Virgin administrator fears bidders ‘may walk away’

Virgin’s administrator has written to the Federal Government, saying it is worried bidders for the troubled airline might pull out in the absence of government support for the airline industry.

Jun 10, 2020, updated Jun 10, 2020
Final bids for the airline close this week.  (Photo: AAP Image/Darren England)

Final bids for the airline close this week. (Photo: AAP Image/Darren England)

The global aviation industry is facing an uncertain future, with coronavirus halting international travel and airlines announcing job cuts and calling on governments for support.

On Monday, Virgin Australia and Qantas grounded their remaining international passenger operations after government funding for the handful of overseas routes they were flying came to an end.

The limited flights had been in operation to allow Australians stranded overseas to return home amid the COVID-19 crisis.

Sources have confirmed Virgin’s administrator, Deloitte, wrote to the Government on Tuesday, requesting urgent support.

The bidders are not only concerned about Virgin’s financial status, but the general future for airlines given the uncertainty over when international travel could resume.

The Federal Government has consistently argued it will not bail out individual companies, but has given some funding for local flights, including some operated by Qantas and Virgin.

Virgin Australia went into administration on April 21, owing about $7 billion to about 12,000 creditors.

A number of bidders have been circling the airline, but the initial shortlist of 20 was narrowed to two bidders at the start of the month: Boston-based private investment firm Bain Capital, and global investor Cyrus Capital Partners, which has links to British billionaire and Virgin founder Richard Branson.

Deloitte administrator Vaughan Strawbridge said he was “entirely comfortable with the process we have in place and the sale we are pursuing”.

“Last night we wrote to Government asking for clarification of their intentions regarding future and ongoing support for the aviation industry,” Strawbridge said.

“It’s important the bidders understand levels of government support so they know how to structure their bids.”

Final bids are due this Friday.

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