Virgin Australia collapses under coronavirus pandemic strain
BRISBANE : Cash-strapped Virgin Australia collapsed yesterday, making it the largest carrier yet to buckle under the strain of the coronavirus pandemic, which has ravaged the airline industry.
In an announcement to the Australian Stock Exchange, Virgin said it planned to keep operating flights despite handing the keys to administrators.
"Our decision today is about securing the future of the Virgin Australia Group and emerging on the other side of the Covid-19 crisis," chief executive Paul Scurrah said. "Australia needs a second airline and we are determined to keep flying."
The airline was more than A$5 billion (S$4.5 billion) in debt and had appealed for A$1.4 billion loan to stay afloat, but the government refused to bail out the majority foreign-owned company. Administrator Vaughan Strawbridge, from accounting company Deloitte, said more than 10 parties had expressed a "keen interest".
"There has been an extraordinary amount of interest in the business and in the restructuring of Virgin Australia," he told reporters. "And so we are confident that this will result in a restructuring being achieved in a short period of time."
Ratings agency Moody's said unsecured creditors would have to take "a significant haircut" if the restructure was successful.
"Nevertheless, such an outcome may remain preferable to putting the company into liquidation with uncertain recovery prospects," it said.
The airline had already made 1,000 workers redundant and stood down 8,000 of its 10,000 pilots, flight attendants and ground crew.
Mr Strawbridge said the administrators would "seek to preserve as many of those jobs as possible". Virgin was struggling before coronavirus, posting an underlying before-tax loss of A$71.2 million last year.- AFP