MIAMI – As Virgin Australia (VA) filed for administration due to its bankruptcy last week, thousands of direct and indirect jobs are now at risk.
Once the airline made the decision to ask for government intervention, it cut 80% of its staff and suspended virtually all flights due to the COVID-19 travel restrictions.
Around 10,000 direct jobs and 5,000 workers employed in supply-chain operations will be affected, reported local media.
Regarding its financial status, VS owes US$5b to banks and institutional investors. As a result, four of its owner groups, Etihad Airways (EY), Singapore Airlines (SQ), Nanshan Group, HNA Group, and Virgin Group, rejected to inject further funds to assist the airline.
Unfruitful strategies to obtain a government bailout
Previously, a federal bailout of about US$1.4b was refused to the carrier as a US$715m government package was given to Australia’s airline companies in March.
On April 20, Virgin Group founder Sir Richard Branson placed his private island, Necker Island on offer as collateral against a potential bailout from the UK government.
It makes sense to think of the strategy as a way to sway a decision from the British Department for Transport (DfT) for a £500m bailout to keep the airline viable to run in the wake of the Coronavirus pandemic.
As of today, the British Government appears to keep its stance to reject any form of a bailout.