Virgin Australia has confirmed it has gone into voluntary administration, handing the airline over to insolvency experts at Deloitte to restructure the business and find new owners to keep it flying.
In a statement to the ASX, the airline said the move would help “recapitalise the business” and ensure it emerged “in a stronger financial position on the other side of the COVID-19 crisis.”
The decision comes after the Federal Government refused to step in with a $1.4 billion loan, despite repeated pleas from company management.
Finance Minister, Mathias Cormann, said the government wants to see Virgin and Qantas remain in Australia but believes administration can find a sustainable private-sector solution to the company’s future.
“The first responsibility to bail-out a business is always for its owners, its shareholders,” Mr Cormann told Sunrise on Tuesday.
“Virgin has very substantial owners like Singapore Airlines and Etihad both owning 20 percent of the shares, another 40 percent are with substantial Chinese investors.
“And whilst we do want to see competition in the aviation sector on the other side of this crisis, from here on in we want to see a private sector, market-led solution to this and we believe there is an opportunity for it.”
Administrators will now look at ways to save the business including restructuring debt as private equity firms circle, sparking hopes of a sale.
Virgin Australia saw its cash flow collapse because of tough coronavirus travel restrictions and is saddled with around $5 billion debt.
It has already stood down 80 per cent of its direct workforce and announced 1,000 redundancies in the past few weeks.
The airline will continue to operate its scheduled international and domestic flights.
