Virgin Australia flights to continue during administration process

Australia’s second-largest carrier plans to continue operating a vastly reduced schedule while administrators from Deloitte work to find a buyer for the airline.

Virgin Australia has entered voluntary administration after failing to secure a bailout from the government to help them manage the impact of the COVID-19 pandemic.

The airline, which is currently operating a network of 36 routes, hopes the administration process will allow it to recapitalize and emerge from the coronavirus crisis in a “leaner, stronger and fitter” financial position.

A team from professional services firm Deloitte has been appointed to handle the administration, led by Vaughan Strawbridge. He said the firm intends to undertake a process to restructure and refinance the carrier so it can exit administration “as soon as possible.”

Virgin Australia CEO Paul Scurrah will continue to lead the business during the period alongside its existing management team.

“Australia needs a second airline and we are determined to keep flying,” Scurrah said. “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.”

Strawbridge told a press conference that there has already been an “extraordinary amount” of interest in the airline so he is confident the restructure can be achieved in a short period of time. He said that Deloitte has been approached by more than 10 interested parties.

“We have not changed anything in respect of the operations and there are no plans to make any redundancies,” Strawbridge added.

Etihad Airways, HNA Group, Nanshan Group and Singapore Airlines each own about 20% of Virgin Australia, while Richard Branson’s Virgin Group holds 10%.

In a statement, Virgin Australia said it would “continue to operate its scheduled international and domestic flights which are helping to transport essential workers, maintain important freight corridors, and return Australians home.”
According to data from OAG Schedules Analyser, the airline is operating a network of 36 routes this week (w/c April 20), 31 of which are domestic. The only international services on offer are from Brisbane (BNE) to Hong Kong (HKG) and Los Angeles (LAX); Perth (PER) to Christmas Island (XCH) and Cocos Islands (CCK); and between XCH and CCK.

In total, Virgin Australia is offering 45,402 seats this week across 316 flights. During the same week in 2019, airline’s capacity totaled 537,445 seats and it operated 3,322 flights.

The voluntary administration of Virgin Australia comes a day after Branson said the carrier and Virgin Atlantic would need government support if they are to survive the COVID-19 crisis and keep competition alive in markets that would otherwise become effective monopolies.

“Without [government aid] there won’t be any competition left [in the airline industry] and hundreds of thousands more jobs will be lost, along with critical connectivity and huge economic value,” he wrote in an open letter to staff.

Photo credit: Nigel Howarth/Aviation Week