Virgin Australia became Australia’s first big corporate casualty of the coronavirus pandemic after it announced to have entered voluntary administration. Administrators of Deloitte would now take control of the airlines. They plan to save the business by seeking new investors and will also try to restructure the company’s debt and clear its creditors’ account. The decision will directly impact 10,000 full time workers and 6,000 contract workers of the airlines.
The Chief Executive Paul Scurrah says if the airline survives through the administration it is bound to come back leaner, stronger and fitter.
Almost 90% of Virgin Australia is owned by foreign airlines. Singapore Airlines, Etihad Airways, HNA Group and Nanshan Group own up to 20% of the company, and the owner of Virgin Group Mr Richard Branson owns 10%. While governments in the US and Europe have stepped in to support the airlines, Australian government has shown hesitation over potentially owning a money-losing airline.
There is also a concern for about 4,000 suppliers and customers who have bought airline tickets worth over $1Bn and are yet to fly. Currently, the airline is accessing the initiative by the federal government - Jobkeeper Scheme. This ensures each employee receives $1,500 on a fortnightly basis. However, there is no surety of jobs post recapitalization and in the event it is acquired by new owners.
The current scenario hints at possible job losses, however, there will be more clarity once there is a clear mandate on immediate steps to be taken and a decision on how recapitalization will kick in.