Moody's has put Virgin Australia's credit rating on review for a possible downgrade amid ongoing uncertainty over the airline's capital structure, the level of shareholder support and its slower than expected reduction of debt.
Last week, Air New Zealand said it could sell all or part of its 26 per cent stake in the Australian carrier, in a move that led rival ratings agency Standard & Poor's to revise its ratings outlook to "negative" from "stable". 
Virgin does not have an investment grade credit rating from either agency, with Moody's rating its senior unsecured debt as B3 and S&P rating it as B-. Virgin's corporate rating is B2 from Moody's and B+ from S&P.
The Moody's announcement came as one of Virgin's major shareholders, billionaire Richard Branson's Virgin Group, agreed to sell his 22 per cent stake in another carrier, Virgin America, to Alaska Airlines as part of a takeover deal. Virgin Group will receive about $US570 million ($749 million) in proceeds from the sale.
"I would be lying if I didn't admit sadness that our wonderful airline is merging with another," Mr Branson said of Virgin America in a blog entry. "Because I'm not American, the US Department of Transportation stipulated I take some of my shares in Virgin America as non-voting shares, reducing my influence over any takeover. So there was sadly nothing I could do to stop it."
In the US, foreign ownership of domestic airlines is capped at 25 per cent, whereas in Australia up to 100 per cent of a domestic airline can be owned by foreign shareholders.
During a visit to Australia in   September, Mr Branson said Virgin Group was "not interested" in selling any part of its remaining 10 per cent stake in the Australian carrier even though it had sold shares to Etihad Airways in the past.
Virgin Group is backing a 12-month $425 million loan to Virgin Australia alongside Air New Zealand, Singapore Airlines and Etihad.
In his blog entry, Mr Branson said Virgin Australia now provided "real competition across the board to Qantas".
The Alaska-Virgin America deal continues a long trend of airline consolidation in the US market. In Australia, the industry is already even more concentrated given two groups, Virgin Australia and Qantas, control mainline, low-cost and regional carriers.
Alaska outbid another airline, JetBlue, to win control of Virgin America and its prized slots at airports on the west and east coasts of the US. Fitch Ratings said the deal, which will cost $US2.6 billion, could result in Alaska losing its investment grade credit rating. 
University of Sydney associate professor in aviation management Rico Merkert said the high pricetag of the Virgin America deal showed buyers were willing to pay big dollars for aviation assets and brands.
"This indicates to me that an airline such as Singapore Airlines (and also others) will similarly be very interested in parts or all of Air New Zealand's share in Virgin Australia," Dr Merkert said.
He said Singapore Airlines was the most likely party to make use of this opportunity to make a full takeover offer for Virgin, but it was also possible Delta Air Lines could buy the Air NZ stake and essentially "swap seats". Delta is Virgin's partner on North American routes.
Virgin Australia has a market value of $1.3 billion, less than half the Virgin America sales price, despite being a much larger airline than the US carrier in terms of its annual revenue and fleet size.
In Australian dollar terms, Virgin America reported $2 billion of revenue last year compared with Virgin Australia at $4.7 billion.