Virgin Australia has confirmed its entry into voluntary administration – making it the first large company in Australia to experience the coronavirus pandemic.
The country’s second largest carrier cut almost all flights last month following widespread travel bans.
He was already grappling with long-term debt of 5 billion Australian dollars (2.55 billion pounds sterling; 3.17 billion dollars).
The airline is now looking for new buyers and investors after failing to obtain a loan from the Australian government.
Virgin Australia chief executive Paul Scurrah said, “Our decision today is to secure the future of the Virgin Australia group and to emerge on the other side of the Covid-19 crisis.
“Australia needs a second airline and we are determined to continue flying. “
Meanwhile, Sir Richard Branson – whose Virgin group is co-owner of Virgin Australia – has pledged a Caribbean island as collateral to help secure a bailout of Virgin Atlantic by the British government.
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Actions had been suspended in the firm for the past two weeks as it struggled to find a survival plan.
Canberra denied the airline’s request for an A $ 1.4 billion loan, but in the past month, it had announced support of about A $ 900 million for all local airlines.
Virgin Australia has made only two statutory benefits in the past decade.
It is partly owned by a number of entities, including the United Arab Emirates government, Singapore Airlines, the Chinese HNA and the Sir Richard Branson group.
It employs around 10,000 people directly and another 6,000 through ancillary activities.
Deloitte consulting firm announced that it had appointed a director on Monday. He will try to restructure the company’s debt, pay off creditors and find a buyer – private equity groups should be interested.
Consumer groups and local politicians have voiced concerns that, unless the airline is resuscitated, the national carrier Qantas has a virtual monopoly in Australia.
Air transport is crucial on the vast continent where the distances between the coastal capitals make flights the only practical means of traveling quickly at national level.
Virgin Australia previously held approximately 31% of domestic flights, while Qantas controlled approximately 58% of the market.
The airline’s long-term loss will also be seen as a blow to Australia’s tourism industry – a major driver of GDP.
Before the closure, Virgin Australia had flown approximately 130 aircraft to 41 destinations – mainly domestic flights, but also international services, including to New Zealand, Bali, Fiji, Tokyo and Los Angeles.