The airline that could replace Virgin Australia at its revealed Branson’s carrier owes $7BILLION 

A regional Queensland airline could be best placed to replace the embattled Virgin Australia, after the airline entered voluntary administration with a reported $7 billion debt, experts claimed.

Aviation experts believe charter group Alliance Airlines could soon fill the void left by flailing airline, which runs key domestic routes across Australia.  

The airline was place into administration after it was left crippled by the coronavirus pandemic.

It had already been struggling, amassing debts of $7 billion, including $450 million owed to its hardworking staff.

A collapse of the airline could leave a huge gap in Australia’s domestic flight market, creating a worrying monopoly for the likes of rival Qantas.

But Strategic Aviation Solutions chairman Neil Hansford told Courier Mail the Queensland carrier could be ready to fill the gap.

Virgin Australia has gone into voluntary administration, putting 16,000 jobs under threat (pictured, staff at Brisbane airport after the announcement on April 21)

Richard Branson owns 10 per cent of Virgin Australia (pictured), who is battling to save his UK business Virgin Atlantic

‘You’ve got Alliance sitting in Brisbane with 50-odd aircraft,’ he said on Saturday.

‘With the right sort of funding or government guarantees could upgrade their fleet and get reasonable services going.’

‘There’s plenty of ample crew … plenty of engineering around.’

Alliance Airlines has a fleet of 50 planes based out of Brisbane, and was founded in 2002. 

Administrator Deloitte has found 10,247 creditors, meaning people or companies who are owed money by Virgin Australia.

This includes 9,020 of the airlines own employees, with debts totalling nearly $7 billion to creditors.

Nearly $2 billion of this is owed to bondholders, with $450 million owed to staff.   

Sir Richard Branson, who owns ten per cent of Virgin Australia, tweeted: ‘This is not the end of Virgin Australia. I believe in  a new beginning’

‘The administrators expect that the total number of creditors is estimated to be over 12,000,’ a statement from the financial service firm said. 

Alliance Airlines is understood to have what’s known as a wet-lease partnership with Virgin Australia, meaning it already provides aircraft and crew to the airline.

It currently operates the airline giant’s flights between Brisbane and Gladstone, Bundaberg, Moranbah and Port Macquarie.

But it also has up to $300,000 exposed as the Virgin Australia administration process gets underway, meaning it too could lose money.  

Experts said the airline would need to compete with Jetstar – which is owned by Qantas – by offering competitively low fares.  

Virgin called in administrators after a board meeting of its international shareholders voted against providing more financial support (pictured, staff in Brisbane on April 21)

Alliance Airlines (pictured), which has 50 planes based out of Brisbane, could soon fill a void left by Virgin Australia’s domestic offering, an expert has said

An initial review of the airline’s books showed it owed a total of $6.84 billion, including huge debts to corporate lenders, companies who lease aircraft and landlords.  

In addition to this, the cost of going into voluntary administration is estimated to be between $20 and $30 million.  

Going into liquidation is not the company’s aim, Deloitte said, and Virgin Australia instead prefer a ‘sale or recapitalisation’ of the company.

‘It would also allow a significant amount of the workforce to be retained and allow key suppliers to continue supplying Virgin,’ the statement said.

The airline went into voluntary administration on April 21, putting 16,000 jobs under threat.

An air-hostess named Kara (pictured on April 21) warned that if Virgin goes under then Qantas would be able to push up prices for flights

Pilot Ken Winslow (pictured on April 21) said: ‘It’s been sad that the Federal Government hasn’t been able to provide us with tangible support’

The airline, which was already struggling before coronavirus restrictions hit cashflows, is now being managed by Deloitte accountants while it restructures and looks for a buyer.

Administrator Vaughan Strawbridge said there were no plans for redundancies and that workers will still be paid their wages, including those on the government’s JobKeeper scheme.

Raising hopes that the airline will be bought quickly, he said there were ‘in excess of ten companies with a keen interest in being part of the restructuring’. 

Private equity firm BGH Capital is thought to be among them.

But there are fears the restructure will involve scrapping less profitable routes, particularly to regional areas, meaning flag carrier Qantas will be the only provider and could increase fare prices.

Devastated: One baggage handler named Scott (pictured on April 21), who has been working for Virgin for 16 years, described his colleagues as his ‘brothers and sisters’

Virgin staff are seen at Brisbane airport on April 21 (pictured) shortly after the airline went into voluntary administration

In an emotional press conference at Sydney Airport on April 21, tearful Virgin employees begged for Prime Minister Scott Morrison to save their jobs after the government said it would not buy a stake in the company or give it a $1.4 billion loan.

One baggage handler named Scott, who has been working for Virgin for 16 years, described his colleagues as his ‘brothers and sisters’.

In a message to the prime minister, he said: ‘Sir, I could not do your job and I don’t envy you, but please let me do mine. Don’t clip our wings.’

A young flight attendant called Flynn said: ‘Virgin Australia is our family. Without it, it’s like we are losing a family member.’

Virgin Australia is ten per cent owned by billionaire Sir Richard Branson, who is battling to save his UK business Virgin Atlantic.

A young flight attendant called Flynn (pictured on April 21) said: ‘Virgin Australia is our family. Without it, it’s like we are losing a family member.’

British billionaire Sir Richard Branson (pictured) offered his his own private Caribbean island of Necker as collateral

He has asked for a $500 million (AUD $1billion) loan from the UK government and offered his his own private Caribbean island of Necker – estimated by Forbes to be worth £80 million (AUD $160m) – as collateral.

In a letter to Virgin Australia employees, Sir Richard, 69, said he was ‘so proud’ of them and added: ‘This is not the end of Virgin Australia. I believe in a new beginning.’

Virgin Australia asked for a $1.4 billion government loan – but the coalition government was unwilling to risk such as vast amount of taxpayers’ cash.

Treasurer Josh Frydenberg said that voluntary administration represented an ‘opportunity’ for Virgin to strengthen. 

Other Australian companies such as Network Ten have successfully navigated administration, he added.

Virgin Australia could be sold within months

 Administrators intend to sell off Virgin Australia within months and don’t plan to carve it up.

The airline went into voluntary administration on Tuesday and a quick sale is now anticipated.

‘There is an extraordinary number of parties keen to be involved,’ administrator Vaughan Strawbridge, from Deloitte, told reporters on Tuesday.

‘This is a matter of months, not longer than that.’

As the hunt for a buyer rolls on, staff who still have jobs will continue to receive their wages, and eligible staff will get the government’s JobKeeper payments.

He said moving the airline’s Brisbane headquarters to Sydney is not under consideration but added that issue would be worked through with potential buyers.

Virgin Australia CEO Paul Scurrah said a sale was the best way of ensuring the airline survived, after it failed to secure the liquidity it needed from shareholders, governments and others.

‘This is a tough day for our airline … (but) we’re certainly not collapsing,’ he said.

‘It is our absolute intention to emerge stronger. Australia needs a second airline and we are determined to make sure we are that airline.’

He said the coronavirus crisis had severed the airline’s oxygen supply, but a new buyer would hopefully ensure Australia has a second carrier when things get back to normal. 

 

 

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