BRISBANE/ AUSTRALIA: Cash-strapped Virgin Australia collapsed Tuesday, making it the largest carrier yet to buckle under the strain of the coronavirus pandemic, which has ravaged the global airline industry.
In an announcement to the Australian Stock Exchange, Virgin said it planned to keep operating flights despite handing the keys to administrators. “Our decision today is about securing the future of the Virgin Australia Group and emerging on the other side of the Covid-19 crisis,” CEO Paul Scurrah said in the statement. “Australia needs a second airline and we are determined to keep flying.”
The airline was more than AUD5 billion ($3.2 billion) in debt and had appealed for AUD1.4 billion loan to stay afloat, but the government refused to bail out the majority foreign-owned company.
Administrator Vaughan Strawbridge, from accounting firm Deloitte, said more than 10 parties had expressed a “keen interest” in being part of the restructuring plans.
The airline had already made 1,000 workers redundant and stood down 8,000 of its 10,000 pilots, flight attendants and ground crew.
Virgin suspended all international routes and scrapped all but one of its domestic routes after Australia shut its borders to limit the spread of COVID-19 and imposed tough restrictions on movement.
The news follows the collapse of Britain’s biggest domestic carrier FlyBe last month as the crisis threatens many firms. On Monday, Branson warned Virgin Atlantic would fold without state help, Norwegian Air announced four subsidiaries in Sweden and Denmark had filed for bankruptcy, and Japan’s ANA slashed its annual net profit forecast by 71%.
The United States has set aside billions of dollars to support airlines including giants American Airlines, Delta Air Lines, Southwest Airlines and United Airlines.
Published in The Express Tribune, April 22nd, 2020.
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