Virgin Australia to Enter "Voluntary Administration"

Tejas B.| 04/22/2020

Virgin Australia A332
A Virgin A330 departing Sydney. Credit: TheExplorerBlog | Winston Shek




According to multiple sources, Australia's second largest airline, Virgin Australia, has entered "voluntary administration".


Voluntary Administration is when a company cannot pay its debts, resulting in an administrative takeover by independent contractors.


The airline entered administration the day after the CEO of the Virgin Group, Richard Branson, made a last and final appeal for the Australian Government to provide financial aid and support. Richard Branson also offered his home on Necker Island as collateral as Virgin Australia is on the verge of collapse. Virgin Group's other airline, Virgin Atlantic,(based in the U.K.) is also currently suffering from a financial crisis.

Branson also shared a video message on Social Media to all Virgin Australia employees stating that "This is not the end" as well as "I want to assure all of you - and our competitor - that we are determined to see Virgin Australia back up and running soon." 

In addition to asking for Financial Support from the Australian Government, the Airline has looked for investors for help. The two largest Stakeholders of the airline are Etihad Airways ( Based in Abu Dhabi ) and Singapore Airlines ( Based in Singapore ).  However, both airlines are currently suffering from the COVID - 19 crisis as well, the idea of the two stake holders giving financial aid to the airline is unlikely. 



A Virgin Australia 777 at LAX. Credit: TheExplorerBlog | Jimmy Wu



Furthermore, according to CNN Business, Richard Branson said in a letter to employees that the survival of both Airlines in the Virgin Group was important not only for the jobs of their employee, but for the much needed competition for British Airways (in the U.K.) and Qantas (Australia).


Currently, Virgin Australia has cut 95% of their flight operations as well as a temporarily cutting 80% of their workforce of their jobs.


Also, according to CNN Business, The Virgin Group operates a lot of sectors that are among the hardest hit amid the COVID - 19 Crisis. Aviation, hotels, cruises and leisure travel are just some of the sectors that the Virgin Group Operates that have been hit hard due to the novel coronavirus pandemic. Richard Branson has pumped more than $250 Million into the Virgin Group to avoid further financial struggles.


On Tuesday, the Australian Treasury said it would work with Virgin Australia to ensure that Australia has two "commercially viable airlines."


Governments all around the world, including the U.S, have been providing financial support for their airlines. Virgin Australia isn't the only airline suffering from the COVID-19 crisis. South African Airways is on the brink of collapse. Low Cost Carrier Norwegian has several different subsidiaries that have gone bankrupt.



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