Limited FIFO fallout expected from Virgin administration

WHILE Virgin Australia is responsible for a large portion of the resources sector’s fly-in, fly-out business, the industry is confident there will be little impact from the airline going into voluntary administration – at least in the short-term.
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Virgin Australia is still running FIFO operations despite the airline going int administration. Image: Courtesy Virgin Australia

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The airline's board of directors appointed Vaughan Strawbridge, John Greig, Sal Algeri and Richard Hughes of Deloitte as voluntary administrators of the company and a number of its subsidiaries.

Virgin has been cruelled by the impacts of the COVID-19 restrictions on flight operations.

The pandemic came at a time when the airline was in the midst of a program to reset the business' cost base.

The company will continue to operate its scheduled international and domestic flights that are helping to move miners, maintain freight corridors and hep get Australians home.

That means the FIFO flights will continue for the time being.

Beyond that the mining industry is keen for there to remain two major air carriers in the Australian market.

If Virgin cannot return to the air it will leave just Qantas as the major air carrier in the market.

Chamber of Minerals and Energy of Western Australia director of policy and advocacy Robert Carruthers said Virgin had a critical role to play in servicing the resources sector in WA and across Australia.

"It's been a key provider of charter services for mining and oil and gas companies," he said.

"Our belief is the charter will continue for the short term.

"We hope the administrators will see value in the business. At the current time they've suggested these ongoing services are business as usual."

Carruthers said the industry wanted there to be two major carriers in Australia.

He said it was a bit of an unusual state of affairs in the WA market at the moment when there were more charter flights in the air than regular passenger ones.

At the moment the administrators appointed to Virgin are being helped by the airline's management team led by CEO Paul Scurrah.

Strawbridge said the intention was to restructure and refinance the business and bring it out of administration as soon as possible.

"We have started a process of seeking interest from parties for participation in the recapitalisation of the business and its future and there have been several expressions of interest so far," he said.

The federal government has appointed former Macquarie Group CEO Nicholas Moore to lead its engagement with the administrator.

Treasurer Josh Frydenberg said the government remained committed to two commercially viable airlines operating domestically across Australia.

"This is important for competition and the Australian economy," he said.

"We will ensure the Australian Competition and Consumer Commission strongly enforces competition laws so airlines are able to compete effectively as the industry rebuilds.

"The government's preference continues to be for a market-led solution."

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