In a time where Aviation itself is at an ultimate standstill due to the worldwide COVID-19 pandemic, Virgin Australia’s future remains a mystery. Latest reports flooding news outlets and social media suggest that Virgin Australia Airlines Pty Ltd are on the brink of voluntary administration.
An airline that rose to its stature after a slow but steady expansion, Virgin’s presence has undoubtedly shaped the Australian Aviation Industry over the last two decades.
It is understood that a meeting was held with the board of Virgin Australia tonight to discuss what type of action the airline must take to save the company. However, all signs are pointing to an unlikely recovery, unless money is pumped into the airline. This comes as Virgin announced another seven-day trading halt on Thursday.
Voluntary Administration woes for Virgin Australia
Trying to stay afloat, the airline’s request for a $1.4 billion loan from the federal government, was denied. Woefully, the airline’s name is tainted with a $5 billion debt hovering over its head.
The biggest concern the airline has been constantly facing by the Australian public is that Virgin Australia is currently largely owned by foreign investors. The breakdown consists of 20.94% Etihad Airways, 20.09% Singapore Airlines, 19.98% Nanshan Group., 19.82% HNA Group and 10.42% Virgin Group. Thus, just over 90% of the company is held by foreign entities.
Moreover, the airline has faced significant backlash over its foreign ownership, with tax payers disagreeing that the Australian Government should bail them out and take over, with Virgin Australia potentially becoming at least 51% Australian owned.
However, it seems that the majority of the general public have apparently forgotten that Qantas were given $1.35 billion by Finance Minister Ralph Willis in 1993 to pay out Commonwealth debts to keep the company afloat. To put this into perspective, that number equates to $3.26 billion in today’s figures.
On a brighter note, Virgin Australia was offered $200 million by the Queensland Government as a lifeline during these troubling times caused by the COVID-19 Pandemic. It is also known that the Government will spend up to $165 million between Qantas and Virgin to assure the most significant regional and metro routes such as Mildura, Port Lincoln, Townsville and Tamworth as well being able to continue to be connected with Sydney and Melbourne.
Moreover, Virgin Australia reduced its network by 90% on March 25 and stood down over 80% of their staff. Similarly, Qantas announced on March 19, a reduction of International capacity by around 90% and Domestic capacity by 60% until the end of May 2020, whilst putting two thirds of their workforce on leave.
Both Virgin Australia and Qantas have taken measures in parking collectively over 200 aircraft in airports around Australia such as BNE, MEL, AVV, SYD and PER.
Although no official statement has been published by the airline as of yet, it is duly believed that we are only hours or days away before a formal announcement of Virgin Australia’s voluntary administration.
Let’s take this moment to think of the 10,000+ employees that continue to be affected by the COVID-19 pandemic and Virgin’s unfortunate fallout. We will come out better than ever, united.