FILE PHOTO: A Virgin Australia plane at Kingsford Smith International Airport the morning after Australia implemented an entry ban on non-citizens and non-residents to curb the spread of the coronavirus, in Sydney, Australia, March 21, 2020. REUTERS/Loren Elliott
SYDNEY (Reuters) – Virgin Australia Holdings Ltd (VAH.AX) said on Tuesday it entered voluntary administration to recapitalise the business and emerge in a stronger financial position after being battered by the coronavirus crisis and a high debt load.
Deloitte has been appointed as the administrator, the airline said in a statement, adding it had been unable to secure a A$1.4 billion ($887.60 million) loan from the federal government.
Virgin said the current management team led by chief executive Paul Scurrah would continue to run the business and it would still operate scheduled domestic and international flights to help transport essential workers, maintain freight corridors and return Australians home.
Administrator Vaughan Strawbridge said Deloitte had begun a process of seeking interest from parties in recapitalising the business and there had been several expressions of interest.
“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.
The airline employs 10,000 people directly and 6,000 people indirectly in competition with larger rival Qantas Airways Ltd (QAN.AX), which would have a virtual monopoly in Australia if Virgin stopped flying.
“Our decision today is about securing the future of the Virgin Australia Group and emerging on the other side of the COVID-19 crisis,” Scurrah said in a statement.
Reporting by Jamie Freed; Editing by Sandra Maler & Shri Navaratnam