Virgin Australia enters voluntary administration
Virgin Australia has entered voluntary administration as it seeks to recapitalise the business in the wake of the coronavirus pandemic.
In the mid-term, the company said it hopes to emerge in a stronger financial position on the other side of the Covid-19 crisis.
The decision comes after Virgin Group founder Richard Branson warned the airline might not survive without government support
Virgin Australia’s board has appointed Vaughan Strawbridge, John Greig, Sal Algeri and Richard Hughes of Deloitte as voluntary administrators of the company and a number of its subsidiaries.
Velocity Frequent Flyer, while owned by the group, is a separate company and is not in administration.
The decision comes as the group has continued to seek financial assistance from a number of parties, including state and federal governments, to help it through the unprecedented crisis.
However, Virgin Australia has been unable to secure the required support.
The airline will continue to operate its scheduled international and domestic flights which are helping to transport essential workers, maintain important freight corridors, and return Australians home.
The administrators will be supported by the current management team, led by chief executive, Paul Scurrah.
Strawbridge said: “Our intention is to undertake a process to restructure and re-finance the business and bring it out of administration as soon as possible.
“We are committed to working with Paul and the Virgin Australia team and are progressing well on some immediate steps.
“We have commenced a process of seeking interest from parties for participation in the recapitalisation of the business and its future, and there have been several expressions of interest so far.”
Virgin Australia management argued the Covid-19 pandemic came as the group was progressing on a significant transformation program to reset its cost base including consolidating its workforce, simplifying the fleet, withdrawing from unprofitable routes and reviewing and renegotiating supplier agreements.
Scurrah added: “Our decision is about securing the future of the Virgin Australia Group and emerging on the other side of the Covid-19 crisis.
“In 20 years, the Virgin Australia Group has earned its place as part of the fabric of Australia’s tourism industry.
“Australia needs a second airline and we are determined to keep flying.
“Virgin Australia will play a vital role in getting the Australian economy back on its feet after the Covid-19 pandemic by ensuring the country has access to competitive and high-quality air travel.”