Virgin Australia went into voluntary administration on Tuesday, following the federal government’s rejection of a $1.4 billion bailout, with the hunt now on for new investors to keep the airline in flight.
At least 10 investors are understood to be circling the airline, in what is to date Australia’s largest coronavirus-related collapse, but debt-burdened Virgin insists it will survive beyond Covid-19.
Virgin’s board of directors appointed Vaughan Strawbridge, John Greig, Sal Algeri and Richard Hughes of Deloitte as administrators. While former chief executive Macquarie Nicholas Moore has been appointed to engage with Virgin’s administrator on government’s behalf.
“There have been several expressions of interest so far,” Deloitte's Vaughan Strawbridge said on Tuesday.
“This is a matter of months, not longer than that.”
Virgin’s move into administration comes as Queensland and New South Wales entered into a battle over Virgin Australia’s headquarters.
Queensland’s state government offered $200 million to help rescue Virgin over the weekend, on the condition it kept its headquarters in Brisbane.
New South Wales premier Gladys Berejiklian said the state was “considering all the options” on Monday, offering Virgin Australia a rescue package, announcing the state could bring Virgin to the Badgerys creek airport in western Sydney.
Virgin, which had reported losses before covid-19, has debts of more than $4.8 billion.
While Virgin's future is unclear as administrators look for new owners, Strawbridge said on Tuesday he did not plan to make any of Virgin's 10,000 employees redundant.
Virgin’s move into administration impacts up to 10,000 employees and as many as 6000 contractors.
Treasurer Josh Frydenberg said the government’s objective was “a market-led solution”.
“This is not liquidation,” Frydenberg told media.
“This is not Ansett. This is not the end of the airline.”
Frydenberg added that government would not bailout the five foreign stakeholders who own the airline.
While Richard Branson’s Virgin Group hold 10 per cent, Virgin’s major shareholders include Singapore Airlines, Etihad Airways and conglomerates HNA Group and Nanshan Group.
Virgin Australia chief executive Paul Scurrah said that seeking new investment streams was the best way to ensure the airline's future, “to emerge on the other side of the covid-19 crisis”.
“Australia needs a second airline and we are determined to keep flying,” he said.
Virgin will continue to operate its scheduled international and domestic flights during the administration period.
It is understood that staff who still have jobs will continue to receive wages, and eligible staff will receive the job keeper scheme.
Velocity frequent flyer, while owned by the group, is a separate company and is not in administration.