COVID 19 Airline Fiasco
Since – March 2020 – the airlines across Australia have been in a constant demise – it hasnt become any better upto todays date – 20 April 2020 .
Governement has helped in certain ways to keep airlines working, but at this stage – Qantas, VIrgin, Regional Express have basically almost ceased operations.
Regional Express has limited flights between regional areas across AUSTRALIA .
VIrgin today , almost the stage of complete collapse .
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 further financial support for Virgin sealed the carrier’s fate, and the government now plans to wait out the insolvency process to see if taxpayers’ money is needed to keep it flying.
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.
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, including trying to find new owners to keep it flying.
Virgin’s board of directors were meeting on Monday. 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.
One such private equity buyer could be BGH, which has been named as a party that could be interested in salvaging Virgin either from administration or prior to it going under.
Virgin’s future had hung in the balance ever since the pandemic took hold. It had 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 pump 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.
Virgin had already 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.
Virgin had also 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 administration process would see some of its debts wiped and aircraft leases renegotiated.
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 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.
“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.”
https://www.abc.net.au/news/2020-04-20/virgin-australia-pilot-calls-for-lifeline-against-insolvency/12165550 POSTED – approx 620pm 20 APRIL 2020
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