(TAN): Virgin Australia, one of Australia’s largest airlines, has entered voluntary administration after it buckled under the pressure of the coronavirus pandemic.
The carrier sought bankruptcy protection as the shutdown, that has devastated the global aviation industry, worsened the situation for the already cash-strapped company and led to its collapse, as per reports.
Virgin Australia reportedly said it will continue to operate its scheduled flights.
Australia needs a second airline and we are determined to keep flying. Virgin Australia will play a pivotal 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,” Chief Executive Officer of Virgin Australia, Paul Scurrah said.
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The airline was more than AUD 5 billion (USD 3.15 billion approximately) in long-term debt, reports said. According to reports, the company had appealed to the Australian government for a AUS 1.4 billion loan but was turned down by the administration.
When company directors find out their business could soon become insolvent, they can employ insolvency practitioners to act as administrators who consequently function as directors, as per reports. They also have other authorities, including the ability of reject contracts or property that are not profitable, negotiate a withdrawal from administration, and hand the business back to directors through a “deed of company arrangement” or Doca, reports said.
International professional services network firm Deloitte has been roped in as administrator for Virgin Australia to restructure its debt and pay off creditors, as per reports.
“Our intention is to undertake a process to restructure and refinance the business and bring it out of administration as soon as possible. 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,” Deloitte administrator Vaughan Strawbridge said.
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He reportedly added over 10 investors were interested in participating in the restructuring plans.
Meanwhile, founder of Virgin Group, has reportedly asked the United Kingdom government for a loan of USD 3.2 billion to support Virgin Atlantic. He said he was willing to offer the private island where he lives in the British Virgin Islands as collateral for the loan, reports said.
“Dear Virgin Australia team. I am so proud of you and everything we have achieved together. This is not the end of Virgin Australia, but I believe a new beginning. I promise that we will work day and night to turn this into reality,” he tweeted.
Virgin Australia, which flies to 41 destinations, including both domestic and international, has 130 aircraft, and 10,000 direct and 6,000 indirect employees.
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