Australia’s second largest airline was forced to go into administration after failing to secure a government bailout.
As Finance Monthly reported, Virgin Australia confirmed on Tuesday that it has entered voluntary administration, putting 15,000 jobs at risk. In a statement, the company pledged to proceed with all scheduled flights that are “helping to transport essential workers, maintain important freight corridors, and transport Australians home.” Travel credits will also remain valid.
The airline’s board of directors has appointed Deloitte’s Vaughan Strawbridge, Sal Algeri, John Greig and Richard Hughes as voluntary administrators.
As it stands, 80% of its workforce is already stood down, and Strawbridge made it clear that there were “no plans to make any redundancies.” Virgin Australia’s slump marks the first major airline in the Australasia region to enter administration as a direct recourse of the COVID-19 pandemic and the quarantine measures it has necessitated across many countries.
The news has come a few days after Virgin Group founder Sir Richard Branson posted an open letter to the company’s 70,000 employees in which he warned of the consequences of the airline’s potential collapse. He wrote, “if Virgin Australia disappears, Qantas would effectively have a monopoly of the Australian skies. We all know what that would lead to.”
Despite its requests to the Australian government, Virgin Australia was not issued the $1.4 billion emergency loan that it sought.
Finance Monthly reported that “Virgin Australia’s difficulties mirror those faced by other major airlines around the globe, which are struggling to cope with increased travel restrictions and a dramatic fall in demand amid the COVID-19 crisis.” Pan Finance also recently reported that UK-based airline Flybe also went into administration early in March as the pandemic escalated its existing financial constraints.
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