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| Photo Brisbane Airport |
As we predicted yesterday the Virgin Australia Group has announced that it has appointed voluntary administrators to recapitalise the business and help ensure it emerges in a stronger financial position on the other side of the coronavirus COVID-19 crisis.
Velocity Frequent Flyer, while owned by the Group, is a separate company and is not in administration.
The airline is still operating all its temporary scheduled flight timetable which are helping to transport essential workers, maintain important freight corridors, and return Australians home.
The intention of the administrators is to undertake a process to restructure and re-finance the business and bring it out of administration as soon as possible. Currently, the airline is owned by a mix of foreign companies, spread between (20.9%) Etihad Airways, (20%) Singapore Airlines, (19.8%) HNA Group, (19.9%) Nanshan Group and (10.4%) Virgin Group. All of which had previously been asked to contribute more to save the carrier, yet no significant investment was forthcoming and administration was sought.
Administrators at Deloitte, are now in control of the airline and will make an attempt to restructure the firm. So far, Deloitte has confirmed that more than 10 other entities have expressed an interest in taking over the debt-riddled airline, yet none have been named at this stage and no company has announced they want to buy it.
Virgin Australia which had just days ago celebrated its 20-year anniversary, has furloughed 80% of its 10,000 workers had been seeking a rescue package from the Australian government, in the form or a loan in exchange for equity. No loan was forthcoming and the firm's management decided to call in Deloitte. One of the administrators, Vaughan Strawbridge, told local media that at this stage they don't plan on letting any staff go, or changing the current operations of the carrier. He also said that the situation would be resolved one way or another within one or two months.
"Generally you get the best outcome where you sell it as a whole, so that is definitely the preferred approach," he said, adding: "There were “a number of very sophisticated parties who have got the capability to be part of the restructure,"
In its current form, Virgin Australia hasn't made a profit for around 7 years and really seems to have lost its way from the grand fanfare of its launch and the promise in the early years. Its main rival, the much bigger Qantas has been offering an arguably better combination of fares and service on many routes on the domestic market which has seen it grow. Virgin Australia tried to grow but lacked the financial strength behind it and further perhaps less than sensible business decisions have lead the company to the very brink of survival. With fresh management, a new owner - perhaps one from outside the airline industry that isn't financially crippled by their own battle for survival during these trouble times is the best way forward for Virgin Australia. But regardless of the carriers ultimate fate, the "Virgin Australia brand" is dead, a new name, a new start and a fresh approach is desperately needed.
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