Virgin Australia has entered voluntary administration, leaving the jobs of at least 15,000 airline workers and connected supply chain workers under a cloud.
Key points:
- Virgin Australia is now being run by Deloitte administrators, who will work with the company on paying off its debts
- Virgin Group founder Richard Branson has vowed that the airline will be "back up and running" soon
- Airline industry experts say the administrators will now have to make tough decisions, including reducing airplanes and staff
In a statement to the ASX, the airline said the move would help "recapitalise the business" and ensure it emerged "in a stronger financial position on the other side of the COVID-19 crisis".
The board of directors has appointed Deloitte's Vaughan Strawbridge, John Greig, Sal Algeri and Richard Hughes as voluntary administrators of the company and a number of its subsidiaries.
Mr Strawbridge said there were "no plans to make any redundancies." The airline will continue to operate its scheduled international and domestic flights.
Velocity Frequent Flyer, while owned by the Group, is a separate company and is not in administration.
Treasurer Josh Frydenberg ruled out a rescue package from the Federal Government.
"The Government was not going to bail out five large foreign shareholders with deep pockets who, together, own 90 per cent of this airline," he said.
Australia's troubled second airline, which saw its cash flow collapse because of tough coronavirus travel restrictions, is saddled with around $5 billion debt.
It has already stood down 80 per cent of its direct workforce and announced 1,000 redundancies in the past few weeks.
The airline called in the administrators after the Federal Government refused to step in with a $1.4 billion loan, despite repeated pleas from company management.
Virgin has also been in talks with the New South Wales and Queensland state governments, but is yet to secure support.
'Australia needs a second airline'
Administrator Vaughan Strawbridge said several parties had expressed interest in the business and they were "progressing well on some immediate steps".
"Our intention is to undertake a process to restructure and refinance the business and bring it out of administration as soon as possible," he said.
"We have commenced a process of seeking interest from parties for participation in the recapitalisation of the business and its future, and there have been several expressions of interest so far."
"In 20 years, the Virgin Australia Group has earned its place as part of the fabric of Australia's tourism industry," Virgin chief executive Paul Scurrah said.
"We employ more than 10,000 people and a further 6,000 indirectly, fly to 41 destinations including major cities and regional communities, have more than 10 million members of our Velocity loyalty program, and contribute around $11 billion to the Australian economy every year.
"Australia needs a second airline and we are determined to keep flying.
"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."
Virgin's board said the COVID-19 pandemic had hit as the Group was progressing on a "significant transformation program".
This would have reset its cost base by "consolidating its workforce, simplifying the fleet, withdrawing from unprofitable routes and reviewing and renegotiating supplier agreements".
Your questions on coronavirus answered:
Richard Branson vows to 'never give up', have airline 'back up and running'
In a statement to staff, Virgin Group boss Richard Branson said the airline had brought competition and lower airfares to Australia's skies.
Virgin Group is a 10 per cent shareholder in Virgin Australia.
"I know how devastating the news today will be to you all," Mr Branson said.
"In most countries federal governments have stepped in, in this unprecedented crisis for aviation, to help their airlines. Sadly that has not happened in Australia."
But he said he was "never one to give up" and that the Group was "determined to see Virgin Australia back up and running soon".
"This is not the end for Virgin Australia, but I believe a new beginning."
Virgin Group CEO Josh Bayliss said the impact of the COVID-19 pandemic had been catastrophic.
"In addition to the human suffering and loss, it has caused extreme business and financial disruption," he said.
"It's unlike anything the airline industry has ever seen before. Virgin Australia has been hit by a crisis completely outside of its control."
He said the Group remained in constant dialogue with Virgin Australia, "focusing on playing our part in the rescue of the airline".
"We are determined to find a way through this situation to keep the airline going," he said.
"We want to see a continuation of the unique culture and spirit which has brought much-needed competition to Australia's aviation market, providing vital connectivity for the country."
He said a Qantas monopoly in the Australian domestic market would have "serious adverse consequences" for customers and the industry.
"Our intention is to work with administrators and the management team, along with investors and government, to ensure that Australia maintains two airlines," he said.
"Australia remains a key market for the Virgin brand and we wish to support Virgin Australia to become more resilient and stronger than before.
"We are determined to see Virgin Australia planes, and their wonderful teams, flying again soon."
Calls to preserve jobs, workers' entitlements
Transport Workers' Union national secretary Michael Kaine said the Federal Government should approach administrators with a plan to ensure the preservation of workers' entitlements.
"We urge the Federal Government to sit down with the trade unions representing the 16,000 Virgin workers to work out a plan to go before administrators," he said.
Narrow Road Capital funds manager Jonathan Rochford said the blame for Virgin's problems ultimately lay with its management and board, who failed to act during a decade when the airline did not make a decent profit.
He said the administrators would now move quickly to cut costs and preserve cash, while maintaining as many jobs as they could.
"Expect some rapid-fire decisions on reducing airplanes and staff," Mr Rochford said.
Current CEO Paul Scurrah would be the first call for any potential buyer, he predicted.
"I wouldn't be surprised if he's running the business again in the not too distant future."
Opposition Leader Anthony Albanese, who has repeatedly urged the Government to step in with a $1.4 billion loan, said Qantas would now be left with a monopoly, which would have "very significant" consequences for consumers.
What the experts are saying about coronavirus:
Higher airfares may be on the cards
IBISWorld senior industry analyst Tom Youl said the airline itself may emerge from bankruptcy proceedings under new ownership, and in a better position.
But in the meantime, he said there was no third airline waiting in the wings to fill capacity gaps, which may be bad for consumers.
The Sydney-Melbourne route ranks second for aircraft movements and third for passenger volumes among all global flight paths.
"The most likely outcome of a Qantas monopoly is higher airfares, unless the flag carrier undertakes a strategy to buy the goodwill of the Australian public by keeping airfares stable, knowing that a second airline will eventually enter the market," Mr Youl said.
StrategicAero Research chief analyst Saj Ahmad said Virgin Australia "never really seemed to monetise its market share in its cut-throat competition with Qantas", and because of COVID-19, its foreign shareholders were never going to step in.
Virgin Australia is majority foreign-owned by Etihad Airways (20.94 per cent stake), Singapore Airlines (20.09 per cent), Nanshan Group (19.98 per cent), HNA Group (19.82 per cent) and Richard Branson's Virgin Group (10.42 per cent).
"Etihad's own losses over the last few years, alongside its own poor investment choices in the now-grounded Jet Airways and essentially bankrupt Alitalia and deceased Air Berlin, meant that Virgin Australia was never really going to receive any more cash out of Abu Dhabi ever again," he said.
And with Singapore Airlines vying to bolster its own position in Australia, he said Virgin Australia was at the periphery of that airline's investment focus.
"It's a bitter pill for investors, but the Australian Prime Minister, Scott Morrison, is absolutely right not to bail out any one specific company amidst the COVID-19 pandemic," Mr Ahmad said.
"If we start going down that route, who decides which company is viable or not, and which will provide better returns on investment? Critically, would Qantas qualify for a similar financial injection too? Where do you draw the line?"
What you need to know about coronavirus:
https://news.google.com/__i/rss/rd/articles/CBMib2h0dHBzOi8vd3d3LmFiYy5uZXQuYXUvbmV3cy8yMDIwLTA0LTIxL3Zpcmdpbi1hdXN0cmFsaWEtZ29lcy1pbnRvLXZvbHVudGFyeS1hZG1pbmlzdHJhdGlvbi1jb3JvbmF2aXJ1cy8xMjE2NzgxNNIBJmh0dHA6Ly9hbXAuYWJjLm5ldC5hdS9hcnRpY2xlLzEyMTY3ODE0?oc=5
2020-04-21 01:42:25Z
52780737914519
Bagikan Berita Ini
0 Response to "Virgin Australia forced into voluntary administration, thousands of jobs at risk, after coronavirus restrictions cripple cash flow - ABC News"
Post a Comment