Virgin Australia is set to enter voluntary administration after a crunch meeting of its board of directors on Monday, according to reports.
Both The Sydney Morning Herald and The Australian Financial Review have reported that a decision is “imminent”, with the latter citing sources claiming 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.
The two newspapers earlier reported rumours that private equity firms were considering purchasing the airline’s assets if it goes into administration.
The Australian Financial Review speculated that BGH Capital, a private equity operator run by Ben Gray, was doing the numbers on the business.
Then, the SMH followed by reporting that, in fact, a number of private equity operators and hedge funds were interested.
One big private equity operator, it reported, said he knew of 20 funds looking for a deal but would only make a move if administration happened, and debts were therefore wiped out: “Nobody will put money in and be behind the existing debt.”
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.
The news comes after an attempt to secure finance from a number of different states hit a roadblock when a row broke out over where the company should base its headquarters.
The argument began on Saturday, when the Palaszczuk government offered Virgin a $200 million lifeline on the condition that other states also contribute and the business maintains its base in Brisbane.
However, the next day, NSW Treasurer Dominic Perrottet hinted that any contribution from its government would require the airline to move to Sydney, instead.
“Virgin should have their headquarters for both Virgin and Tiger in Sydney,” Perrottet told Sky on Sunday night.
“I’m always open for businesses right across the country to relocate to New South Wales and create jobs here in our state, particularly when you look at the aerotroplis in western Sydney.
“It provides a significant opportunity for Virgin and other airlines to relocate.”
Finally, on Monday morning, Queensland angrily hit back, with Minister for State Development Cameron Dick insisting the move would force 1,200 staff to move states to remain in a job.
“It’s a nonsense to think the Prime Minister would even consider a NSW plan to move the airline there,” he said.