With an enormous debt prior to the coronacrisis and the local government’s denial of state aid, Virgin Australia might become the first airline to go down under, due to the current pandemic. The airline is reportedly prepared to go into voluntary administration to assess its future, with one of the options being to shut down Virgin Australia completely.
The fallout of Virgin Australia would leave Qantas as the sole Australian airline, something that the Prime Minister of Australia doesn’t want to see happen. The government has expressed a desire to have “two viable commercial airlines in Australia.” However, it was also reluctant to provide direct support to Virgin Australia, which had asked to provide an $841 million (AUD1.4 billion) loan. Alan Joyce, the CEO of competing airline Qantas, reiterated that if their main competitors were to get the $841 million (AUD1.4 billion) loan, the Flying Roo should get $2.6 billion (AUD4.2 billion).
The Australian government is monitoring the situation and looking at whether the airline would need public funds to keep running, reported the Sydney Morning Herald. Latest financial results indicated that Virgin Australia ended 2019 with a net loss of $200 million (AUD315 million). The carrier’s last profitable year was in 2012 when it managed to post a net profit of $14.5 million (AUD22.8 million). Currently, the company has around $2.6 billion (AUD5 billion) of debt.
Despite the fact that Virgin Australia‘s life hangs in the balance, two regional Australian governments are fighting to relocate the airline to their state, namely New South Wales and Queensland. The fight has resulted in a public exchange of words, whereupon Cameron Dick, the state development minister of Queensland, told New South Wales’ government to “back off on stealing Virgin (VAH) .”
Meanwhile, the face of the Virgin Group, Richard Branson, has released a public statement. He reiterated that Australian skies would be monopolized if Virgin Australia were to go down.
“We all know what that would lead to.”
