Virgin Australia Latest Airline to Fall Because of Coronavirus

Virgin Australia became Asia Pacific’s first airline to collapse due to the coronavirus as demand plummets.

The company said Tuesday that it had entered voluntary administration, seeking bankruptcy protection after a debt crisis worsened by the pandemic, although it eventually hopes to “emerge stronger on the other side of this crisis.”

Virgin said in a statement posted on the Australian stock exchange that it had appointed a team of Deloitte administrators to “recapitalize the business and help ensure it emerges in a stronger financial position on the other side of the COVID-19 crisis,” by either bringing in new investors, reorganizing borrowings, or finding a buyer.

The Brisbane-based carrier plans to continue operating all scheduled international and domestic flights, though most have been halted in recent weeks, with 95% of flights cut. Virgin Australia operates 130 aircraft and employs 10,000 staff.

Founder Richard Branson, who holds a 10 percent stake, called for the Australian government to step in, warning on Monday that the carrier urgently needed an $888 million loan.

Branson, who has put $250 million into Virgin Group companies in response to the pandemic, also said he would offer his Necker Island estate in the Caribbean as collateral. Virgin Atlantic, Branson’s British airline, is also seeking a commercial loan from the UK government.

The Australian Treasury said it would work with Virgin Australia’s administrators “to ensure Australia maintains two commercially viable airlines,” the other being the country’s flagship airline, Qantas.

“Our objective is to help keep as many employees as possible in their jobs, a second major domestic airline in the sky, prices down, and competition maintained,” Australian Deputy Prime Minister Michael McCormack and Treasurer Josh Frydenberg wrote in a joint statement.

In another message addressed to employees, Branson said “this is not the end for Virgin Australia.”

“In most countries federal governments have stepped in, during this unprecedented crisis for aviation, to help their airlines. Sadly, that has not happened in Australia,” he wrote. “I want to assure all of you — and our competitor — that we are determined to see Virgin Australia back up and running soon.”

Virgin Australia joins the UK’s biggest domestic carrier Flybe, which collapsed last month due to financial challenges that were too great to withstand in the pandemic.