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Virgin Australia goes bust, becomes largest airline coronavirus casualty

April 21, 2020
5 min read
Virgin Australia goes bust, becomes largest airline coronavirus casualty
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Virgin Australia has become the largest airline to fail amid the novel coronavirus pandemic that is driving the worst crisis ever faced by global airlines.

The Brisbane-based carrier entered "voluntary administration" -- the Australian equivalent of bankruptcy restructuring -- on April 21, Virgin Australia said in a statement. The process will allow the airline to restructure and seek outside investment after its current shareholders and the Australian government declined to provide aid.

Virgin Australia will continue to operate its already greatly reduced schedule in Australia and internationally. The airline is operating 64 domestic flights daily, including to Brisbane (BNE), Melbourne (MEL) and Sydney (SYD), as well as limited international service to Hong Kong (HKG) and Los Angeles (LAX).

The airline's Velocity frequent flyer program is not part of the administration process.

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Sunset on the Virgin Australia ramp at Sydney. The airline entered voluntary administration (bankruptcy) on 21 April. #avgeek

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"Our intention is to undertake a process to restructure and re-finance the business and bring it out of administration as soon as possible," said Vaughan Strawbridge, one of Virgin Australia's administrators and a partner at Deloitte, in a statement. "We have commenced a process of seeking interest from parties for participation in the recapitalization of the business and its future."

Virgin Australia is the largest airline to-date to shut down or file for bankruptcy or an equivalent amid the coronavirus pandemic. UK regional carrier Flybe was the first to collapse in early March, followed by regionals Compass Airlines, RavnAir and Trans States Airlines in the U.S.

South African Airways is also near collapse after the South African government denied its request for aid, Bloomberg reported.

The International Air Transport Association (IATA) has warned that as many as half of the world's airlines could collapse or be acquired without government aid to get them through the COVID-19 crisis.

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Related: More than half of global airlines could ‘die’ without aid

Virgin Australia has teetered on the edge for weeks. Already financially weak after a costly multi-year investment spree, the airline sought an Australian dollar 1.4 billion ($888 million) loan from the federal government at the end of March. That loan was denied as were requests for additional funds from its major shareholders Etihad Airways, Chinese groups HNA and Nanshan, and Singapore Airlines, the Sydney Morning Herald has reported.

The airline is the second largest in Australia after Qantas Airways. Virgin Australia flew nearly 31% of the available seat miles -- 37% when including its budget subsidiary Tigerair Australia -- in the country in 2019, according to Cirium schedule data. Qantas flew nearly 39% of capacity in Australia during the year.

Virgin Australia had 10,620 employees at the end of June 2019.

Related: Virgin Australia set to enter voluntary administration

Featured image by Getty Images

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TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

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10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
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Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

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  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023