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More Airline Industry Casualties Due To COVID-19

Posted on Wednesday, April 22nd, 2020 • News

Virgin Australia the country’s second-largest carrier has entered in voluntary administration.

It employs about 10,000 people directly and another 6,000 through ancillary businesses. The wide-spread travel bans have been the main casualty for this airline who was already struggling with a long-term debt of A$5bn debt.

After failing to get a loan from the Australian government, the airline is now seeking new buyers and investors. Concerns have already been voiced that unless the airline is resurrected, national flag carrier Qantas will hold a near-monopoly in Australia. Virgin Australia chief executive Paul Scurrah said: “Our decision today 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.”

Virgin Australia is partly-owned by a number of entities including the UAE government, Singapore Airlines, China’s HNA, and Sir Richard Branson’s Group. Sir Richard Branson – whose Virgin group is a part-owner of Virgin Australia – has offered a Caribbean island as collateral to help get a UK government bailout of Virgin Atlantic.

UK airports

Since UK went into lockdown nine out of ten flights have been grounded risking closure.

The number of flights recorded last week by the UK’s 10 biggest airports were just 711 compared to 7865 in the week up to the UK’s lockdown. Heathrow airport’s average take-offs and landings per day would normally see an average of 1,400. Cargo flights are running and airport operators are supporting these airlines by working to cut costs.

Independent aviation analyst Martin Evans describes this situation as a “risk” and we could see some airports close unless a rescue deal can be arranged. Whether flights are operating or not, airports would still have to cover fixed costs, ranging from management to traffic control.

There is concern that some grounded aircraft will “never return to the skies”. When restrictions are lifted passenger numbers can be low as people choose not to travel.

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