Virgin Australia collapses as Richard Branson offers to sell Necker Island
Virgin Australia has become the world’s first long-haul airline to go into voluntary administration after failing to secure a bailout during the coronavirus crisis.
A spokesperson for the company said: ‘Virgin Australia has entered voluntary administration to recapitalise the business and help ensure it emerges in a stronger financial position on the other side of the Covid-19 crisis.’
The move follows a board meeting of the firm’s international shareholders who voted against providing more financial support. The airline had unsuccessfully asked the Australian government for £710,000,000 but the request was denied.
In a letter to staff, Sir Richard Branson said it was ‘not the end for Virgin Australia, but I believe a new beginning’.
He continued: ‘Never one to give up, I want to assure all of you – and our competitor – that we are determined to see Virgin Australia back up and running soon.
‘We will work with Virgin Australia’s administrators and management team, with investors and with government to make this happen and create a stronger business ready to provide even more value customers, competition to the market, stimulus to the economy and jobs for our wonderful people.
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‘Virgin Australia has captured the hearts of all Australians. That is down to all of you – past and present – who made it the best airline to fly within Australia.’
The airline, which serviced both domestic and short-haul destinations, was founded by Sir Richard in 2000 and became one of Australia’s main carriers. Deloitte has now been appointed the airline’s voluntary administrators.
The news comes just as Sir Richard pledged his luxury island resort as collateral after seeking a bailout from the UK government for airline Virgin Atlantic. He has asked for a commercial loan, believed to be around £500,000,000. Necker Island is believed to be worth £80,000,000.
In an open letter to staff, the billionaire said the Virgin Group ‘will do everything we can’ to keep the airline going. He continued: ‘But we will need government support to achieve that in the face of the severe uncertainty surrounding travel today and not knowing how long the planes will be grounded for.
‘This would be in the form of a commercial loan – it wouldn’t be free money and the airline would pay it back (as easyJet will do for the £600,000,000 loan the government recently gave them).
‘The reality of this unprecedented crisis is that many airlines around the world need government support and many have already received it.’
Sir Richard, who bought Necker Island aged 29 in 1980, went on to say his wealth does not mean he has ‘cash in a bank account ready to withdraw’. He then hit back at criticism that he was a tax exile, stating instead that he and his wife didn’t leave the UK for tax reasons, ‘but for our love of the beautiful British Virgin Islands and in particular Necker Island’.
He added: ‘As with other Virgin assets, our team will raise as much money against the island as possible to save as many jobs as possible around the group.’
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