Virgin confirms voluntary administration

Voluntary adminstration gives Virgin temporary protection from outright collapse. Photo: Reuters
Voluntary adminstration gives Virgin temporary protection from outright collapse. Photo: Reuters
Troubled airline Virgin Australia has confirmed it is in voluntary administration.

Its board of directors has appointed Vaughan Strawbridge, John Greig, Sal Algeri and Richard Hughes of Deloitte as voluntary administrators of the airline and a number of its subsidiaries.

It will now try to recapitalise the business, to help it emerge "in a stronger position on the other side of the COVID-19 crisis".

The Velocity Frequent Flyer arm, while owned by the group, is a separate company and is not in administration.

The decision comes as Virgin seeks financial assistance from a number of parties, including state and federal governments, to help it through the coronavirus crisis, however it is yet to secure the required support.

Finance Minister Mathias Cormann on Tuesday again rejected calls for the federal government to buy a stake in the struggling airline, which has cut services, stood down staff, and suspended trading on the ASX amid widening coronavirus travel bans.

Up to 15,000 jobs are at risk, with the federal government resisting the company's plea for a $A1.4 billion ($NZ1.47 billion) bailout loan.

Virgin's management team - led by chief executive Paul Scurrah - will assist Deloitte as the airline continues operate scheduled international and domestic flights to transport essential workers, maintain freight corridors, and return Australians home.

Deloitte says its intention is to restructure and refinance the business and bring it out of administration as soon as possible.

"We are committed to working with Paul and the Virgin Australia team and are progressing well on some immediate steps," Mr Strawbridge said.

"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."

Voluntary administration gives Virgin temporary protection from outright collapse.

Administrators will comb through the books and identify potential asset sales to pay down debt or an outright sale of the business to another party, in this case private equity firms who may be circling.

If this proves impossible, Virgin will "collapse".

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