Australian treasurer Josh Frydenberg is pushing for a new Virgin Australia to have a major network and be a robust competitor to Qantas as KordaMentha reportedly circles to take over as administrator.
Mr Frydenberg said the government wants “to encourage as widest service as possible across the country, not just for tourism but also for freight routes and Virgin was performing that important service.”
“What we will do and what we have already started to do is engage with the ACCC as the regulator of competition across the economy to ensure that major market power is not abused and that Virgin, on the other side of this coronavirus crisis, can continue to operate and not be squeezed out of the market.”
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A robust Virgin Australia is very important to WA with its Perth-based fleet of 6, 162-seat A320s and 14, 100-seat Fokker 100s serving a host of regional towns and FIFO destinations across the state.
While, Queensland and NSW fight over where the airline should be based post-administration, Perth remains a key part of the network as a FIFO base and taps the large resource industry business.
Abandoning Perth would be walking away from the corporate market and while the new Virgin Australia may be re-positioned in the market, it is certain to have premium classes and lounges.
Rating agency S&P also believes that Virgin Australia will fly out of administration saying “we expect that a debt restructuring should facilitate a recapitalization of the company, which should enable Virgin to emerge from the restructuring and continue as Australia's second-largest domestic airline.”
There are now more than 10 suitors circling Virgin Australia’s administrators Deloitte looking at the opportunity of picking up a debt reduced airline.
Mr Frydenberg said that he believes that the suitors are “very serious.”
“I do believe there is a lot of significant interest from commercial parties.”
And there is a lot of interest from high profile administrator KordaMentha which made its start with the collapse of Ansett.
The company performed a quite extraordinary job of paying 96 cents in the dollar for employee entitlements over 10 years.
KordaMentha sold off aircraft, terminals and more than 10 million spare parts.
In the biggest administration in Australian history employees received the bulk of their money in the first three years and then a dividend every year for the remaining years.
A creditors meeting early next week for Virgin Australia will provide an opportunity for KordaMentha to put its name forward to look after the administration.
KordaMentha was contacted for comment.
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