Virgin Australia Goes Into Administration. Will Lufthansa Go Bust Too?


These are definitely unprecedented times. With the worldwide spread of COVID-19 in recent weeks, the entire airline industry is in crisis.

Some say this is “the worst crisis (for airlines) ever since World War II”. Airlines have been severely hit by travel restrictions and the closure of borders in almost all markets, as well as the cessation of all international and domestic flights. The result is that many airlines may not survive.

Air Mauritius decided to go in voluntary administration due to its high degree of reliance on tourism, which is one of the most affected sectors when it comes to the Mauritian economy. The airline had already begun a transformation program earlier this year to address “financial difficulties”, but global travel restrictions and plummeting demand caused by COVID-19 have exacerbated the issues faced by the carrier.

Virgin Australia has gone into voluntary administration, with accounting firm Deloitte appointed to oversee the process. The carrier was founded in 2000 by Sir Richard Branson and Australian businessman Brett Godfrey, and was originally known as Virgin Blue before changing its name, first to V Australia and eventually to Virgin Australia. The airline said it entered voluntary administration to recapitalize the business and help ensure it emerges in a stronger financial position on the other side of the COVID-19 crisis (HT: The Luxury Travel Expert).

Next up, according to this article on Head for Points is Lufthansa. Lufthansa is apparently on the verge of bankruptcy unless it gets an immediate bailout of up to €10 billion EUR.

Who else is in trouble? Unfortunately, the coronavirus may prove the final nail in the coffin for South African Airways (SAA). According to Bloomberg, SAA plans to lay off its entire workforce after failing to persuade the government to provide more financial aid, a move that threatens to ground the 86-year-old carrier for good.

HeadForPoints also highlights Citi estimates for how long some major European airline groups can last assuming that they continue to pay their bills, refund tickets, and pay interest and debt as they become due. In this listing it outlines:

  • Air France-KLM – 3 months
  • easyJet – 15 months
  • IAG (British Airways) – 8 months
  • Lufthansa – already technically insolvent
  • Ryanair – 18 months
  • Wizz Air – 22 months

These are terrible times for the airline industry indeed. When we are all able to travel again, remember to book your flight and hotel via our luxury travel concierge. We offer free upgrades, free breakfasts, and free perks at hotels including the Four Seasons, Hyatt, Ritz-Carlton, Marriott, InterContinental, and more.

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