Virgin Australia Holdings Ltd. became the nation’s biggest corporate casualty of the coronavirus, calling in administrators after the outbreak deprived the debt-burdened airline of almost all income. Neil Hansford, chairman of Strategic Aviation Solutions, an Australian consultancy firm, discusses where he sees the airline heading. He speaks on "Bloomberg Daybreak: Australia."
Press conference with Virgin CEO Paul Scurrah, and Vaughan Strawbridge from Deloitte.
Virgin Australia has entered voluntary administration, leaving the jobs of at least 15,000 airline workers and connected supply chain workers under a cloud.
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 board of directors has appointed Deloitte's Vaughan Strawbridge, John Greig, Sal Algeri and Richard Hughes as voluntary administrators of the company and a number of its subsidiaries.
Mr Strawbridge said there were "no plans to make any redundancies." The airline will continue to operate its scheduled international and domestic flights.
Virgin Atlantic and Virgin Australia will need government support if they're to survive the economic crisis triggered by the coronavirus pandemic.
Billionaire founder Richard Branson said Monday that the airlines need money from the UK and Australian governments to keep going "in the face of the severe uncertainty surrounding travel today," including the lack of clarity over how long planes will have to remain grounded.
In an open letter to employees, Branson said the survival of Virgin Atlantic and Virgin Australia was important to provide much needed competition to British Airways, an IAG (ICAGY) subsidiary, and Qantas (QABSY). "If Virgin Australia disappears, Qantas would effectively have a monopoly of the Australian skies," he noted.
Branson, who has already pumped $250 million into Virgin Group companies in response to the pandemic, said he would offer his Necker Island estate in the Caribbean as collateral "to raise as much money against the island as possible to save as many jobs as possible around the group."
Virgin Atlantic will seek a commercial loan from the UK government, which it will repay, Branson added, without giving details of how much money it needs.
"The reality of this unprecedented crisis is that many airlines around the world need government support and many have already received it. Without it there won't be any competition left and hundreds of thousands more jobs will be lost, along with critical connectivity and huge economic value," he said.
While US airlines will receive tens of billions of dollars in support as part of the country's $2 trillion stimulus package, governments in Europe have not promised wholesale bailouts to their carriers. Instead, individual airlines are tapping government support to pay staff salaries and raise debt.
The aviation industry is calling on the government to provide greater clarity on plans to quarantine for a fortnight all travellers coming to Britain, amid concerns that the measures could have severe repercussions for the travel and tourism industries.
It has been reported that anyone entering the UK, including Britons returning home, will soon have to self-isolate for 14 days due to the coronavirus crisis.
Airlines UK, which represents British Airways, EasyJet and other UK-based airlines, said the proposal would “effectively kill international travel to and from the UK, and cause immeasurable damage to the aviation industry and wider UK economy”.
It added: “Nobody is going to go on holiday if they’re not able to resume normal life for 14 days, and business travel would be severely restricted.”