City to write off $90k Virgin Australia Regional Airlines debt after company went bust

The City of Greater Geraldton is set to write off an outstanding debt of more than $90,000 because Virgin Australia Regional Airlines was unable to pay the hefty fee. The matter was discussed at the council’s agenda forum on Wednesday evening and stirred up questions on how to prevent financial losses in the future, after last month waiving a $33,000 debt for now-defunct Pindan Projects. Virgin Australia was placed in voluntary administration on April 20, 2020 due to “operational challenges brought about by COVID”. At the time the airline owed the city a total of $96,371 made up of $4245 in lease fees and $92,126 in passenger and landing fees. The outstanding debt occurred between January and May 2020, but the company was not officially liquidated until December 14, 2023. It paid final dividends of $6042 which brought the final balance of unrecoverable funds to $90,329. In the city’s agenda forum document, the impact assessment states: “There were significant adverse economic impacts across Australia from the COVID-19 pandemic . . . however there are no economic impacts in relation to the write-off of the outstanding debt to the city.” During the agenda forum, Cr Michael Librizzi asked if there were measures which could be put in place to prevent further debt write-offs. But city director of corporate services Paul Radalj explained why it was not possible. “The process is based on the numbers each month and there will always be that lag between what happened that month and the actual invoicing of the airline so I don’t believe you could put any agreement or anything that would cover yourself there,” Mr Radalj said. Deputy mayor Natasha Colliver asked whether or not there was a risk it could happen to other airlines. Mr Radalj responded: “This hasn’t happened before in my time . . . it’s the first one I’ve come across.” He went on to say it was the last doubtful debt owed to the city after the Pindan Projects debt was written off. Within the agenda meeting document, it states there were no other alternative options to recover the debt because the company was under administration. City of Greater Geraldton CEO Ross McKim said Geraldton was not the only local government to take a hit from the liquidation. “As the liquidation has now been finalised there is no further recourse available to recover the remaining debt of unpaid fees, and as such the balance owing requires writing-off,” he said. “There is no impact to this financial year’s operating budget.” “While it was disappointing to see regional air travel take a hit, we’ve since seen some really positive outcomes with the introduction of WA regional airline Nexus . . . filling a gap and providing more options in connecting Geraldton to the north, and also to Perth.” The council will vote on the matter at its ordinary meeting next Tuesday, February, 27.