Virgin Australia, the nation's second-largest airline, announced on Tuesday it had entered voluntary administration as it seeks to strengthen its finances amid a debt crisis.
Virgin said in a statement to the Australian Securities Exchange that it had appointed a team of Deloitte administrators to "recapitalize the business and help ensure it emerges in a stronger financial position on the other side of the COVID-19 crisis". The move came after the Australian government refused Virgin's request for a 1.4 billion Australian dollar (USD 888 million) loan.
Rival Qantas Airways argued that it had three times more revenue than Virgin and was therefore entitled to a AUD 4.2 billion (USD 2.7 billion) loan if the smaller airline was not to gain an unfair advantage.
Administrator Vaughan Strawbridge said in the statement: "Our intention is to undertake a process to restructure and refinance the business and bring it out of administration as soon as possible." Virgin would continue to operate its scheduled international and domestic flights. Virgin shares have been in a trading halt for a week due to its debt crisis.
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