Sources claim Virgin Australia is preparing to go into voluntary administration, with an official announcement likely to come as early as Tuesday morning. Australia’s beleaguered second airline has been saddled with A$5 billion in debt and has been fighting for a $1.4bn bailout from the federal government – a package that Qantas publicly resisted.
Around 10,000 employees are at immediate risk of being redundant, while a further 6,000 jobs that Virgin Australia indirectly support could also be lost. In recent weeks, the airline has already stood down around 8,000 staffers and its entire New Zealand-based crew, as well as pilots of its low-cost subsidiary Tiger Air have been sacked.
Virgin Australia has appointed the financial advisors Deloitte to oversee a restructuring of the airline but this now looks set to become a voluntary administration process. One source quoted by the Sydney Morning Herald said an official announcement could be “imminent”.
On Monday evening, Virgin Australia declined to answer questions from the media about the rumours.
Earlier this month, the Morrison government refused to grant Virgin Australia’s request for financial support but on Monday the Queensland government offered $200 million towards a wider package to save Virgin Australia. The offer was on the proviso that Virgin Australia remained headquartered in Brisbane – around 5,000 people are employed by the airline in the state.
So far, the federal government has only offered $165 million for both Qantas and Virgin Australia to keep the airlines flying domestically on routes that would otherwise be unprofitable because of a slump in demand caused by the Coronavirus crisis.
Virgin Australia is part-owned by both Singapore Airlines and Etihad Airways, as well as Richard Branson’s Virgin Group. If Virgin were to fail, it would be the fifth airline to go into administration that Etihad Airways has had a stake in.
