Virgin Australia has formally entered into voluntary administration.
The professional services firm Deloitte has been appointed as administrator, The announcement was made shortly before 00:00 BST / 09:00 AEST on Tuesday 21 April 2020.
Virgin Australia’s “Velocity” frequent flyer programme is owned by a separate legal entity in the Virgin Australia Group and is not part of the administration process.
There had been speculation about Virgin’s financial health for some time. Profitability has been elusive and the airline has debts of AU$5 billion. Virgin Australia had sought support from the Australian Federal Government of AU$1.4 billion.
The airline has a history and ownership structure that could best be described as “complex”.
It was owned by Etihad Airways, Singapore Airlines, Nanshan Group, HNA Group which each own approximately a 20% share of the airline. Virgin Group owns approximately 10%.
Virgin Australia is currently operating a skeleton domestic network, which is being subsidised by the Australian Federal Government. Unlike when an airline enters into administration in the UK, Virgin Australia will continue to operate flights whilst it is in administration.
It is probable that a buyer that will be found for the airline’s assets. However, it is likely that it will emerge as a significantly smaller airline.
Whilst the Australian Federal Government has decided not to provide financial support to Virgin Australia, Australian Minister for Finance Mathias Cormann told ABC News Breakfast today that it does support the ultimate emergence of a second privately owned domestic airline to ensure Qantas does not have a monopoly.
The administrators have advised at a press conference that there have been a large number of expressions of interest in the airline. It is expected that the ultimate buyer will be known in around 2-3 months.
Sir Richard Branson has penned an open letter to Virgin Australia employees. Whilst Sir Richard hopes this is the start of a new beginning for the airline, it will of course be for the new owners to decide whether to continue to licence the Virgin brand.Continue reading “Virgin Australia Enters Into Voluntary Administration”