Dramatic twist in the collapse of Virgin Australia as bulldozers and trucks are used to block planes from taking off until their debts are repaid
- Bulldozers are blocking Virgin Australia planes from being removed at airport
- Perth Airport has claimed the company owes a ‘significant’ amount of money
- The extraordinary measures come as the airline is placed into administration
Bulldozers are being used to block Virgin Australia planes from being removed from the tarmac at Perth Airport over claims the company owes a ‘significant’ amount of money.
The airport is using extraordinary measure to protect its financial exposure after the airline was placed into voluntary administration on Tuesday.
Four planes are being blocked by airport vehicles to stop a towbar from being attached to them.
An airport spokesman said it was ‘standard practice’ to use these measures in these situations.
Bulldozers are being used to block Virgin Australia planes from being removed from the tarmac at Perth Airport over claims the company owes a ‘significant’ amount of money
‘Virgin has significant outstanding invoices from Perth Airport for airfield and terminal use charges — money the airline has already collected from its passengers and the FIFO sector,’ the spokesman told Daily Mail Australia.
‘While Perth Airport is working with the Virgin administrators, it also needs to protect its own interests.
‘Perth Airport has taken liens over a number of Virgin aircraft — a standard practice in these situations. The aircraft affected are not being used for current FIFO or interstate operations and have been parked at Perth Airport for some time now.’
The airline is continuing is continuing to fly about 180 flights each week as administrators Deloitte work to restructure the company and search for a potential buyer.
The airline was struggling before the COVID-19 pandemic restricted cashflows with $5.3billion debts.
It was believed in March that the airline only had enough cash reserves to last three months during the pandemic.
Qantas had enough for 11 months.
The empty Virgin Australia boarding gates at Sydney Domestic Airport, in Sydney, Tuesday, April 21 after the company announced it would go into voluntary administration
Virgin Australia employees are seen at Sydney Airport, in Sydney, Tuesday, April 21 after the company announced it would go into administration
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.
Treasurer Josh Frydenberg said voluntary administration represented an ‘opportunity’ for Virgin to strengthen. Other Australian companies such as Network Ten have successfully navigated administration, he added.
Referring to the 2002 collapse of Aussie airline group Ansett, he said: ‘This is not liquidation. This is not Ansett. This is not the end of the airline.’
He said a bail-out was never on the cards, adding: ‘The Government was not going to bail out five large foreign shareholders with deep pockets who, together, own 90 per cent of this airline.’
Singapore Airlines, Etihad Airways and Chinese conglomerates HNA Group and Hanshan own 20 per cent each of Virgin Australia.
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.