Cash is by far the biggest issue for Virgin Blue. Sale and lease back may provide temporary protection, but when the business is trading at a loss, all that does is prolong the agony and further weaken the balance sheet in terms of equity. While the current capitalisation of ~ $ 200 m is not helpful, it roughly matches the trend of the market.
The balance between capacity reduction, break even, cash management, is extremely difficult to manage effectively and will be the ultimate test of the
VB management team.
Considering the current trading climate and the latest financials, I seriously doubt whether
VB on its own has the capacity to trade through this awful period.
Hope I'm proved wrong.