Virgin Australia has become the first major airline to fall victim of the coronavirus crisis by falling into administration.
Australia’s second largest carrier called in administrators after appeals for government aid fell on death ears.
Almost all flights were grounded last month following extensive travel bans.
Virgin Australia has a net debt of A$5 billion and had already laid off 8,000 staff.
The Covid-19 pandemic came as the carrier was progressing an “significant” transformation plan to “reset” its cost base. This was to include a “consolidation” of the workforce, simplifying the fleet, withdrawing from loss-making routes and reviewing and re-negotiating supplier agreements.
But confirmation of the voluntary administration came as Virgin Group founder Sir Richard Branson appealed for a taxpayer loan to bail out Virgin Atlantic.
Virgin Australia is part-owned by the Virgin Group alongside the UAE government, Singapore Airlines, Chinese group HNA.
Deloitte was appointed as administrator overnight in a bid to re-capitalise the airline and help ensure it emerges in a stronger financial position on the other side of the Covid-19 crisis.
The process is likely to take “two to three months”.
Virgin Australia 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 is yet to secure the required support.”
The airline will continue to run scheduled international and domestic flights to help transport essential workers, maintain cargo links and return Australians home.
Aircraft leasing firm Avation, which has a dozen aircraft operated by Virgin Australia, said it was aware of reports that there are ten or more interested buyers for the airline.
Administrator Vaughan Strawbridge said: “Our intention is to undertake a process to restructure and re- finance the business and bring it out of administration as soon as possible.
“We are committed to working with 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 re-capitalisation of the business and its future, and there have been several expressions of interest so far.”
Virgin Australia chief executive 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 ten million members of our Velocity loyalty programe, and contribute around $11 billion to the Australian economy every year.”
He added: “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.”
Virgin Australia was set up as Virgin Blue in 2000 as a wholly owned subsidiary of Virgin Group.
But Virgin cut its stake to 50% in 2002 as the carrier expanded to fill the gap left by Australian carrier Ansett, which collapsed days after 9/11, and reduced its holding further over subsequent years.