Virgin Australia goes into voluntary administration due to coronavirus grounding flights
VIRGIN Australia has gone into voluntary administration after failing to secure a Government bailout.
The carrier is the latest airline to struggle due to the coronavirus pandemic which has all but grounded planes around the world.
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In a statement, Virgin Australia said the decision was made to “recapitalise the business and help ensure it emerges in a stronger financial position on the other side of the COVID-19 crisis”.
It said: “The decision comes as the Group has continued to seek financial assistance from a number of parties, including state and federal governments, to help it through the unprecedented crisis, however it is yet to secure the required support.
“Virgin Australia will continue to operate its scheduled international and domestic flights which are helping to transport essential workers, maintain important freight corridors, and return Australians home.”
Virgin Group founder Sir Richard Branson addressed the decision in a tweet directed at the Virgin Australia team.
It read: "Dear @VirginAustralia team. I am so proud of you and everything we have achieved together. This is not the end of Virgin Australia, but I believe a new beginning.
"I promise that we will work day and night to turn this into reality."
GROUNDED FLIGHTS
The airline was launched by Richard Branson 20 years go, who now retains 10 per cent of the business, and also codeshares with Virgin Atlantic who offers flights to and from the UK.
Offering both domestic and international flights, Virgin Australia are approximately AUD$5bn (£2.55bn) in debt, and called for a AUD$£1.4bn (£715m) bailout from the government, according to the .
This was refused, with the Queensland government offering just AUD$200m (£102m).
Almost the entire fleet of Virgin Australia has been grounded due to coronavirus, with most staff being forced to stand down.
Just 64 government-subsidised domestic flights are currently running.
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The potential failure of the airline has led to fears of price hikes from Qantas, leaving just one major Australian airline.
Prime Minister Scott Morrison explained that the government wants to continue with a two-airline industry in Australia.
Simon Lutton, executive director of the Australian Federation of Air Pilots, added: "Australia needs a competitive and strong airline industry, we can’t have one that is dominated by one player."
He added that the country needed a "sound and viable competitor" to Qantas.
The announcement has raised further concerns about the stability of the global airline industry.
Nigel Frith, senior market analyst at www.asktraders.com, said that it "questions as to which international airline goes next".
Lufthansa has shut their budget airline Germanwings for good, while easyJet has warned that the airline could run out of money by August if the lockdown continues.
Norwegian pilots added that there was "no money to pay them" as the airline attempts to stay afloat.
It is bad news for UK tourists if a major airline goes bust.
If a large carrier folds, Brits will see far less choice in where they are able to go on holiday.
Paul Charles, an aviation expert and head of the travel consultancy The PC Agency, told Sun Online Travel that choice is at risk in the current climate.
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He said: "Fundamentally, the airline industry is on its knees and until uncertainty over coronavirus ends it won't recover.
"There are some airlines which have much stronger positions around the world than others - with more cash in bank - like IAG, Finnair and Wizz Air, and then there are some airlines that don't.
"But everyone is struggling and I don't think the government has enough money to support all of them, so the question is whether they would be willing to sacrifice some well known brands in order to protect the industry generally."
He added: "There will be less choice for consumers. The choice for us will be curtailed anyway because some airlines will go under globally too, but what happens to Brits directly depends on what bailout the government decides for the UK airline industry."
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