CANBERRA, Australia (AP) - Virgin Australia, the nation's second-largest airline, announced Tuesday it had entered voluntary administration, seeking bankruptcy protection after a debt crisis worsened by the coronavirus shutdown pushed it into insolvency.
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."
Virgin is one of the first major airlines to seek bankruptcy protection in response to the pandemic. Virgin's administrators have taken control of the company and will try to work out a way to save either the company or its business.
The move came after the Australian government refused Virgin's request for a 1.4 billion Australian dollar ($888 million) loan.
Rival Qantas Airways argued that it had three times more revenue than Virgin and was therefore entitled to a AU$4.2 billion ($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 will continue to operate its scheduled international and domestic flights, most of which have been canceled due to the pandemic.
Virgin is struggling to repay AU$5 billion in debt after several loss-making years. Some analysts predict that if the airline survives, it will drop international services and focus on the Australian domestic market.
Virgin Australia's major shareholders are Singapore Airlines and Etihad Airways as well as Chinese investment conglomerates Nanshan Group and HNA Group. British billionaire founder Richard Branson holds a 10% stake.
Treasurer Josh Frydenberg told reporters his "government was not going to bail out five large foreign shareholders with deep pockets who together own 90% of this airline."
Branson told Virgin Australia's staff that the appointment of administrators was "devastating."
"In most countries federal governments have stepped in, in this unprecedented crisis for aviation, to help their airlines," Branson posted online. "Sadly, that has not happened in Australia."
He said Virgin would work with administrators, investors and the government to get the airline "back up and running soon."
Branson has asked the British government for a loan to prop up Virgin Atlantic, which his Virgin Group owns jointly with U.S. carrier Delta Air Lines. He is reportedly asking for 500 million pounds ($3.2 billion).
He has said he was willing to put up the private island where he lives in the British Virgin Islands as collateral for the loan
The Australian government and businesses fear that a collapse of Virgin would leave Qantas with a virtual monopoly in Australia's domestic aviation market.
Prime Minister Scott Morrison said he was encouraged that "10 parties have shown interest" in Virgin's future and have approached administrators to discuss financial deals.
"If we'd not taken the actions that we have and not demonstrated the patience that we have, then all we may have ended up doing is sending $1 billion to foreign shareholders and that was never part of my plan," Morrison told reporters.
"Our plan was always about seeing two viable airlines on the other side," he added.
Virgin filled a gap left when Qantas' former main domestic rival, Air New Zealand-owned Ansett Australia, collapsed in 2001.
Brisbane-based Virgin has 130 aircraft and employs 10,000 staff.
Opposition lawmakers and union leaders urged the government to bail out Virgin to save jobs and low-price domestic airfares.
"This crisis isn't a result of market failure, it's a result of a government decision to shut the market," opposition leader Anthony Albanese said. "That's why talk of market-based solutions at the moment is a triumph of ideology over common sense."
The pandemic is a catastrophe for airlines around the world.
In the U.S., major airlines are getting $25 billion in government aid to pay workers and avoid massive layoffs. The assistance includes a mix of cash and loans, with the government getting warrants that can be converted into small ownership stakes in the leading airlines.
Airbus puts six jets
made for AirAsia up for sale as crisis deepens
 PARIS (Reuters) - Airbus The unusual move is a sign of the deepening crisis in the aviation industry caused by the coronavirus pandemic, which some analysts warn could lead to a fire-sale of unwanted planes. Like other airlines looking to save cash amid lockdowns and travel bans that have crippled their business, AirAsia has said it doesn't need any more aircraft this year. Manufacturers usually insist an airline takes delivery of jets that have been built, while showing flexibility on delivery dates of planes yet to be produced, especially for top clients. Although "pop-up" sales of unwanted aircraft are not new, they rarely involve high-profile customers and typically include the manufacturer keeping the deposit, the sources said. Airbus declined to comment on whether it had done so this time. "It is a harsh step to take," said one source, speaking on condition of anonymity due to the sensitivity of the matter. An Airbus spokesman said: "We do not disclose or comment on delivery schedules for any customers". A spokesman for AirAsia, Asia's biggest low-cost carrier, declined to comment. Airbus has invited bids for four A320neo and two A321neo jets built for AirAsia, according to the sources and a confidential document seen by Reuters. Buyers can fetch the jets from France or Germany in June, complete with optional onboard equipment ordered by AirAsia. AirAsia co-founder Tony Fernandes said this month the group had no revenue and 96% of its fleet was grounded. He added that "AirAsia is strong and remains firmly focused on the future". A senior Malaysian minister told Reuters on Friday that merging AirAsia with loss-making state Malaysia Airlines was one of the options to "save" them. Airbus said this month it faced many calls from airlines to defer aircraft deliveries, but had not received cancellations directly as a result of the coronavirus epidemic. RISKS A sale would protect Airbus's investment in parts, but comes with greater than usual risk during the industry crisis. With most airlines struggling financially and reluctant to take deliveries, the move could lead to pressure from other customers to find new homes for aircraft they no longer want, triggering a broader sale of undelivered jets, the sources said. Airbus has said it has 60 aircraft already built that it is unable to deliver, partly for logistical reasons. Secondly, Airbus faces a risk that any cut-price deals will set a precedent for future jet sales. "It's a small community and the result of these tenders often gets out," said a second source familiar with the auction. Others said Airbus had little choice but to recoup as much as possible from the jets, worth $111-$130 million each at most recent list prices but less than half after typical discounts. Buyers are currently scarce, but some are ready for bargains. Ryanair Wizz Air In February, long-haul subsidiary AirAsiaX said it would defer delivery of 78 larger A330neo jets. Boeing |
Boeing jet orders in
question after Norwegian Air's affiliates file for bankruptcy
 Norwegian Air Shuttle, a major Boeing customer, saw four affiliates in Denmark and Sweden file for bankruptcy Monday, raising questions about the fate of 92 jets it has ordered. The Oslo-based ultra-low cost airline revealed its actions in a long, emotional news release, saying the carrier received no government support in those two countries despite its pleas and the existence of similar financial aid for airlines in Norway and the U.S. Norwegian has undelivered orders for 92 Boeing 737 Max jets ordered in January 2012, plus five 787-9 Dreamliners ordered in October 2015, according to Boeing's orders and deliveries website. Boeing Commercial Airplanes spokesman Bernard Choi declined to comment on Norwegian's outstanding aircraft orders. "We are working closely with all of our customers during this challenging time for our industry," Choi said. The Max was grounded around the world and airline deliveries were halted 13 months ago after two of the jets crashed, killing 346 people. Boeing's Renton factory halted production in January. On Boeing's orders and deliveries web page, the jet maker offers a special accounting category for outstanding orders of 737 Max and its other jets. That category includes airline customers which are still in operation, but whose ability to pay for previously ordered jets is now uncertain or doubtful. Boeing reported that it has 328 orders like this that might not get delivered. Boeing does not offer any break down to identify which airlines and how many jets it suspects each might not get delivered. Still, Boeing reports it has a backlog of 4,079 Max orders as of March 31, but has faced a wave of cancellations in 2020. Norwegian CEO Jacob Schram said his company laid off 1,571 pilots and 3,134 cabin crew and canceled deals with a crew supply company in the U.S. called OSM Aviation. OSM has offices in Fort Lauderdale and New York City. "It is heart-breaking that our Swedish and Danish pilot and cabin crew subsidiaries now are forced to file for bankruptcy, and I'm truly sorry for the consequences this will have for our colleagues," Schram said. "We are working around the clock to get through this crisis and to return as a stronger Norwegian with the goal of bringing as many colleagues back in the air as possible." 15 deaths in the airline industry in 9 days linked to coronavirus. Why are planes still flying? Somehow, word got around among retired New York City firefighters about a perfect second-career job: a local company, with lots of travel perks. One by one, they became flight attendants at JetBlue. Ralph Gismondi was among the first of an estimated 30 or so former firefighters who joined the airline. He retired as a fire captain after several decades that included a stint at ground zero on 9/11. He began working as a flight attendant for JetBlue in 2003 and saw each trip as a chance to fine-tune his comedy routine over the public address system. On layovers, he would play the piano in hotel lobbies and rally other flight attendants for nights out on the town, coworkers said. On April 5, Gismondi became the first JetBlue employee to die of COVID-19. Within days, two more JetBlue deaths linked to the coronavirus followed: Pilot Kevin McAdoo, a U.S. Air Force veteran, died April 7. Then, 27-year-old Jared Lovos, a fitness enthusiast who had been a JetBlue flight attendant and recently transferred to human resources, died April 10. Across the industry, The Times learned of at least 15 workers who have died from COVID-19 from April 5-13, according to the airlines, unions and interviews with family members and friends. Yet without any central tracking, the true number of deaths in the airline industry is likely to be significantly higher. An American Airlines gate agent at Los Angeles International Airport, an aircraft mechanic at a Tulsa, Okla., airport, a baggage handler at Dallas-Fort Worth and a food services manager at JFK airport in New York are all counted among the recent dead. And the human toll of air travel is mounting. Many pilots and flight attendants see these as preventable deaths. Passenger numbers are down 95% compared with the same week last year. Airlines have made drastic cuts to service. At the same time, they are still offering specials like $35 round-trip tickets from Los Angeles to Chicago. Major airlines are set to receive $25 billion in coronavirus relief funding from the federal government; the bailout requires that carriers maintain baseline service levels. "We are doing nothing but spreading the disease," said one American Airlines flight attendant, who asked not to be named because they were not authorized to speak to the media. Delta emailed flight attendants April 9 telling those with the coronavirus to "refrain from notifying other crew members" or posting on social media, according to an email obtained by The Times. In a statement, a spokesperson for Delta said that the email used "incorrect language" and that the airline's notification process "protects confidentiality of employees" and "follows - and in some cases exceeds - CDC [Centers for Disease Control and Prevention] guidance." While policies are inconsistent among airlines, crew members across the industry report that they either haven't been told when they've been exposed to coworkers with the coronavirus, or notification comes too late. Until recently, airlines banned flight attendants from even wearing masks. The airlines are breaking no Federal Aviation Administration rules regarding the pandemic. In fact, the FAA has none; it recommends - but does not mandate - that airlines follow the CDC's guidelines. Pilot and flight attendant unions have blasted airlines for failing to properly notify crew members of exposure, demanding that the FAA mandate CDC recommendations. The FAA did not respond to detailed questions but referred a Times reporter to a letter from FAA Administrator Steve Dickson. "We are not a public health agency," Dickson wrote. All the way through mid-April, the FAA was telling airlines that crew members may continue working "as long as they remain asymptomatic." But symptoms may take 14 days to appear, and the CDC now says that upward of 50% of people with the infection may be asymptomatic. The Assn. of Flight Attendants has called for the grounding of all leisure travel, with air travel limited to essential services like cargo and medical flights. JetBlue said the airline follows CDC guidelines and provides 14 days of paid leave to anyone instructed by a doctor or health official to quarantine, even if a test is unavailable. "There is nothing more important to us than the health and safety of our crewmembers and customers," a spokesperson wrote in a statement. "This is the part that gets me," said a JetBlue flight attendant, who asked not to be named because they were not authorized to speak to the media, and who was a friend of former firefighter Gismondi. "He was saving lives, and then he retired and went to passing out potato chips and pretzels. And this is what this man is going to die from?" For 11 hours, flight attendant Jorge Merelles heard the sound of coughing throughout the plane from Rio de Janeiro to Miami on March 15. One woman, in particular, was gasping for air and very pale, with a deep cough like a smoker. "There were a lot of elderly customers onboard who came from the canceled cruise ships. A lot of them were sick. None of them were wearing masks," Merelles said. Merelles and the other flight attendants were not allowed to wear masks at the time. Merelles got home to Miami and then flew six more legs over the course of the next week, traveling back to Brazil, to Mexico, to Los Angeles and St. Louis. On March 23, he started to feel tired. Then came a headache, a slight fever and shortness of breath. The following day, he lost his sense of taste, his fever spiked and his body ached. That night, unable to stand, he went to the hospital suspecting he had COVID-19. "I was thinking of the Rio flight," he said. He spent the next eight days in the hospital, treated as a presumptive COVID-19 patient while awaiting test results. On the third day in the hospital, Merelles received a FaceTime call from a flight attendant friend, who said he was in the hospital with COVID-19 and his wife was in the ICU on a ventilator with the virus too. Before long, the two men realized they were in the same hospital, FaceTiming one another from three rooms apart. It was a sobering sign of how widespread infection had become among flight attendants. On April 1, the day Merelles was discharged from the hospital, his COVID-19 test came back positive. Merelles said it was only then that his airline started notifying crew members with whom he had flown. But the notification went to coworkers with whom he had worked in the 48 hours prior to the onset of his symptoms. By and large, airlines aren't consistently telling pilots and flight attendants when they've been exposed, according to pilot and flight attendant unions and interviews with crew members. Or, as Merelles experienced, airlines are waiting too long. He said it wasn't until April 15, a full month after his Brazil flight, that his airline called to say there had been confirmed positive cases onboard. Merelles firmly believes that all aircraft should be grounded, with flights solely for medical purposes, cargo and mail. "If they have crews, have those crews tested. Check them out. Have a very tight control over this. That's the only way to get out of this," he said. "I think we are still spreading it from city to city." A long line of cars drove past Gismondi's house on Long Island on April 11, some with JetBlue scarves flying from the mirror. One by one, Gismondi's fellow flight attendants slowed down to wave at his wife and family wearing masks and standing in the driveway. Not far away, a baggage handler from JFK airport was in the hospital with only a few days left to live. Leland Jordan, an architectural drafter, had moved in 2009 from Guyana to New York City. Working as a baggage handler was the only job he could get as an immigrant. From 9:30 p.m. till 5:30 a.m., Jordan routed bags from international flights in JFK's Terminal 4. Lacking health insurance, the 73-year-old worked as much overtime as he could get to pay for his diabetes medication and medical expenses, according to his wife, Juliet. On March 17, Jordan fell ill at work and had to be transported to the hospital by ambulance. He was later discharged to his home in Far Rockaway, Queens, near the airport. Feeling better, he went back to work. Jordan and his coworkers spent their shifts stationed in a confined indoor space, handling all of the international bags. Jordan went to his supervisor to say it wasn't right that they were not practicing social distancing and had no protective gear, his wife said. The contractor laid off Jordan and other workers March 24. About a week later, Jordan started coughing. "He said he was just getting a little cold. But we didn't know," his wife said. Then he started getting a headache and grew worse. She called an ambulance April 7. "He walked down the steps very strong and went and sat on the stretcher. I never thought I wouldn't see him back." But Jordan declined quickly. He died April 13. One of his coworkers, a fellow baggage handler at JFK, also died after becoming infected with the virus, according to his union, 32BJ SEIU. "Everybody was worried about the dangers of COVID," said Jordan's wife. "But when you've got to work, you've got to work. You need money. When that's the only income you have, you have to work." Boeing workers return to their factories to find hand-washing stations and a new sense of worry  The company pledges to keep employees safe, but they aren't so sure RENTON, Wash. - Boeing workers came back to their jobs this week after a three-week furlough intended to halt the spread of the coronavirus through the workforce. The third shift resumed at 10:30 p.m. Monday, and the first shift reported back between 5 and 6 Tuesday morning. They returned to new hand-washing stations, to managers asking them about their health, to more signs warning of the dangers of the coronavirus - as if the workers needed the reminder, after scores of their colleagues had fallen ill during the pandemic, forcing Boeing to close some of its biggest manufacturing plants across the country. Now Boeing has started reopening the factories in what will be a closely watched experiment in whether Americans can safely return to work, in the nation with the highest number of covid-19 casualties in the world. Before the return, the factories were scrubbed clean and adjustments were made to combat the deadly virus in places where social distancing is difficult, if not impossible. In the Puget Sound region of Washington state, 27,000 Boeing employees returned to work. A few thousand more returned to defense plants outside Philadelphia and Columbus, Ohio. A plant outside of Charleston, S.C. remains closed for the time being. The return left many of the employees and their families uneasy. On Tuesday morning, the employee lot at the Boeing Renton Factory was three-quarters full as machinists and shuttle buses ferrying employees from the lot to the factory took on just one or two passengers or left empty. Drivers said there were far fewer workers than normal. One employee, a surgical mask dangling from his wrist and safety glasses hanging around his neck, said that five of his 15 team members had not shown up for work. "A lot of guys aren't comfortable," said the employee, who like others interviewed spoke on the condition of anonymity because Boeing prohibits workers from speaking to reporters without authorization. "I'm not even sure if the lunch room is open." In the Puget Sound region alone, scores of Boeing workers had tested positive for the virus and at least one worker has died. So as the factories returned to work, union officials urged members to hold their employer accountable by speaking up and, if necessary, pulling the red card. In soccer, a red card is used by referees to eject a player after a foul. On the Boeing factory floor, it's used to call a foul of a different sort: to alert managers to unsafe working conditions. Traditionally, the cards have been used to alert managers to the physical dangers of working around heavy machinery or the safekeeping of dangerous chemicals. But now the union leadership is urging workers to use them to protect against the virus. On one side of the card is a symbol of a stop sign that reads: "STOP for your safety. If you believe that continuing your work can lead to loss of life or limb, you have the right to STOP." On the other: "Hand this card to your supervisor or contact site/safety manager to invoke this language. You should offer to do other work which they consider safe while a decision is being made." David Calhoun, Boeing's new CEO, has said repeatedly that the company's top priority is to protect the health and safety of its employees. And the closing of the plants was the ultimate expression of that, officials have said. In a letter to employees last week, Calhoun wrote that "colleagues returning to work will see a wide range of safety measures in place," including "practices to enable physical distancing, such as staggered shift times, spread-out work areas and visual controls." Members of Congress and local officials have said they have been in close contact with Boeing as employees return to perform work deemed "essential" by the federal government. The company said some customers are still taking deliveries of airplanes. And Boeing's Puget Sound factories also manufacture the KC-46 tanker, an aerial refueling jet, as well as the P-8 maritime patrol aircraft for the Pentagon. In an interview, Rep. Rick Larsen (D-Wash.), whose district includes several Boeing factories, said that "most people breathed a sigh of relief" when Boeing closed its factories. He said he felt confident that the "workforce will be not just policing themselves, they'll be policing Boeing." Tara Lee, a spokeswoman for Washington Gov. Jay Inslee (D), said Inslee expects "that Boeing will undertake rigorous safety protocols as they move forward." But Jon Holden, the head of Local 751 of the International Association of Machinists, is not convinced that is the case. He spent Monday touring the facilities with Boeing management, walking the production lines, inspecting the new hand-washing stations and the new temperature-check areas. He called those features a positive development, but he remained skeptical. "I'm not going to say I'm satisfied," he said in an interview. "I'm going to say that I look forward to our members ensuring that their environment is safe." Given the glaring problems pre-shutdown, Holden was not sure anything would be better this time, despite the company's pledges. The fact is the work requires people to be close together. Social distancing does not apply to installing a cockpit or wiring a fuselage. "We have thousands of people in those factories that work in close proximity to each other," Holden said. "So for our members that go back in, we'll be diligent about enforcing the safety rules and ensuring that there's enough masks and gloves and cleaning supplies. But it's not going to be easy. ... It remains to be seen how it will work in practice." Workers interviewed outside the Renton factory Tuesday agreed. "We're supposed to work on this plane and stay six feet apart. How are we supposed to do that?" one employee said. Another said that managers were "doing everything they possibly can to keep us six feet apart. But when we build a wing it's going to be difficult because of the crowded situation." He said he used paid vacation days during the shutdown and accomplished so many house projects that he has nothing left on his summer chore list. Nevertheless, he felt the company called workers back too soon, especially given limited global demand for new airplanes at a time when air travel is virtually grounded. "With airlines not taking orders, they should have waited until the end of the month," he said. The union worked hard to negotiate a provision called Article 16.1 into the contract with Boeing that allows any employee to pull the red card and stop work. Before the shutdown, the union praised several workers for invoking Article 16.1, highlighting their efforts in the newsletter published by the union. In one case, second-shift workers on the 777X line were sent home for feeling sick, but it was unclear whether the company had cleaned their work stations. Subsequent shifts refused to work until they had evidence that the areas had been thoroughly cleaned. Another "pulled the red card" when workers on the 737 wing production line did not have enough protective equipment and "were required to work within six feet of each other," according to the newsletter. The result: "Work stopped while management evaluated the situation." Ultimately, "cases of masks were released to the manager to provide to our members." The union has told its members that if they are fearful they can refuse to come to work and take vacation or unpaid leave instead. "Some are high-risk by either age or underlying conditions, or they care for someone at high risk," Holden said. "Based on their situation, they're going to have to make a decision of whether they can go back into the workplace or not." While many are happy to return to work, giving them a sense of purpose and a paycheck, they know their employer faces an uncertain future. Boeing was reeling from the 737 Max crisis - the aircraft has been grounded worldwide for more than a year after two fatal crashes that killed 346 people. Then came the coronavirus, which all but killed air travel globally and evaporated demand for new airplanes. Boeing loses 150 orders for the 737 Max as coronavirus pandemic wreaks havoc on airlines In his note to employees, Calhoun painted a grim picture of the industry's future, writing that the impact on the airlines "has been like nothing we have ever seen." Airline revenue is expected to drop by $314 billion by the end of the year, he wrote, adding that "some 2,500 aircraft have been idled and passenger volume is down over 95 percent compared to last year." He added that "we're in uncharted waters" and that the "impact of this global virus will change our business for years to come." Still, he praised the government's $25 billion support package for the airline industry and said Boeing is looking for "the best ways to keep liquidity flowing through our business and to our supply chain until our customers are buying airplanes again." When that day will come is anybody's guess, said Richard Aboulafia, an aerospace analyst with the Teal Group, a consulting firm. "This gets to the tricky issue of denial," he said. "I think there are a lot of people holding out some faint hope this is a V-shaped downturn. And if you still hold out that hope, then, yeah, you want be positioned for the big recovery in September. And that's why I'm starting a unicorn petting farm for my children." The dire prospects were not lost on workers on the troubled 737 Max program, and one employee said it was pointless to be called back to work on a stalled project during a public health emergency. Washington has a stay-at-home order that runs through May 4, though the aerospace industry is exempt. "We have no reason to be here," he said. "We are not essential. ... The Boeing Company is jeopardizing my health for no good reason." The 20-year machinist said he received pay through April 8, then applied for unemployment insurance. After inspecting Tuesday's work conditions on a project, he walked off the job and said he would put in for retirement. |
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