Virgin Australia has this morning confirmed that it has entered voluntary administration in order to “recapitalise the business”.
In an announcement on the ASX this morning, the airline said that its decision would “help ensure it emerges in a stronger financial position on the other side of the COVID-19 crisis”.
The Group’s Board of Directors has appointed Vaughan Strawbridge, John Greig, Sal Algeri and Richard Hughes of Deloitte as voluntary administrators of the company and a number of its subsidiaries.
Virgin Australia said the decision comes as the group has continued to seek financial assistance from a number of parties, including State and Federal Governments, to help it through the unprecedented crisis, nevertheless is yet to secure the required support.
“Virgin Australia will continue to operate its scheduled international and domestic flights which are helping to transport essential workers, maintain important freight corridors, and return Australians home.”
Virgin Australia
“The administrators will be supported by the group’s current management team, led by Chief Executive Officer Paul Scurrah, and will work closely with team members, suppliers, and partners throughout the process,” Virgin Australia said.
Administrator Vaughan Strawbridge said their intention was to undertake a process to restructure and refinance the business and bring it out of administration as soon as possible.
“We are committed to working with Paul and the Virgin Australia team and are progressing well on some immediate steps,” Vaughan Strawbridge said.
“We have commenced a process of seeking interest from parties for participation in the recapitalisation of the business and its future, and there have been several expressions of interest so far.”
Vaughan Strawbridge, Administrator, Deloitte
Virgin Australia said that its frequent flyer program Velocity “while owned by the Group, is a separate company and is not in administration”.
Virgin Australia Group Chief Executive Officer, Paul Scurrah, said their decision today was about securing the future of the Virgin Australia Group and emerging on the other side of the COVID-19 crisis.
“In 20 years, the Virgin Australia Group has earned its place as part of the fabric of Australia’s tourism industry. We employ more than 10,000 people and a further 6,000 indirectly, fly to 41 destinations including major cities and regional communities, have more than 10 million members of our Velocity loyalty program, and contribute around $11 billion to the Australian economy every year,” he said.
“Australia needs a second airline and we are determined to keep flying. Virgin Australia will play a vital role in getting the Australian economy back on its feet after the COVID-19 pandemic by ensuring the country has access to competitive and high-quality air travel.”
Virgin Australia Group Chief Executive Officer, Paul Scurrah
It’s believed that $1 billion is owed to customers in future flight bookings and credits owing since COVID-19 began.