Virgin Australia has debts $6.8bn, with $450m owing to staff: Deloitte

Administrators have revealed the extent of the huge debt pile that crushed Virgin, including $450m to that’s owed employees.

Virgin Australia pilots Kyle Haafkens (left) and Adam Turner on the day the company announced it has gone into administration due to COVID-19. Picture: Aaron Francis/

Virgin Australia owes close to $7bn to creditors, including almost $2bn to bondholders, and $450m to employees, administrator Deloitte has revealed.

Since being appointed to the airline on Tuesday, Deloitte said it had identified approximately 10,247 creditors, including about 9020 employees.

“The administrators expect that the total number of creditors is estimated to be over 12,000,” said a statement from the financial service firm.

A breakdown of the airline’s debt based on an “initial review of the books and records”, showed Virgin Australia owed a total of $6.84bn, almost a third of which ($2.28bn) was owed to 26 corporate lenders and aircraft financing facilities.

A further $1.88bn was owed to 50 aircraft lessors, $71m was owed to 81 landlords, and 1070 trade creditors were owed about $166m.

Deloitte also revealed the cost of voluntary administration would be in the vicinity of $20m to $30m with further costs to be incurred should the matter proceed to liquidation.

A statement to creditors reiterated that liquidation was not the desired outcome, but rather “a sale or recapitalisation” of Virgin Australia.

Virgin Australia flight attendant Becky Branca. Picture: Tony Gough

“It would also allow a significant amount of the workforce to be retained and allow key

suppliers to continue supplying Virgin,” the statement said.

The first interlocutory hearing of the administration was held in the Federal Court in Melbourne on Friday, with Judge John Middleton giving the go ahead for next Thursday’s creditors meeting to be conducted electronically, given the current viral pandemic.

Judge Middleton also revealed he could be considered a “contingent creditor” of Virgin Australia due to the fact he had bought tickets for flights in July.

“At the moment I understand that flight credits are safe but if it comes to a matter whereby that crystallises in any way then I will abandon that claim so that will solve the problem of my being a contingent creditor or an actual creditor if that be the case,” Judge Middleton said.

He also disclosed he held Velocity points and was a member of the Virgin Australia club but did not see that impacting at all on anything transpiring in this case.

“I thought I should put those matters on the record so if anything transpires later that it becomes litigious with other interested parties that is on the record,” he said.