Virgin Australia Enters Voluntary Administration
Another victim of the Coronavirus slump
Virgin Australia Holdings Ltd announced this week that they had entered voluntary administration to recapitalize the business and eventually regain a stronger financial position after struggling with the global lockdown caused by the coronavirus.
Virgin Australia’s fall into voluntary administration comes as the group failed to secure an $888 million loan from the government with Deloitte quickly being appointed as the administrator for the airline.
Despite their troubles, Chief Executive Paul Scurrah said that they would continue to operate scheduled domestic and international flights to help essential workers, continue freight chains and return Australians home. He also said in a statement: “Our decision today is about securing the future of the Virgin Australia Group and emerging on the other side of the COVID-19 crisis.”
Vaughan Strawbridge said Deloitte had started a process of seeking out interest from parties in recapitalising the business and claimed there was early interest. “Our intention is to undertake a process to restructure and refinance the business and bring it out of administration as soon as possible.”
While Virgin Australia seems to be an early casualty from the coronavirus, it’s unlikely to be the last with global airline losses already pegged at $314 billion with airlines across the world ending staffing contracts and furloughing staff.
Before the announcement, Sir Richard Branson warned that the wider Virgin Atlantic group was set to collapse unless it received UK taxpayer support. Branson who is himself worth more than £3.5 billion, claimed that the group needed £500 million of public money, offering his own private island of Necker as collateral to save the struggling airline as well as vowing to put in £215 million of his own money to keep his empire going.
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