Photo by Fin Gabriel on Unsplash
The administrators of Virgin Australia have asked a court to allow the plighted airline to start offering flight credits again.
Flight credits were suspended last month, after Virgin Australia went into administration. The proposal to have the credits return, though, won’t pay the approximately 340,000 requests for refunds received since administrators took charge.
“In this regard, I note that the inability of the administrators to pay refunds to customers who booked their tickets before the Virgin companies entered into administration has been the subject of recent media coverage,” said lead administrator Vaughan Strawbridge.
“Because of the Covid-19 travel restriction period, only approximately 50 of the aircraft are presently operational with approximately 27 of those aircraft generating revenue at any one time – principally for charter arrangements and otherwise for limited domestic travel.”
Virgin Australia is the country’s second-largest carrier – and has long-term debt of about A$5 billion. The airline is looking for a new investors, after being rejected for a loan by the Australian government.
“Our decision is about securing the future of the Virgin Australia Group and emerging on the other side of the Covid-19 crisis. Australia needs a second airline and we are determined to keep flying,” said Virgin Australia chief executive Paul Scurrah.
“This is a national crisis, it’s a global crisis, it’s a crisis that this industry has never seen before. Rivalry should be put aside and the national interest should come first.
“We should make sure that the industry gets through this together. Let’s come together and link arms, so we can actually do the right thing by the country.”
The largest shareholder of Indian budget carrier IndiGo is reportedly contemplating bidding for Virgin Australia.
Earlier this year, administators Deloitte confirmed several parties had signed confidentiality agreements, which allows them access to Virgin Australia’s financial information.
“They said the reason for this level of interest at such an early stage was partly down to the ‘exceptional team’ Virgin has in its workforce,” Transport Workers Union national secretary Michael Kaine told Guardian Australia.
“There is nothing to prevent creditors in the United States from commencing enforcement actions against the foreign debtors – the Virgin group – or their assets. This would undermine the administration process in Australia.”