Will there be a last-minute lifeline for the embattled Virgin Australia? The clock is ticking away.
Virgin Australia Holdings is preparing to enter voluntary administration, the Sydney Morning Herald reported on Monday, citing unnamed sources, with the cash-strapped carrier unable to weather the coronavirus crisis because of its debt.
The newspaper said the airline’s board of directors was meeting on Monday and an announcement of it going into administration was “imminent.”
Virgin Australia declined to comment on the report.
Options available under Australia’s voluntary administration regime include asset sales, an agreement with creditors, debt write-offs or a winding up of the company.
The company’s debt pile stood at A$5 billion ($3.2 billion) at Dec. 31.
Australia’s second-biggest carrier last week suspended trading in its shares to continue talks on financial aid and restructuring alternatives to help it contend with the coronavirus crisis.
It had requested a loan of A$1.4 billion from the government and entered debt-restructuring talks with creditors.
Virgin’s shares are tightly controlled by a group of foreign carriers, including Singapore Airlines, Etihad Airways and Chinese conglomerate HNA Group, which have also suffered a sharp deterioration in revenue because of the coronavirus pandemic.
($1 = 1.5753 Australian dollars) (Reporting by Jamie Freed Editing by David Goodman)
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Photo credit: The cash-stripped Virgin Australia is set to enter voluntary administration. Simon_sees / Flickr