Virgin Australia: Last month, Virgin Australia cancelled almost off of its flights
Virgin Australia has entered voluntary administration, it has been announced. The coronavirus crisis, ensuing travel bans and fall in demand for flights sparked the Australian airline’s downfall. Last month, Virgin Australia cancelled almost of its flights amid the pandemic.
The carrier was already struggling with a long-term A$ 5billion (£2.55bn) debt.
Virgin Australia Holdings Limited entered voluntary administration to “recapitalise the business and help ensure it emerges in a stronger financial position on the other side of the COVID-19 crisis,” the airline said in a statement today.
Voluntary administrators of the company and a number of its subsidiaries from Deloitte have been appointed by the Group’s Board of Directors.
They now hope to successfully sell the whole airline to a new owner.
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.
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Virgin Australia: The airline employs about 10,000 people directly
Virgin Australia is part-owned by a number of entities – Etihad Airways owns 21 percent, Singapore Airlines, China’s Nanshan Group and HNA own 20 percent each, and Sir Richard Branson’s Virgin Group owns around 10 percent.
The airline employs about 10,000 people directly and another 6,000 through ancillary businesses. All will keep their jobs during the administration period.
So what does the company’s collapse mean for flights?
Virgin Australia Group Chief Executive Officer, 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.”
He added: “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.”
The carrier 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 during administration.
Those with bookings on Virgin should “expect to fly” once the restrictions on travel are lifted, Scurrah explained.
Those with bookings on Virgin should “expect to fly” once the restrictions on travel are lifted
The CEO added there was no intention to cancel flight credits.
The goodwill associated with those credits would be worked through with interested parties meaning flight credits are safe for now.
Virgin Australia had previously held around 31 percent of domestic flights in Australia.
Rival airline and flag carrier Qantas controlled around 58 percent of the market.
Virgin Australia’s collapse will prove a blow to the country’s tourism.
The airline previously flew about 130 aircraft to 41 destinations.
There were mainly domestic, but it also operated international services including to New Zealand, Bali, Fiji, Tokyo and Los Angeles.
Scurrah said: “In 20 years, the Virgin Australia Group has earned its place as part of the fabric of Australia’s tourism industry… and contributes around $ 11billion (£5.6bn) to the Australian economy every year.”
Administrator, Vaughan Strawbridge, added: “Our intention is to undertake a process to restructure and re-finance the business and bring it out of administration as soon as possible.
“We are committed to working with Paul and the Virgin Australia team and are progressing well on some immediate steps.
“We have commenced a process of seeking interest from parties for participation in the recapitalisation of the business and its future, and there have been several expressions of interest so far.”