Virgin Australia, the second-largest carrier of Australia, is set to collapse within 24 hours.
Australian media reports that the airline has entered into voluntary administration and has appointed accounting firm Deloitte to oversee the process. The airline is burdened under the weight of enormous debts (it was loss-making for each of the past seven years) and the coronavirus crisis deprives it of much-needed cash. Furthermore, the Australian government refused to grant an AUD 1.4 billion loan and waits for the end of the insolvency process to see if taxpayers’ money is needed to keep it flying.
Under the Australian voluntary administration regime, the company has several options: the sale of assets, an agreement with creditors, the cancellation of debts or the liquidation of the company.
A statement of the airline is awaited in the 24 hours to clarify the news.
Most of Virgin Australia aircraft are grounded, but for a few operating domestic government-subsidised routes.
Virgin Australia is 90% owned by a group of investors including Singapore Airlines, Etihad Airways, the Chinese conglomerate HNA Group and the Virgin group of Richard Branson. Based in Brisbane, the carrier employs over 10,000 people. It has in vain been trying for several weeks to raise new funds.
We reported last week that the airline faces an AUD 5 billion debt and that its future was uncertain.