Virgin Australia finally collapsed into administration yesterday after tottering on the edge for weeks.
It is the biggest business casualty so far of the pandemic.
The airline is a victim of the social distancing and lockdown strategy adopted to control the spread of the pandemic, but that also caught the company while it was in a fragile state and trying to recover from years of big losses, write-downs and too much capacity.
It cut its domestic flights by 90% and stood down workers, ended international flights and stood down more employers or signalled that thousands would be retrenched.
Now all that is moot and either the administrators will do the dirty work or a new owner or owners will wield the axe.
The airline went into voluntary administration on Tuesday morning after it sought a loan from several places, including state and federal governments, but wasn’t able to get refinancing to help it continue trading.
Virgin said it will continue its scheduled flights to transport essential workers and return Australians home.
Virgin Australia Group CEO Paul Scurrah said in a statement the decision was about “securing the future of Virgin Australia Group.”
“Australia needs a second airline and we are determined to keep flying,” he said.
“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.”
The administrators said they want to refinance and restructure the business so they can bring it out of administration as soon as possible.
Administrator Vaughan Strawbridge said in a statement, “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.”
Struggling online travel group, Webjet yesterday made it clear that it does not have “a material financial exposure to Virgin should an administrator restructure the airline or elect to cease trading.
“Webjet books airfares on behalf of its customers as an agent and is not the provider of the service. Webjet is working closely with its customers and on their behalf to process refunds/credits directly with all airlines who are no longer able to honour prepaid tickets, including Virgin.
“While the travel industry will be impacted by COVID-19 for some time, Webjet considers that it will emerge with a strong competitive position given the diversity of geographic markets in which it operates, its diverse product offers and its capital position following the recent capital raise,” the company’s statement concluded.
