Virgin Australia, the second-largest carrier of Australia following Qantas, is burdened with a $5-billion dollar debt and has entered into voluntary administration with the appointment of accounting firm Deloitte to oversee the process.
The company will either: sell assets, reach an agreement with creditors, cancel debts or liquidate.
The airline will continue to operate its scheduled international and domestic flights though, at the moment, most of the company’s aircraft are currently grounded though a few are operating domestic government-subsidised routes.
Based in Brisbane, the company employs 10,000 people and 6,000 others indirectly, and has been trying to raise new funds in vain under the current coronavirus crisis.
Virgin Australia captain George Kailis told the media that he fears for himself and his co-workers. “When Ansett collapsed Virgin was already there with nine aircraft and crew,” Mr Kailis, who is also the vice-president of the Australian Federation of Air Pilots (AFAP), told ABC News.
“There were plenty of aircraft around because it was [post] 11 September.
“It still took five years to get 40 aircraft in the air and 12 years to get 70 aircraft in the air.
“Virgin had new aircraft arriving and sitting on the tarmac because they could not train pilots quick enough.”
Mr Kailis said that there are 1,400 pilots left in Virgin Group with the vast majority having been stood down without pay.
A $1.4 billion Federal Government bailout is hoped for but unlikely.
Maria Vamvakinou MP, Member for Calwell, said that she has received many calls from Virgin employees who live in her electorate, bearing in mind that the airport is in the federal seat of Calwell. “We are hoping with great anxiety that the Government does something to save not only their jobs, but also save our second airline,” she said during a press conference in Melbourne on 20 April which was attended by Shadow Transport, Infrastructure and Regional Development Minister Catherine King and Bill Shorten MP, Member for Maribyrnong.
“This electorate in particular has suffered job losses as a result of many manufacturing companies closing down in recent times, and over the last 15 years or so. Ford in particular is a case at hand. We are familiar with job losses. We rely heavily on government supporting policies that allowed job creation in this country and I really appeal to the Government on behalf of the people who work for Virgin and who are in my electorates and in surrounding electorates,” she said.
“I appeal to the Government to do what is necessary to save the airline and save jobs. Not only Australia-wide but save jobs here in Victoria.”
Virgin Group Boss Richard Branson, whose group is a 10 per cent stakeholder in Virgin Australia, sent a statement to staff saying that he was “never one to give up” and was “determined to see Virgin Australia back up and running soon” especially bearing in mind that it had bought competition and lower airfares to domestic routes.
“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.”
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What does this mean for frequent flyers?
Velocity Frequent Flyer, while owned by the Group, is a separate company, however Velocity frequent flyers have been busy trying to transfer points to Singapore Airlines which is in partnership with Velocity. That option, however disappeared earlier this month with transfers between the two schemes “temporarily suspended”.
On Monday night, there were customers trying to redeem points in the Velocity store with many unable to log in though the demand caused Velocity to limit redemptions to 1 per customer per day in April.