Virgin Australia enters administration process, continues to fly

Photo: © Aero Icarus

Virgin Australia has entered a voluntary administration process as it struggles to secure funds amid the ongoing Coronavirus crisis.

The company officially announced the news on Tuesday morning after initially unconfirmed media reports had already spread on the evening before. Accounting and consulting firm Deloitte has been appointed as administrator.

This comes after the Australian government denied a rescue loan for Virgin, which is the country’s second largest airline after flag-carrier Qantas. The move immediately led to controversies and discussions after surfacing on Monday. It it understood that the government denied funding because the airline is mostly owned by foreign investors, including from China, the UAE and Singapore.

Virgin Australia says it continues to operate both domestic and international scheduled flights. The airline aims to recapitalise and leave administration ‘as soon as possible’. Virgin Group Founder Richard Branson wrote in a statement to employees: “This is not the end for Virgin Australia […] I want to assure all of you – and our competitor – that we are determined to see Virgin Australia back up and running soon.

Frequent flyer programme ‘Velocity’ is not in administration as it is a separate company. It was not immediately clear how low-cost carrier Tigerair Australia, a subsidiary of Virgin Australia Holdings, would be affected.

Virgin Australia is normally operating almost 100 aircraft, consisting mostly of Boeing 737-800. Airbus A330 and Boeing 777 are used on high-capacity and long-haul routes. The airline also has Boeing 737 MAX family aircraft on order. It employs around 10,000 people directly and 6,000 ‘indirectly’.

Airlines around the world are struggling with the current Coronavirus pandemic and resulting travel restrictions. Like many others, Virgin had already grounded most of its fleet and stood down parts of its workforce as temporary measures to handle the almost non-existent demand.

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