Airlines are struggling to stay afloat during the pandemic

Written and Published April 21, 2020

Following the news and updates around the COVID-19 pandemic, many airlines were forced to suspend or reduce their daily operations. We have the latest information from airlines and hotels all around the world. Unfortunately, many airlines are struggling to stay afloat during the pandemic with Virgin Australia being forced to file for voluntary administration.

Airlines are struggling to stay afloat during the pandemicAirlines are struggling to stay afloat during the pandemic

Virgin Australia Files For Voluntary Administration

Virgin Australia is the first large airline to fall under the pressure of the COVID-19 pandemic, unfortunately, it is unlikely they will be the only carrier that suffers this fate.
The carrier has filed for voluntary administration after almost 20 years in business. The goal of the voluntary administration is for the administrators to assess the severity of the situation and work with shareholders and creditors to find the best possible solution for the airline.

From the official press release:
“We are committed to working with Paul and 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 recapitalisation of the business and its future, and there have been several expressions of interest so far,” Administrator, Vaughan Strawbridge

This decision follows the Morrison government's rejection of an appeal to help keep the airline afloat. The carriers CEO, Paul Scurrah, wanted federal help to keep operating, but his appeal for a $1.4 billion bailout was denied. Keep in mind that Velocity is running as a separate company and the frequent flyer program will not be under voluntary administration. For now, Virgin will continue to operate a small number of government-subsidized domestic and international flights through the administration process.

From the official press release:
“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 Group Chief Executive Officer, Paul Scurrah

Virgin Australia is 90% foreign-owned, with Singapore Airlines, Etihad Airways, and Chinese HNA Group owning the majority of stakes. Sir Richard Branson's Virgin Group owns 10%. Unfortunately, Branson's Virgin Atlantic is also facing serious financial trouble.

Virgin Atlantic In Financial Trouble

In an open letter to employees of Virgin Atlantic billionaire Richard Branson said that the carrier needed government support to survive the COVID-19 pandemic. Last month the carrier requested emergency financial help in addition to the coronavirus package made available to all British companies.

From the open letter:
“The reality of this unprecedented crisis is that many airlines around the world need government support and many have already received it. Without it there won't be any competition left and hundreds of thousands more jobs will be lost, along with critical connectivity and huge economic value. Virgin Atlantic started with one plane 36 years ago. Over those years it has created real competition for British Airways, which must remain fierce for the benefit of our wonderful customers and the public at large.”

Airlines are struggling to stay afloat during the pandemic

Virgin Atlantic has been told to re-submit a bid for a £500 million state coronavirus bailout package after the government dismissed the initial bid. Branson also pointed out that the rival British carrier EasyJet received a £600 million government bailout earlier in April.