Virgin Australia has finally confirmed to the ASX that it has entered voluntary administration.
Its board has appointed Deloitte to handle the process, but this will not include Velocity Frequent Flyer, which is a separate company.
The airline will continue to operate its scheduled flights, including those underwritten by the government in order to help Australians return home after spending time in hotel quarantine.
Virgin Australia Group’s chief executive, Paul Scurrah, said, “Our decision today is about securing the future of Virgin Australia Group and emerging on the other side of the COVID-19 crisis.
“In 20 years, Virgin Australia Group has earned its place as part of the fabric of Australia’s tourism industry. We employ more than 10,000 people and a further 6,000 indirectly, fly to 41 destinations including major cities and regional communities, have more than 10 million members of our Velocity loyalty program, and contribute around $11 billion to the Australian economy every year.”
“Australia needs a second airline and we are determined to keep flying. Virgin Australia will play a vital role in getting the Australian economy back on its feet after the COVID-19 pandemic by ensuring the company has access to competitive and high-quality air travel.”
The news was first reported last night, when both The Sydney Morning Herald and The Australian Financial Review revealed a crunch board meeting concluding that it was “near impossible” to make any other decision.
The airline was seeking a $1.4 billion loan from the federal government before switching its attention to securing help from a number of states and territories.
Speculation will now swing as to who could save the company, now it has been freed of many of its debt obligations.
The company’s current shareholders include Singapore Airlines, China’s HNA Group and Nanshan Group, Etihad and Richard Branson’s Virgin Group, which together hold 90 per cent of the company.
TWU national secretary Michael Kaine said, “If the federal government does not move to save Virgin, the Prime Minister must explain why Virgin workers don’t matter. Why don’t their families who depend on them matter?
“This is a terrifying moment for thousands of Virgin workers. The airline has two decades of providing decent jobs, a safe working environment and excellent service for the travelling public. It is a viable and much-needed business and without it Australia will struggle to get its economy back on track once the crisis abates.
“There is still time for the federal government to work on an investment plan to get through this period of crisis and taxpayers will get a double benefit. The government will retain a competitive aviation market and they will get a return on their equity stake.”