Virgin Australia, partly owned by SIA, enters voluntary administration as it collapses amid COVID-19 pandemic

Australia’s second-largest airline, Virgin Australia, announced on Tuesday (21 April) that it would enter voluntary administration and became the first airline in Asia to collapse under the shock of the COVID-19 crisis.
The airline is partly owned by Singapore Airlines (SIA), which owned 20%.
In a statement on Tuesday (21 April), the Brisbane-based airline stated that it had appointed Deloitte administrators to take over and restructure the business. The administrators will seek new investors, reorganise borrowings or get a buyer to save the business.
“We have commenced a process of seeking interest from parties for participation in the recapitalization of the business and its future, and there have been several expressions of interest so far,” said Vaughan Strawbridge, who is one of the four administrators at Deloitte.
Virgin Australia joined the United Kingdom’s domestic airline, FlyBe, as the latest casualty of the COVID-19 virus in the airline industry. The airline had furloughed 80% of its 10,000 staff and suspended all international routes after Australia closed its borders amid the outbreak, but it continues to operate some flights for essential workers, freight and repatriation of Australians.
The airline’s debt pile was more than A$5 billion (US$3.2 billion) as of 31 Dec 2019 and has not made an annual profit for seven consecutive years. It had requested a loan amounting to A$1.4 billion from the Australian government and entered debt-restructuring talks with creditors.
Meanwhile, the airline’s shares are tightly controlled by four shareholders, including SIA (20%), Etihad Airways (21%), China’s Nanshan Group (20%) and HNA (20%). While the founder of Virgin Group, Richard Branson owns 10% shares, another 9% is free float.
Forbes reported on 14 April that SIA’s loss of S$116 million in 2019 was associated with Virgin Australia’s performance as the value of SIA’s stakes in Virgin Australia decreased from $432 million in 2018 to $315 million in 2019.
SIA, which is majority-owned by state investor Temasek Holdings by 56%, also halted trading of its shares pending an announcement on 26 March, as reported by Business Times. Following that, Finance Minister Heng Swee Keat said in Parliament that SIA is considering a corporate action supported by Temasek Holdings.