Virgin Australia enters voluntary administration

Canberra, April 21 (SocialNews.XYZ) Virgin Australia, the second largest airline in the Australian market, became the first major corporate casualty of the current coronavirus pandemic when it entered voluntary administration on Tuesday after failing to secure a bailout from the federal government.

The company has made this move "to recapitalize 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.

The company, which has 91 aircraft and around 10,000 workers, has been drowning under a A$5 billion ($3.16 billion) debt amid a halt in activity on account of the current pandemic of the new coronavirus, which has led to 6,619 cases of COVID-19 in Australia, including 71 deaths, Efe news reported.

The airline had sought financial assistance from Prime Minister Scott Morrison's government to help tackle its debt in the short term.

However, the government finally rejected the A$1.4 billion bailout loan to the company.

"Our intention is to undertake a process to restructure and re-finance the business and bring it out of administration as soon as possible," the company's new administrator, Vaughan Strawbridge, from the auditing firm Deloitte, said.

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.

"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."

In the end of March, Virgin Australia had announced it was cutting 90 per cent of its domestic flights and temporarily standing down 80 per cent of its 10,000 employees, while all flights of its low-cost subsidiary Tigerair were also to be suspended.

British magnate Richard Branson, the founder of the Virgin Group and owner of 10 per cent of Virgin Australia, said in an open letter to the airline's staff urging them not to give up and criticizing the Australian government's decision.

"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.

"This is not the end for Virgin Australia but I believe a new beginning. I promise that we will work day and night to turn this into a reality."

Following the announcement that it had entered voluntary administration, Virgin Australia issued a statement assuring customers that their travel credits remained valid.

"Rest assured, we're continuing to operate scheduled flights as normal, which are helping to transport essential workers, maintain important freight corridors, and return Australians home," the statement said.

"Virgin Australia has been an important part of Australia for 20 years and we're determined to keep on flying well into the future."

Source: IANS