Any company going under has a knock on effect, you know what happens when the major employer in a small town goes broke, everyone is affected. It’s not just Virgin, it’s their maintenance providers, fuel and catering suppliers, advertising agency, IT system managers, accounts, landlords of their office buildings etc etc etc.
The country will be in survival mode for a long time to come. Vital sectors will need to be preserved to provide the framework to support the recovery. A skeleton critical mass needs to be kept in place to develop around.
There will be very little spare money as tax revenues will plummet and welfare demands will soar.
An airline industry is critical to Australia given its isolation and vast domestic distances. The bankruptcy of Sabena wasn’t critical to Belgium as there were no domestic flights and everywhere was easily accessible by road and rail. International destinations were served by other airlines flying into Belgium or easy connections through a multitude of nearby hubs such as Amsterdam or Paris.
Even the shortest routes of Australia’s economic golden triangle, Sydney/Melbourne/Brisbane have no practical alternative to flying and having large areas of the country cut off wouldn’t be acceptable.
My take is that there will be a small and highly conditional bail out of Virgin which would enable it to retain a limited domestic network on critical or previously profitable routes. Employee and fleet numbers will be slashed, international and wide body operations curtailed. Staff will be handed new contracts on a “take it or leave it” basis. The company will revert back to where it was around the time Ansett went under.