City of Karratha to write off half a million dollars owed by Virgin Australia, says Mayor Peter Long

City of Karratha Mayor Peter Long says the council would likely have to write off the majority of a more than $500,000 debt owed by Virgin Australia Group after the organisation collapsed at the height of COVID-19 travel restrictions. Karratha airport, owned by the council, was left more than $500,000 out of pocket in landing fees when Virgin Australia Group entered voluntary administration in April 2020. The airline left more than 12,000 creditors in the dust and owed nearly $6.8 billion before it was re-launched under its new owners Bain Capital. Mr Long said the City had since been working on how to recoup at least some of the money but was unlikely to be paid back more than 10 per cent. “They went (into voluntary administration) and at that stage, the City of Karratha was owed roughly half a million dollars and we’d been wondering for some time how much of that we will be able to get back,” he said. “We think we will probably only get about 10 per cent or maybe even less of that back...I think it is roughly $30,000 that we are going to get back, but we haven’t got that back yet. “This has happened to everybody of course, all the airports around Australia where Virgin flew are going to lose money and we are just one of those, it is something we have expected for some time. “It is a pity, it is half a million dollars of public money that we won’t get, but that’s the way it goes and so we accept that.” Mr Long said the loss was unlikely to have a major impact on council finances. “We are quite comfortably off, we have significant funds in the bank and we have a budget of between $100 and $150 million every year, so for us, it is not a major amount, it is significant but it is not a major amount,” he said. “So we will be able to go ahead and we won’t have any significant changes to our budget because of it.” Mr Long said the council would need to formally vote on a motion to write off the remaining debt at a future council meeting. “When we get paid the amount and we know that is as much as we will get, we will then have to pass a motion to write off that debt,” he said. It comes after the City of Kalgoorlie Boulder councillors in November voted to write off its $870,000 debt from Virgin Australia. The City was originally owed $921,777, and after communications with the administrator, a payment equivalent to 5.4 cents in the dollar was made, which reduced the funds owed to $872,752.86. A spokesperson for deed administrators at Deloitte said the voluntary administration process could be lengthy and complex. “In this case, the Administrators had to assess several thousand proofs of debt to ensure the right creditors would be paid the right amounts,” they said. “An initial distribution was made to creditors in September last year. “The Administrators most recently advised creditors that they expected a final distribution to be made before the end of 2023. “Ninety-nine per cent of creditors agreed to this arrangement at the second creditors meeting.”