Cash-strapped Virgin Australia collapsed Tuesday, making it the largest carrier yet to buckle under the strain of the coronavirus pandemic, which has ravaged the global airline industry. In an announcement to the Australian Stock Exchange, Virgin said it planned to keep operating flights despite handing the keys to administrators.
"Our decision today is about securing the future of the Virgin Australia Group and emerging on the other side of the COVID-19 crisis," CEO Paul Scurrah said in the statement. "Australia needs a second airline and we are determined to keep flying."
The airline was more than Aus$5 billion ($3.2 billion) in debt and had appealed for a Aus$1.4 billion loan to stay afloat, but the government refused to bail out the majority foreign-owned company.
Ratings agency Moody's said unsecured creditors would have to take "a significant haircut" if the restructure was successful.
The airline had already made 1,000 workers redundant and stood down 8,000 of its 10,000 pilots, flight attendants and ground crew.
Richard Branson, the billionaire founder of Virgin Group, which owns 10-percent of the airline, tweeted a message in support of the Virgin Australia team. "I am so proud of you and everything we have achieved together," he said. "This is not the end of Virgin Australia, but I believe a new beginning. I promise we will work day and night to turn this into reality."
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