Business

Covid-19: Virgin Australia folds under pandemic pressure

TheMole
Written by TheMole

April 22 2020

Virgin Australia became the latest airline to fold under the Covid-19 pressure when it handed its control to administrators yesterday.

“Our decision today is about securing the future of the Virgin Australia Group and emerging on the other side of the Covid-19 crisis,” said its chief executive officer Paul Scurrah in the statement.

The airline was more than Aus$5 billion ($3.2 billion) in debt and had appealed without success to the Australian government for a Aus$1.4 billion loan.

Despite the bleak outlook, administrator Vaughan Strawbridge, from accounting firm Deloitte expressed confidence that the company’s restructuring could be achieved within a short period.

“There has been an extraordinary amount of interest in the business and in the restructuring of Virgin Australia,” he said to the media yesterday.

The airline had already made 1,000 workers redundant and stood down 8,000 of its 10,000 pilots, flight attendants and ground crew.

Strawbridge said the administrators would “seek to preserve as many of those jobs as possible”.

Virgin suspended all international routes and scrapped all but one of its domestic routes when Australia shut its borders to limit the spread of Covid-19.

The airline has also been helping the government to bring Australians home from Covid-19 hotspots overseas.

Richard Branson, the founder of Virgin Group, which owns 10-percent of the airline, tweeted a message in support of the Virgin Australia team.

“I am so proud of you and everything we have achieved together,” he said.

Branson joined critics of Canberra for failing to bail out the airline, saying governments in most countries had “stepped up” to help their carriers during the “unprecedented crisis for aviation”.

On Monday, he warned that Virgin Atlantic would also fold without state help.

Last month, Britain’s biggest domestic carrier FlyBe collapsed under the Covid-19 pressure as Norwegian Air announced four subsidiaries in Sweden and Denmark had filed for bankruptcy, and Japan’s ANA slashed its annual net profit forecast by 71 percent.

The United States has set aside billions of dollars to support even major airlines such as American Airlines, Delta Air Lines, Southwest Airlines and United Airlines.

Australia has just two full-service airlines, Virgin and flag-carrier Qantas, which are complemented by their budget offshoots, Tigerair and Jetstar.

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