees deemed underperformers.

Source: Bloomberg


Shell announces job cuts in 2016

Royal Dutch Shell Plc plans to cut 2,200 more jobs to take its tally of job cuts to 12,500 in 2016.

According to Paul Goodfellow, Shell’s vice president for the U.K. and Ireland, at least 5,000 jobs would be cut in 2016 to tackle lower crude oil prices and as a result of its acquisition of BG Group Plc earlier this year.

Shell’s adjusted net income for 1Q 2016 declined 58% to $1.6bn following the collapse in oil prices. The company acquired BG Group for $54bn in 2016 to get access to oil and natural gas reserves from Australia to Brazil. The acquisition increased Shell’s debt to $70bn as on 31 March 2016.

Source: Bloomberg

BNP Paribas to cut 233 investment banking jobs in London

According to sources, BNP Paribas plans on laying off about 233 employees from its investment banking division in London.

A 35-member securitization desk will also be halved, as part of the planned job cuts.

As per sources, 100 employees would leave within weeks and the rest, by the end of the year.

The France-based lender had previously announced 675 job cuts from its investment banking division in Paris.

Source: Bloomberg