October 1, 2020

Virgin Australia airline declares bankruptcy

Virgin Australia, the second largest airline in the oceanic country, voluntarily declared bankruptcy on Tuesday after failing to reach a rescue agreement with the government.

In a statement to the Australian stock market, the company said the move would help “recapitalize the business” and ensure it emerged “in a stronger financial position after the COVID-19 crisis.”

The company, which has 91 aircraft and some 10,000 workers, has been drowned by high debt and a slowdown in activity following the pandemic of the new coronavirus.

Virgin Airlines requested financial aid from the Australian government, led by Prime Minister Scott Morrison, to deal in the short term with part of a debt close to 5,000 million local dollars (3,160 million US dollars or 2,910 million euros).

However, the Executive finally refused to agree to a rescue valued at around 1,400 million local dollars (890 million dollars or 815 million euros).

“Our intention is to embark on a process to restructure and refinance the business and remove it from management as soon as possible,” said new administrator Vaughan Strawbridge of the Deloitte auditing firm.

British tycoon Richard Branson, who owns the Virgin group and holds 10 percent of the airline’s shares, asked in a letter to his workers not to give up and criticized the Australian government’s decision.

“In most countries, the government has come out to help airlines in this unprecedented crisis for the sector. Sadly this has not happened in Australia,” he said.


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