Virgin Australia Holdings Ltd. became Asia’s first airline to fall to the coronavirus after the outbreak deprived the debt-burdened company of almost all income.
Administrators at Deloitte, who have taken control of the Brisbane-based carrier, aim to restructure the business and find new owners within months. More than 10 parties have expressed an interest, Deloitte said Tuesday.
Virgin Australia joins FlyBe — the U.K.’s biggest domestic airline before it collapsed last month — among the industry’s corporate casualties of the virus. Airlines have been pummeled by domestic and international travel bans that forced them to seek government aid.
Virgin Australia, which has furloughed 80% of its 10,000 workers, will continue to operate some flights for essential workers, freight and the repatriation of Australians. The airline’s frequent flyer program is a separate company and is not in administration.
Vaughan Strawbridge, one of four administrators at Deloitte, said the airline’s fate should be clear in two to three months. He said he doesn’t plan to change Virgin Australia’s operations or fire any workers.
“Generally you get the best outcome where you sell it as a whole, so that is definitely the preferred approach,” Strawbridge told reporters on Tuesday. There were “a number of very sophisticated parties who have got the capability to be part of the restructure,” he said.
The fate of Virgin Australia, which had more than A$5 billion ($3.2 billion) in debt as of the end of 2019, hung in the balance after it stopped virtually all services because of the virus and its request for state help failed. The company had asked the government for a A$1.4 billion loan, convertible into equity, to see it through the crisis.
Instead, the government called on the airline’s shareholders to step in. Virgin Australia’s final plea for A$200 million in state aid was rebuffed on Monday, Chief Executive Officer Paul Scurrah said Tuesday.
In a letter to Virgin staff on Monday, the British billionaire said his airlines in the U.K. and Australia wouldn’t survive the crisis without state support. Branson said he’s doing everything possible to keep Crawley, England-based Virgin Atlantic Airways Ltd. afloat, but it needs a U.K.-backed loan to ride out the storm.
