In the normal course of trading, airlines hold significant money from customers who had paid for but not yet taken their flight. There would also be customers who may be holding credits or awaiting a refund for flights that were not taken or cancelled. Until the customer took the flight or received a refund, any credits or funds held would be recorded as a liability on the airline’s balance sheet, called unearned revenue. This liability, like amounts owed to other types of creditors, is put on hold during the voluntary administration process.
On 13 May 2020, we obtained orders from the Court allowing us to implement a policy (Conditional Credit Policy) whereby we could offer eligible customers the opportunity to use the value of their original pre-administration booking (the amount paid for the original ticket including ancillaries and taxes, but excluding fees) rather than submitting a claim as an unsecured creditor in the voluntary administration.
Under the terms of the Bain DOCA proposal, Bain has agreed to provide customers with a new Future Flight credit for an amount equal to any remaining value their Conditional Credit. Future Flight credits will be available for booking flights up to 31 July 2022 with travel valid until 30 June 2023. Bookings using the credit will be subject to seat availability within the fare class reserved for Future Flight credits on the selected flight and will be subject its own terms and conditions.
For customers with pre-administration bookings for flight scheduled to occur after the Administration period, should your flight be cancelled the terms of the Bain DOCA proposal will entitle you to receive a Future Flight credit to the equivalent value of your current ticket (less any non-refundable fees and taxes).
Based on the information available to us from the books and records of the Group, we estimate the customer liability position is between $550m and $650m. The number of customers and value is changing constantly as the Virgin Group continues to operate, albeit at reduced capacity.
