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Virgin share price to $0? Administrators (likely) to be called

The Virgin Australia Holdings Ltd (ASX: VAH) share price could be headed headed to $0 with administrators likely to be called.

According to reporting by the AFR, Australia’s second biggest airline is holding a board meeting tonight and voluntary administration is going to be the most likely outcome. 

The airline hasn’t managed to get the support necessary, particularly from Canberra, to get Virgin through this period. AFR sources said that the federal government today told Virgin there would not be any more assistance. 

Without that government support the airline will be very unlikely to be able to gain more support from lenders or investors. 

The board won’t really have much of a choice except to call in administrators. 

There are potential buyers lurking in the wings such as private equity player BGH Capital. But it hasn’t helped that air passenger traffic has almost completely vanished. For example, Sydney Airport Holdings Pty Ltd (ASX: SYD) reported today that passenger traffic in the first half of April was down more than 96%.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sydney Airport Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.