Australia’s second-largest carrier; Virgin Australia has entered voluntary administration. Deloitte had been appointed as administrators to help it restructure amid a debt pile of $5 billion and a collapsed cash flow due to the coronavirus crisis.
The decision comes as the Group has continued to seek financial assistance from a number of parties, including State and Federal Governments, to help it through the unprecedented crisis, however is yet to secure the required support.
Virgin Australia chief executive Paul Scurrah said: “Our decision today is about securing the future of the Virgin Australia Group and emerging on the other side of the Covid-19 crisis.
Virgin Australia will continue to operate its scheduled international and domestic flights which are helping to transport essential workers, maintain important freight corridors, and return Australians home. The administrators will be supported by the Group’s current management team, led by Chief Executive Officer Paul Scurrah, and will work closely with team members, suppliers, and partners throughout the process.
About 16,000 jobs are left in limbo, however the administrators say there are no plans for redundancies.
English entrepreneur Sir Richard Branson, who owns the Virgin brand name, has offered a Caribbean island as collateral to help get a UK government bailout of Virgin Atlantic.
Virgin Australia Group Chief Executive Officer, Paul Scurrah, said, “In 20 years, the Virgin Australia Group has earned its place as part of the fabric of Australia’s tourism industry. We employ more than 10,000 people and a further 6,000 indirectly, fly to 41 destinations including major cities and regional communities, have more than 10 million members of our Velocity loyalty program, and contribute around $11 billion to the Australian economy every year,” said Mr. Scurrah.
Consumer groups and local politicians have voiced concerns that if the airline won’t survive, the national flag carrier Qantas will hold a near-monopoly in Australia.
“Australia needs a second airline and we are determined to keep flying. Virgin Australia will play a vital role in getting the Australian economy back on its feet after the COVID-19 pandemic by ensuring the country has access to competitive and high-quality air travel. We’ll come back leaner, stronger and fitter, and play our role in making sure that the economy of Australia – which is currently devastated by the impact of COVID-19 – recovers as quickly as it possibly can for all Australians,” added Scurrah.
