Virgin Australia collapses under coronavirus strain
21 April, 2020
Cash-strapped Virgin Australia collapsed on Monday, so that it is the major carrier to buckle beneath the strain of the coronavirus pandemic, which has ravaged the global airline industry.
Within an announcement to the Australian Stock Exchange, Virgin said it planned to keep operating flights despite handing over the keys to administrators.
"Our decision today is approximately securing the continuing future of the Virgin Australia Group and emerging on the other side of the COVID-19 crisis," CEO Paul Scurrah said in the statement. "Australia needs a second airline and we are determined to keep flying."
The airline was a lot more than Aus$5 billion ($3.2 billion) in debt and had appealed for a Aus$1.4 billion loan to stay afloat, however the government refused to bail out almost all foreign-owned company.
Administrator Vaughan Strawbridge, from accounting firm Deloitte, said a lot more than 10 parties had expressed a "keen interest" in being the main restructuring plans.
"There has been a fantastic amount of interest available and in the restructuring of Virgin Australia," he told reporters in Sydney.
"Therefore we are confident that this will bring about a restructuring being achieved in a brief period of time."
Ratings agency Moody's said unsecured creditors would have to take "a substantial haircut" if the restructure was successful.
"Nevertheless, such an outcome may remain better putting the business into liquidation with uncertain recovery prospects," it said.
The airline had already made 1,000 workers redundant and stood down 8,000 of its 10,000 pilots, flight attendants and ground crew.
Strawbridge said the administrators would "seek to preserve as much of those jobs as possible".
Virgin suspended all international routes and scrapped all but one of its domestic routes after Australia shut its borders to limit the spread of COVID-19 and imposed tough restrictions on movement.
The airline recently started out operating limited domestic routes, and flights to bring Australians home from overseas, with financial support from the federal government.
'I'm so pleased with you'
Virgin was struggling prior to the onset of the coronavirus crisis, posting an underlying before-tax loss of Aus$71.2 million this past year.
Richard Branson, the billionaire founder of Virgin Group, which owns a 10-percent stake in the airline, tweeted a message in support of the Virgin Australia team.
"I am so pleased with you and everything we've achieved together," he said.
"This is not the end of Virgin Australia, but I really believe a new beginning. I promise we will work day and night to turn this into reality."
Branson also joined a chorus of voices taking aim at Australia's government for failing woefully to bail out the airline, saying governments generally in most countries had "stepped up" to help their airlines during the "unprecedented crisis for aviation".
The news headlines from Australia follows the collapse of Britain's biggest domestic carrier FlyBe last month as the collapse in flights sends several companies into crisis.
AMERICA has set aside vast amounts of dollars to aid the country's airlines including giants American Airlines, Delta Air Lines, Southwest Airlines and United Airlines.
There are concerns in what Virgin's troubles could mean for Australians, who are heavily reliant on flights in the vast nation, and for future years of a tourist industry already reeling from months-long bushfire and COVID crises.
Australia has just two full-service airlines, Virgin and national flag carrier Qantas, which are complemented by their budget offshoots, Tigerair and Jetstar.
Treasurer Josh Frydenberg insisted Virgin's decision to enter voluntary administration was "not the end of the airline", and the federal government works with the administrators to get the very best outcome.
"Our objective is a market-led solution. Our objective is two commercially viable, major domestic airlines operating in Australia," he said.
The federal government had urged Virgin's foreign investors who collectively owned 90 percent of the airline -- including Singapore Airlines and Etihad Airways, which each owned a 20 percent stake -- to come quickly to the rescue.
Source: www.thejakartapost.com