Virgin Australia officially filed for administration, saying on Tuesday (21 April) in a statement to the Australian Stock Exchange it hopes to recapitalise its business to “ensure it emerges in a stronger financial position on the other side of the COVID-19 crisis”. The airline appointed the accounting firm of Deloitte as administrators.
Reports had been flowing around the industry on Monday that the company would fail because it was carrying too much debt compared to competitor Qantas and the government of Australia was not willing to pump in the cash necessary to keep Virgin going.
Virgin Australia said it will continue to operate scheduled international and domestic flights “which are helping to transport essential workers, maintain important freight corridors and return Australians home.”
Virgin Australia Group CEO 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…Australia needs a second airline and we are determined to keep flying.”
Australia’s troubled second airline, which saw its cash flow collapse because of tough coronavirus travel restrictions, is saddled with around A$5 billion debt. It has already stood down 80 per cent of its direct workforce and announced 1,000 redundancies in the past few weeks. The airline called in the administrators after the government refused to step in with a A$1.4 billion loan, despite repeated pleas from company management. Virgin has also been in talks with the New South Wales and Queensland state governments, but is yet to secure support.
In a statement to staff, Virgin Group boss Richard Branson said the airline had brought competition and lower airfares to Australia’s skies. Virgin Group is a 10 percent shareholder in Virgin Australia. “I know how devastating the news today will be to you all,” Branson said. “In most countries federal governments have stepped in, in this unprecedented crisis for aviation, to help their airlines. Sadly that has not happened in Australia.”