Virgin Australia has officially gone into voluntary administration, putting about 16,000 jobs in doubt and leaving open the possibility that Australia’s domestic airline industry will be a Qantas monopoly.
The company has appointed administrators at Deloitte to oversee the airline, it confirmed in a statement on Tuesday.
In a statement to the ASX on Tuesday, the airline said the move was would “recapitalise the business” and ensure it emerged “in a stronger financial position on the other side of the COVID-19 crisis”.
“Australia needs a second airline and we are determined to keep flying,” CEO Paul Scurrah said.
According to reports, the airline was struggling even before the COVID-19 pandemic, and has close to $5 billion in debt. Travel restrictions in response to the pandemic were the final nail in the coffin.
The collapse of the airline comes after Sir Richard Branson penned an open letter, pleading for a government $1.4 billion “loan” to help keep the company afloat.
“We will do everything we can to keep the airline going – but we will need government support to achieve that in the face of the severe uncertainty surrounding travel today and not knowing how long the planes will be grounded for,” he wrote.
Don’t stress about your frequent flyer points (yet) – Velocity Frequent Flyer is a separate company and is not in administration.
In the meantime, the airline will continue to operate its – very limited – scheduled international and domestic flights.
