Don Hudson Posted April 20, 2020 Share Posted April 20, 2020 https://www.smh.com.au/business/companies/virgin-australia-set-for-voluntary-administration-20200420-p54lcd.html Virgin Australia set for voluntary administration By Patrick Hatch, Sarah Danckert, David Crowe and Kylar Loussikian Updated April 20, 2020 — 8.09pmfirst published at 4.46pm Virgin Australia is preparing to go into voluntary administration, unable to survive under the weight of enormous debts and starved of cash by the coronavirus travel shutdown. The Morrison government's refusal of financial support sealed Virgin's fate and the government now plans to wait out the process to see if taxpayers' money is needed to keep it flying. The pandemic has thrown Virgin Australia into financial strife. Credit:Darren England - AAP Virgin did not return calls on Monday afternoon. One board member declined to comment when contacted. Virgin employs around 10,000 people directly and supports another 6000 jobs indirectly, who will face an uncertain future when the airline officially appoints administrators, expected to happen on Tuesday morning. Related Article Analysis Aviation Why the government isn't racing to stop Virgin's voluntary administration The collapse will also send shockwaves through Australia’s travel and tourism sectors which were already reeling from the devastating twin hits of the summer bushfires and the pandemic. The airline grounded almost its entire fleet and stood down most staff weeks ago and only restarted a minimum network of 64 government-subsidised domestic flights last week. Virgin's board of directors were meeting on Monday and one well-placed source said the announcement of it going into administration was "imminent". The airline is saddled with around $5 billion in debt and was running out of money as the coronavirus pandemic forced it to almost completely shut down its business. The company being reborn through a deed of company arrangement struck in administration is "the airline's only chance", said a source familiar with Virgin's struggles. In administration, an independent party will assess Virgin’s position and negotiate with shareholders and creditors about the best outcome for the business. 3:47 Coronavirus: Virgin to go into voluntary administration Virgin Australia is preparing to go into voluntary administration, leaving uncertain the future of 10,000 workers. That could include finding new owners to take over the airline and keep it operating or, if that is not possible, selling its remaining assets to pay off as many creditors as possible. Creditors - including banks, aircraft lessors, customers with credits from cancelled bookings or frequent flyer points and staff owed entitlements - may only receive cents in the dollar for what they are owed. Related Article Coronavirus pandemic Capitalism under fire as weak firms bailed out in a world without risk The already financially struggling Virgin was paralysed by the coronavirus crisis. It asked the federal government for a $1.4 billion loan to see it through the crisis but was rebuffed, while its major airline shareholders - also rocked by the pandemic - would not put more cash into the company. Singapore Airlines, Etihad Airways, the Chinese conglomerates HNA and Nanshan, and Richard Branson's Virgin Group own 90 per cent of company, with the remainder owned by investors on the ASX. Simon Lutton, executive director of the Australian Federation of Air Pilots, which represents most of Virgin’s 1500 pilots, called on the government to support Virgin and its employees through the administration process to ensure the country had two airlines. “Australia needs a competitive and strong airline industry, we can’t have one that is dominated by one player,” Mr Lutton said. "One way or another it needs to make sure we have a sound and viable competitor [to Qantas].” The administration process will see some of Virgin's debts wiped and aircraft leases renegotiated, making it a more attractive aquisition for a new owner. One potential private equity buyer could be BGH, which has been named as a party that could be interested in salvaging Virgin. Australia's number two airline had already appointed Deloitte to looking at potential restructuring options and the accounting firm is expected to run the administration process. Already Virgin had stood down around 8000 employees to try to slow its cash burn during the health crisis and announced around 1000 redundancies, including all pilots at its low-cost arm Tigerair and all New Zealand-based crew. Related Article Qantas and Virgin Australia to fly government-backed domestic network The airline had meanwhile tried to broker a deal with the Queensland and NSW state governments about financial support, with a minor bidding war breaking out between the two states on Monday over where the Brisbane-based group should be headquartered. The Morrison government is planning to allow the voluntary administrators to restructure the company and come to arrangements with shareholders and lenders before any decision on whether to put taxpayer funds at risk. Prime Minister Scott Morrison met cabinet colleagues in Canberra on Monday afternoon as Virgin prepared to enter voluntary administration, but government sources played down any chance of an imminent rescue package. Labor infrastructure spokeswoman Catherine King called on the government to put money into the company with a line of credit. Related Article Opinion Aviation Virgin's racing against time and the government needs to act “What we do know is if the government doesn't act, if this company goes into voluntary administration, there are 16,000 workers who will be seeking JobSeeker assistance," she said. “Frankly, we know the government has the capacity today to save this airline.” But the government does not have an imminent rescue proposal and does not want to inject cash or offer a debt guarantee when the company is yet to restructure its existing equity and debt. Prime Minister Scott Morrison has made it clear the government wants a two-airline industry in Australia but that any assistance is for the industry as a whole, rather than favouring one company over another. “I understand and know that there are all sorts of commercial discussions going on right now,” Mr Morrison said last Friday. “And the worst thing I could do as a Prime Minister or as a government is get in the way of that.” Virgin has been struggling financially as it revenented itself over the past decade from the budget airline Virgin Blue to a full-service carrier competing directly with Qantas for lucrative corporate passengers. The airline was loss making for each of the past seven years, haemorrhaging a combined total of $1.9 billion. Virgin’s chief executive Paul Scurrah was appointed from outside the company just over a year ago and was cutting unprofitable routes and slashing business costs to try to stop it from bleeding cash. But the company was still in too weak a position to last through the coronavirus pandemic, which has ravaged the airline industry globally and prompted mass government bailouts. Link to comment Share on other sites More sharing options...
rudder Posted April 20, 2020 Share Posted April 20, 2020 https://simpleflying.com/four-norwegian-air-subsidiaries-file-for-bankruptcy/ Link to comment Share on other sites More sharing options...
Guest Posted April 20, 2020 Share Posted April 20, 2020 Coronavirus: Virgin Atlantic will fold without aid, warns Branson By Simon ReadBusiness reporter 52 minutes ago Share this with Facebook Share this with Messenger Share this with Twitter Share this with Email Share Related Topics Coronavirus pandemic Image copyrightGETTY IMAGES Sir Richard Branson has warned that airline Virgin Atlantic needs government support to survive. The boss of the Virgin Group said he was not asking for a handout, but a commercial loan, believed to be £500m. In an open letter to staff, Sir Richard said: "Many airlines around the world need government support and many have already received it. The plea comes as Virgin Australia, the country's second largest airline, faces going into administration without aid. Sir Richard wrote in his letter that without UK government support for Virgin Atlantic "there won't be any competition left and hundreds of thousands more jobs will be lost". Skip Twitter post by @richardbranson Richard Branson ✔@richardbranson An open letter to Virgin employees https://virg.in/q5N 1,794 3:00 AM - Apr 20, 2020 Twitter Ads info and privacy 1,247 people are talking about this Report End of Twitter post by @richardbranson Virgin Atlantic - which is owned jointly by Sir Richard and US carrier Delta - has reportedly asked for £500m in aid. However, according to an FT report last week, the request has been rejected by the Treasury. It said the airline had not done enough to show it had explored other options to bolster cash before asking for state aid. Government support In his letter to staff, Sir Richard said: "We will do everything we can to keep the airline [Virgin Atlantic] 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 £600m loan the government recently gave them)." He pointed out that Virgin Atlantic started with one plane 36 years ago, before adding: "Over those years it has created real competition for British Airways, which must remain fierce for the benefit of our wonderful customers and the public at large." He also said that he would use his luxury private Carribean island Necker as collateral to raise funds to save jobs at his businesses. Sir Richard offered to inject £250m into the Virgin Group last month, with most of that going to the airline. Earlier this month, Rolls-Royce, Airbus, Heathrow airport and Manchester Airports Group sent letters to the government highlighting the importance of Virgin Atlantic to the UK's manufacturing supply chain. Australia struggles Meanwhile, it has been reported that Virgin Australia - in which Sir Richard holds a stake of around 10% - is close to going into administration after being refused help by the Australian government. The carrier has been forced to cancel nearly all of its flights during the coronavirus crisis and been unable to restructure its debts. The Australian government refused a request from the company for a A$1.4bn (£720m) loan. The airline - which employs about 16,000 - is part-owned by Sir Richard along with Etihad, Singapore Airlines and China's HNA. "The brilliant Virgin Australia team is fighting to survive and need support to get through this catastrophic global crisis," Sir Richard said. "We are hopeful that Virgin Australia can emerge stronger than ever, as a more sustainable, financially viable airline." He warned: "If Virgin Australia disappears, Qantas would effectively have a monopoly of the Australian skies. We all know what that would lead to." Image copyrightGETTY IMAGES Sir Richard also addressed the fierce criticism he has faced in recent weeks over his tax situation. Critics have pointed out he has paid no UK income tax since moving to the tax-free British Virgin Islands 14 years ago. Sir Richard is the 312th richest person in the world with an estimated $5.2bn fortune, according to the Bloomberg billionaires index. "I've seen lots of comments about my net worth - but that is calculated on the value of Virgin businesses around the world before this crisis, not sitting as cash in a bank account ready to withdraw," he said. "Over the years significant profits have never been taken out of the Virgin Group, instead they have been reinvested in building businesses that create value and opportunities." Turning to the question of living abroad he said: "Joan and I did not leave Britain for tax reasons but for our love of the beautiful British Virgin Islands (BVI) and in particular Necker Island, which I bought when I was 29 years old, as an uninhabited island on the edges of the BVI. "Over time, we built our family home here. The rest of the island is run as a business, which employs 175 people." Link to comment Share on other sites More sharing options...
dagger Posted April 20, 2020 Share Posted April 20, 2020 Norwegian has filed as well. Not quite dead, depending on some debt to equity conversion and a rescue from the Norwegian government Link to comment Share on other sites More sharing options...
Don Hudson Posted April 20, 2020 Author Share Posted April 20, 2020 34 minutes ago, dagger said: Not quite dead, depending on some debt to equity conversion and a rescue from the Norwegian government ... and VA not quite so either, depending... Link to comment Share on other sites More sharing options...
Don Hudson Posted April 21, 2020 Author Share Posted April 21, 2020 Virgin Australia confirms collapse, appoints administrators Virgin Australia has confirmed it has gone into voluntary administration, handing the airline over the insolvency experts at Deloitte to restructure the business and find new owners to keep it flying. 1 hour ago by Patrick Hatch and Sarah Danckert Link to comment Share on other sites More sharing options...
Guest Posted April 21, 2020 Share Posted April 21, 2020 Sadly they will not be the last. Not so very long ago we were concerned with the upcoming Pilot Shortage, now we are faced with a surplus of pilots and aircraft. Perhaps a return to the regulated system will be the end result. Link to comment Share on other sites More sharing options...
J.O. Posted April 21, 2020 Share Posted April 21, 2020 4 minutes ago, Marshall said: Perhaps a return to the regulated system will be the end result. I’m not saying it can’t happen, but several free trade agreements would require amendment first. Link to comment Share on other sites More sharing options...
Guest Posted April 21, 2020 Share Posted April 21, 2020 5 minutes ago, J.O. said: I’m not saying it can’t happen, but several free trade agreements would require amendment first. There is nothing to stop this within Canada or between Canada and other points if the CTA / etc. rules that certain routes are owned by one Canadian Carrier. Re the others, Bilateral agreements normally contain language re flight frequency/ seat capacity and not which national airline is allowed to provide the frequency. Most often, 1 of yours to one of ours. https://www.otc-cta.gc.ca/eng/transport-agreements Link to comment Share on other sites More sharing options...
Don Hudson Posted April 21, 2020 Author Share Posted April 21, 2020 Apparently VA declared a profit only twice in ten years, accumulating AUS$5b in debt. No wonder the Aussie gov't wouldn't touch it, & the banks are ahead of the shareholders in the cents-on-the-dollar calculation. This is before and beyond the current terrible forces unleashed by this virus, so the notions laissez-faire vs. bail-outs are less academic and instead are particularly stark against the world's political economies, reeling. Link to comment Share on other sites More sharing options...
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