Morning! Graham here.
Bankruptcies
I’m sure you will all appreciate the cheery headline.
As a follow-up to yesterday’s Covid-19 update, I thought I would spend a few minutes reflecting on the poor financial health of the travel amp; leisure industry, which is currently a fast-moving situation.
Airlines
Last night, it emerged that Virgin Australia entered into a voluntary administration (Sky, BBC), after the Australian government turned down its request for a loan.
It had already been struggling under a large pile of long-term debt (A$5 billion), and figured that this was the best way of restructuring.
Shortly before that news broke, Sir Richard Branson (who owns 10% of the company) published an open letter to employees. He wrote:
We are hopeful that Virgin Australia can emerge stronger than ever, as a more sustainable, financially viable airline.
With regards to Virgin Atlantic, he said:
…we will do everything we can to keep the airline going – but we will need government support to achieve that in the face of the severe uncertainty surrounding travel today and not knowing how long the planes will be grounded for. This would be in the form of a commercial loan – it wouldn’t be free money and the airline…
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