Virgin Australia has entered voluntary administration a day after founder Richard Branson sought government support for the country's second biggest airline.
The day prior to the airline's decision to enter voluntary administration, Virgin Australia founder Richard Branson made a last-ditch appeal to seek support from the Australian government.
The carrier is the latest business casualty of the global coronavirus pandemic, which has greatly affected travel demand globally. According to the airline, it had entered voluntary administration while it searches for financing to revive its business.
It hoped to eventually "emerge stronger on the other side of this crisis."
Virgin Australia is the first major Asia Pacific airline to fall from loss of business due to the pandemic that forced carriers to cancel flights, ground planes and put staff on unpaid leave.
Virgin Australia follows UK airline Flybe's fate
In early March, UK carrier Flybe announced that it has grounded all flights as it enters administration following the lack of demand for flights due to the coronavirus outbreak. It also confirmed that its business had “ceased trading with immediate effect” in the UK.
In a statement, the airline told customers: “If you are due to fly with Flybe, please DO NOT TRAVEL TO THE AIRPORT unless you have arranged an alternative flight with another airline. Please note that Flybe is unfortunately not able to arrange alternative flights for passengers.”
It added that its financial challenges had been “compounded by the outbreak of coronavirus which in the last few days has resulted in a significant impact on demand.”
Voluntary administration
In a filing posted on the Australian stock exchange, the airline stated that it will continue operating all scheduled flights, "which are helping to transport essential workers, maintain important freight corridors, and return Australians home."
Prior to the filing, Branson approached the Australian government asking it to intervene, warning that the carrier urgently needed help to maintain its operations.
The billionaire founder claimed that he already pumped $250 million into Virgin Group companies to address the pandemic and that he would offer his Necker Island estate in the Caribbean as collateral.
According to administrators, there was no immediate plan for any layoffs at the airline.
Virgin Australia chief executive officer (CEO) Paul Scurrah said the carrier stopped almost all of its operations in recent weeks, cutting flights by 95% and temporarily taking 80% of the workforce off the job.
Scurrah mentioned that the airline normally has 10,000 employees, with another 6,000 workers indirectly employed.
Vaughan Strawbridge, a partner at Deloitte in Australia who is serving as a voluntary administrator, said Virgian Australia has began searching for new owners or investors to help with the business' recovery.
Strawbridge stated: "The intent is to seek to sell the majority, if not all of the business, as one."
He mentioned that there are over 10 parties that have expressed interest in purchasing a stake in the company so far and that the carrier expects to have a better sense of its future over the next two months.
"This is not intended to be a long, protracted process," he added.
