Dubai: Abu Dhabi’s Etihad Airways is backing a 425 million Australian dollar ($321 million, Dh1.2 billion) loan to Virgin Australia to help fix its balance sheet.

The Australian airline, who competes with Qantas domestically, took out a $125 million loan in the first half of its financial year after unrestricted cash reserves shrank to A$544 million as of December 31, from A$839 million.

Now its four major shareholders Etihad, Air New Zealand, Singapore Airlines and Virgin Group are backing a 12 month unsecured loan for the airline. The four shareholders own about 83 per cent of Virgin Australia and will contribute to the facility in proportion to their shareholdings, Virgin Australia said in a statement to the Australian Stock Exchange (ASX) on Tuesday.

Air New Zealand, who owns a 26 per cent stake, is contributing A$131.2 million, the bourse statement said. Virgin Australia did not say what the other contributions were. Gulf News calculated Etihad will fund around A$127 million as per its 25.1 per cent stake.

Etihad confirmed to Gulf News it is taking part in the facility but did not comment on how much it is contributing.

“The loan will be extended on arm’s length commercial terms for a period of 12 months,” Etihad said in an emailed statement.

Singapore with a 22.8 per cent stake will fund $115.6 million and Virgin Group, who own 10 per cent, will fund A$50.7 million, according to Gulf News calculations.

Virgin Australia says it is reviewing its capital structure to ensure sustainable access to capital and improve cash flow generation and profitability.

“The Group has secured loan facilities from its major shareholders that provide a flexible source of funding while the review is undertaken. This review will ensure the Virgin Australia Group has the best capital structure in place to achieve its strategic goals and generate long-term growth and value for shareholders,” Virgin Australia Group Chairman Elizabeth Bryan said in a bourse statement.

The airline did not say when the review would be completed. Virgin Australia reported A$62.5 million half-year profit and reportedly took out a A$164 million loan in the same period.

In August 2013, Virgin Australia obtained A$90 million credit line from Etihad, Air New Zealand and Singapore. The three shareholder airlines later that year took part in a A$350 million capital raising exercise.