Experts warn Virgin Australia could collapse if coronavirus crisis deepens

An aviation analyst has warned that Virgin Australia could go under following the double whammy this year of bushfires and the escalating coronavirus outbreak.

Virgin Australia’s share price has nosedived of late with shares trading under 10 cents this week following ratings agency Standard & Poor’s downgrading the carrier’s outlook from stable to negative.

The latest setback follows a decade of losses for the airline, which have exceeded $2.1 billion in total. Virgin Australia announced it would make a loss of $88.6 million after tax in the six months to December 31.

Speaking to Daily Mail Australia, IBISWorld aviation analyst Tom Youl said Virgin Australia’s high debt levels were a real threat to the carrier’s long-term viability.

“If it continues to stretch on, the amount of debt they have, there is going to be a concern there,” he said.

“In terms of actual viability of the company, it is of concern.”

But Virgin Australia has “strongly rejected” claims that its future is at risk, despite the expected “challenging conditions” forecast for the next six months.

“Virgin Australia maintains a strong cash position in excess of $1 billion and our recent financial results last week showed an increase in revenue and passenger numbers,” a spokesperson told Daily mail Australia.

“Any speculation about the future of the business is untrue and misleading.”