Tuesday 21 April 2020

A few thoughts on Virgin Australia

First of all Virgin Australia has entered in voluntary administration. This is not receivership.
for one thing they can trade their way out of difficulties. The Ten network for example did this
THIS may help.

Virgin Australia has large debts which only recently was brought back onto the balance sheet.

There are a number of advantages which Deloitte who were appointed  the administrators by the Virgin Australia board can do.


  1. They can tell the the creditors to take hair cuts on the money they have loaned Virgin Australia. They can do this otherwise they ( the creditors) will not get any money owed.
  2. They can no longer service regional routes in Australia which are not profitable. They can do this as everyone knows Virgin Australia needs to be profitable.
  3. With international travel some way off they do not have to service any international routes for quite some time.
This means Virgin Australia will simply service the profitable capital city routes until it is travelling well. It then has the luxury of picking and choosing routes that merely make  money.

This means a smaller workforce for a start. 
It also means what is necessary is not restructuring but a different business strategy.
As anyone who has been to business school this is almost always the case with any struggling company.



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