Loading The collapse will also send shockwaves through Australia’s travel and tourism sectors which were already reeling from the devastating twin hits of the summer bushfires and the pandemic. The airline grounded almost its entire fleet and stood down most staff weeks ago and only restarted a minimum network of 64 government-subsidised domestic flights last week. Virgin's board of directors were meeting on Monday and one well-placed source said the announcement of it going into administration was "imminent". The airline is saddled with around $5 billion in debt and was running out of money as the coronavirus pandemic forced it to almost completely shut down its business.

The company being reborn through a deed of company arrangement struck in administration is "the airline's only chance", said a source familiar with Virgin's struggles. In administration, an independent party will assess Virgin’s position and negotiate with shareholders and creditors about the best outcome for the business. Loading Replay Replay video Play video Play video That could include finding new owners to take over the airline and keep it operating or, if that is not possible, selling its remaining assets to pay off as many creditors as possible. Creditors - including banks, aircraft lessors, customers with credits from cancelled bookings or frequent flyer points and staff owed entitlements - may only receive cents in the dollar for what they are owed.

Loading The already financially struggling Virgin was paralysed by the coronavirus crisis. It asked the federal government for a $1.4 billion loan to see it through the crisis but was rebuffed, while its major airline shareholders - also rocked by the pandemic - would not put more cash into the company. Singapore Airlines, Etihad Airways, the Chinese conglomerates HNA and Nanshan, and Richard Branson's Virgin Group own 90 per cent of company, with the remainder owned by investors on the ASX. Simon Lutton, executive director of the Australian Federation of Air Pilots, which represents most of Virgin’s 1500 pilots, called on the government to support Virgin and its employees through the administration process to ensure the country had two airlines. “Australia needs a competitive and strong airline industry, we can’t have one that is dominated by one player,” Mr Lutton said.

"One way or another it needs to make sure we have a sound and viable competitor [to Qantas].” The administration process will see some of Virgin's debts wiped and aircraft leases renegotiated, making it a more attractive aquisition for a new owner. One potential private equity buyer could be BGH, which has been named as a party that could be interested in salvaging Virgin. Australia's number two airline had already appointed Deloitte to looking at potential restructuring options and the accounting firm is expected to run the administration process. Already Virgin had stood down around 8000 employees to try to slow its cash burn during the health crisis and announced around 1000 redundancies, including all pilots at its low-cost arm Tigerair and all New Zealand-based crew.

Loading The airline had meanwhile tried to broker a deal with the Queensland and NSW state governments about financial support, with a minor bidding war breaking out between the two states on Monday over where the Brisbane-based group should be headquartered. The Morrison government is planning to allow the voluntary administrators to restructure the company and come to arrangements with shareholders and lenders before any decision on whether to put taxpayer funds at risk. Prime Minister Scott Morrison met cabinet colleagues in Canberra on Monday afternoon as Virgin prepared to enter voluntary administration, but government sources played down any chance of an imminent rescue package. Labor infrastructure spokeswoman Catherine King called on the government to put money into the company with a line of credit.

Loading “What we do know is if the government doesn't act, if this company goes into voluntary administration, there are 16,000 workers who will be seeking JobSeeker assistance," she said. “Frankly, we know the government has the capacity today to save this airline.” But the government does not have an imminent rescue proposal and does not want to inject cash or offer a debt guarantee when the company is yet to restructure its existing equity and debt. Prime Minister Scott Morrison has made it clear the government wants a two-airline industry in Australia but that any assistance is for the industry as a whole, rather than favouring one company over another.