Virgin Australia has entered voluntary administration, with some 16,000 jobs up in the air, due to the coronavirus crisis after the airline failed to secure a government bailout of 1.4 billion dollars (890 million U.S. dollars).
The Brisbane-based company confirmed the news on Tuesday morning, saying it went into insolvency “to recapitalise the business and help ensure it emerges in a stronger financial position 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,” Paul Scurrah, group chief executive for Virgin Australia, said in a statement.
The group’s airlines flew to 41 destinations, including major cities and regional communities, and contributed around 11 billion dollars (6.9 billion U.S. dollars) to the Australian economy every year, he said.
The decision comes as Virgin Australia sought financial assistance from a number of parties, including state and federal governments, to help it through an unprecedented financial crisis.
However, the carrier has not been able to secure the required support, Virgin Australia said in a statement.
It will continue to operate a limited schedule of flights.
Four officials from Deloitte accounting firm have been chosen as administrators of the company and some of its subsidiaries.
“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 have commenced a process of seeking interest from parties for participation in the recapitalisation of the business and its future, and there have been several expressions of interest so far,” said Vaughan Strawbridge, one of the administrators.