All finance news

Virgin Australia enters voluntary administration as coronavirus continues to batter airlines

0 2

Hong Kong (CNN Business)Virgin Australia has collapsed into administration, one day after billionaire founder Richard Branson made a last-ditch appeal for government support for the country’s second biggest airline.

The carrier is the industry’s latest casualty as the coronavirus pandemic continues to eliminate global demand for travel. The company said Tuesday that it had entered voluntary administration as it looked for money to revive its business, and that it eventually hoped to “emerge stronger on the other side of this crisis.”

    Virgin Australia is the first major airline in Asia Pacific to succumb to the loss of business from the pandemic, which has caused carriers to rip up their flight schedules, ground planes and put staff on unpaid leave. Last month, UK budget carrier Flybe also collapsed, saying its financial challenges were too great to withstand in the context of the pandemic. For now, the Brisbane-based carrier plans to continue operating all scheduled flights, “which are helping to transport essential workers, maintain important freight corridors, and return Australians home,” the airline said in a filing posted on the Australian stock exchange. Read MoreThe news came just hours after Branson implored the Australian government to step in, warning on Monday that the carrier urgently needed help to keep going. The billionaire businessman, who has already pumped $250 million into Virgin Group companies in response to the pandemic, also said he would offer his Necker Island estate in the Caribbean as collateral.Virgin Atlantic, Branson’s British airline, is also seeking a commercial loan from the UK government, and has put its staff on several months of unpaid leave.In a call with reporters Tuesday, administrators said there was no immediate plan for any layoffs at Virgin Australia.The carrier already halted most operations in recent weeks, with 95% of flights cut and 80% of the workforce temporarily off the job, CEO Paul Scurrah said. Virgin Australia normally has 10,000 employees, with another 6,000 workers indirectly employed, he added.Vaughan Strawbridge, a partner at Deloitte in Australia who is serving as a voluntary administrator, said the company had started looking for new owners or investors to help recover the business.”The intent is to seek to sell the majority, if not all of the business, as one,” said Strawbridge.So far, more than 10 parties have already expressed an interest in taking a stake, and the company expects to have a better sense of its future over approximately the next two months, he added.”This is not intended to be a long, protracted process,” he said.Branson has argued that Virgin Australia is essential in maintaining competition to the country’s flagship airline, Qantas (QABSY). “If Virgin Australia disappears, Qantas would effectively have a monopoly of the Australian skies,” he wrote in an open letter this week.The Australian Treasury said Tuesday that it would work with Virgin Australia’s administrators “to ensure Australia maintains two commercially viable airlines.””Our objective is to help keep as many employees as possible in their jobs, a second major domestic airline in the sky, prices down and competition maintained,” Australian Deputy Prime Minister Michael McCormack and Treasurer Josh Frydenberg wrote in a joint statement.A spokesperson for the Australian Competition and Consumer Commission also said it was working with Virgin “to identify expected next steps.”In addition to approaching the government, the company had looked to investors for help. Outside the Virgin Group, the airline’s major shareholders include Etihad Airways and Singapore Airlines.But “our shareholders were unlikely to be able to participate … given they are all suffering from Covid-19,” Scurrah told reporters Tuesday.

    A Virgin Australia flight taking off from Sydney International Airport in March.In another message addressed to employees on Tuesday, Branson called out the Australian government, saying “this is not the end for Virgin Australia.””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,” he wrote.

      “I want to assure all of you — and our competitor — that we are determined to see Virgin Australia back up and running soon.”— Hanna Ziady contributed to this report.


      Leave A Reply

      Your email address will not be published.

      14 − 11 =