Less than a month after it shut down its New Zealand bases, Virgin Australia announced it entered voluntary administration on Tuesday due to the impacts of the COVID-19 pandemic.
The airline has been struggling with a long-term debt of around AU$5 billion and after failing to secure government funding, it's now seeking new buyers and investors.
In a statement, the airline said it was making the move "to recapitalise the business and help ensure it emerges in a stronger financial position on the other side of the COVID-19 crisis".
"The decision comes as the [owners have] continued to seek financial assistance from a number of parties, including state and federal governments, to help it through the unprecedented crisis, however is yet to secure the required support."
Virgin Australia announced in late March it was closing its New Zealand bases which were serviced by around 550 staff members as 80 percent of its international workforce was stood down.
This week, state officials from Queensland and New South Wales got into a bizarre war-of-words over which state could financially prop up the airline.
The idea of a taxpayer-funded bailout of a foreign-owned company was not well received by all Australians, including notorious politician Pauline Hanson.
However, it pulling out of the Australian market would leave Qantas with a powerful monopoly on the country's domestic network. Virgin Australia previously held around 31 percent of domestic flights while Qantas controlled around 58 percent of the market.
"Australia needs a second airline and we are determined to keep flying," said Virgin Australia chief executive Paul Scurrah on Tuesday.
"In 20 years, the Virgin Australia Group has earned its place as part of the fabric of Australia's tourism industry. We employ more than 10,000 people and a further 6,000 indirectly, fly to 41 destinations including major cities and regional communities, have more than 10 million members of our Velocity loyalty program, and contribute around $11 billion to the Australian economy every year."
Air New Zealand has ruled out entering the Australian domestic market even if Virgin Australia closes down.