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Coronavirus: Virgin Australia enters voluntary administration
21 April 2020, 08:28
Virgin Australia has slumped into voluntary administration due to the impact of the coronavirus pandemic after it failed to obtain a government bailout.
Australia's second-biggest airline becomes the nation's first major corporate casualty of the coronavirus crisis.
It had asked the country's government for the equivalent of £710 million but the request was denied by Canberra.
Last month, nearly all the carrier's flights were grounded in the light of wide-spread travel bans.
A statement released by the firm read: "Virgin Australia has entered voluntary administration to recapitalise the business and help ensure it emerges in a stronger financial position on the other side of the Covid-19 crisis."
Dear @VirginAustralia team. I am so proud of you and everything we have achieved together. This is not the end of Virgin Australia, but I believe a new beginning. I promise that we will work day and night to turn this into reality https://t.co/GJH1zhEqEd pic.twitter.com/GelLiA6DKG— Richard Branson (@richardbranson) April 20, 2020
The airline's international shareholders had previously voted against the provision of further financial support in a board meeting.
Virgin Australia was already struggling with long-term debt of roughly five billion Australian dollars (£2.55 billion).
Deloitte has been appointed as voluntary administrators by the firm's board.
The company, founded in 2000 by Sir Richard Branson, serves both domestic flights and short-haul destinations.
In a letter to the airline's staff, which he tweeted, Sir Richard said it "is not the end for Virgin Australia, but I believe a new beginning."
He said: "Never one to give up, I want to assure all of you - and our competitor - that we are determined to see Virgin Australia back up and running soon.
"We will work with Virgin Australia's administrators and management team, with investors and with government to make this happen and create a stronger business ready to provide even more value customers, competition to the market, stimulus to the economy and jobs for our wonderful people.
"Virgin Australia has captured the hearts of all Australians. That is down to all of you - past and present - who made it the best airline to fly within Australia."
The British billionaire owns around 10 per cent of the firm, which is also part-owned by Etihad Airways and Singapore Airlines.
It comes after Sir Richard warned Virgin Atlantic would collapse without receiving financial support from the UK government.
The boss of Virgin Group wrote to his employees to tell them the airline needs taxpayer support in the form of a commercial loan.
Reports have emerged suggesting he could be asking for up to £500 million of public money.
In an open letter written to staff, the Virgin chief wrote: "We will do everything we can to keep the airline going - but we will need government support to achieve that in the face of the severe uncertainty surrounding travel today and not knowing how long the planes will be grounded for.
"This would be in the form of a commercial loan - it wouldn't be free money and the airline would pay it back (as easyJet will do for the £600 million loan the government recently gave them)."