Virgin Australia announced on Tuesday that they have entered voluntary administration to recapitalize and emerge as a stronger carrier after the global COVID-19 pandemic has been contained and the airline industry begins to recover.
Today, Virgin Australia Holdings Limited (ASX:VAH) announced that they have entered voluntary administration in order to recapitalize their business and emerge as a stronger carrier on the other side of the global COVID-19 pandemic. The firm’s Board of Directors has appointed Vaughan Strawbridge, John Greig, Sal Algeri and Richard Hughes of Deloitte as voluntary administrators of the company and some subsidiaries. While Velocity Frequent Flyer is owned by the Virgin Australia Group, it is separate and not affected by the voluntary administration filing. A voluntary administration filing is equivalent to a U.S. Chapter 11 Bankruptcy reorganization, something that all major U.S. carriers have experienced in recent decades. The decision to enter voluntary administration comes at a time when the airline continues to seek financial support, both from private parties and the State and Federal Governments. In Tuesday’s announcement, Virgin Australia Group’s Chief Executive Officer, Paul Scurrah said,
“Our decision today is about securing the future of the Virgin Australia Group and emerging on the other side of the COVID-19 crisis. In 20 years, the Virgin Australia Group has earned its place as part of the fabric of Australia’s tourism industry. 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”
While in voluntary administration, Virgin Australia will continue to operate scheduled domestic and international flights to transport essential workers, maintain essential freight corridors and repatriate Australian citizens. The Administrators will work with the carrier’s current management, team members, suppliers and partners as the Virgin Australia Group navigates it way past this unprecedented crisis and emerges as a stronger competitor. Also commenting on Tuesday’s announcement, Administrator Vaughan Strawbridge added,
“We are committed to working with Paul and the Virgin Australia team and are progressing well on some immediate steps. We have commenced a process of seeking interest from parties for participation in the recapitalization of the business and its future, and there have been several expressions of interest so far.”
Source: Virgin Australia