Are Chinese airlines planning to snap up Virgin Australia?

Vaughn Strawbridge, an administrator from Deloitte Australia that is now handling the case of Virgin Australia, confirmed that there are over 10 parties interested in the troubled airline. But the administrator did not reveal the identities of the parties offering Virgin a lifeline.

Reports claimed that three Chinese airlines – China Southern Airlines, China East Airlines and Air China – are considering buying embattled Virgin Australia after the government refused to bail it out. A formal has yet to be made (or publicly announced).

It is important to note that Chinese conglomerates HNA Group and Nanshan Group each own approximately 20% of the airline. However, many doubt that they could offer interim funding when they are busy with their own battles back home.

This is confirmed by Virgin Australia CEO Paul Scurrah when he said, “our shareholders were unlikely to be able to participate … given they are all suffering from Covid-19.”

However, any offer could provide a much-needed lifeline to Virgin Australia after the airline went into voluntary administration on Monday. One of the reasons why the government refused to bail the company is because of its ownership.

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.”

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.

Second act

Almost sounding like a threat for revenge, Virgin Group founder Richard Branson assured everyone that “this is not the end for Virgin Australia.”

“In most countries federal governments have stepped in, in this unprecedented crisis for aviation, to help their airlines. Sadly, that has not happened in Australia,” he wrote.

“I want to assure all of you — and our competitor — that we are determined to see Virgin Australia back up and running soon.”

The administrator intends to try and restructure the firm’s debt, pay off creditors and find a buyer. For now, everyone is keeping their jobs and it is business as usual. However, many are concerned that unless the airline is saved, Qantas will dominate the Australian skies.