Coronavirus Gold Coast: City leaders back QIC investment in Virgin Australia

Gold Coast leaders are cheering on a controversial State Government bid to prop up collapsed airline Virgin - citing Air NZ’s bailouts and Brisbane Airport’s state backing.

GOLD Coast leaders are cheering on a controversial State Government bid to prop up debt-laden Virgin Australia citing government backing of Air NZ across the ditch and state investment in Brisbane Airport.

A consortium led by the state’s Queensland Investment Corporation is developing a bid for a stake in Brisbane-based Virgin ahead of tonight’s deadline.

The bid has been blasted by Federal Home Affairs Minister and sometimes-Gold Coaster Peter Dutton, but has found enthusiastic support from some of the city’s most powerful figures.

Virgin Australia collapsed last month. Picture: Brendan Radke.

Destination Gold Coast chair Paul Donovan said if QIC’s bid was successful, the funding of Virgin would boost airline confidence and ensure job protection.

“From the state’s point of view it is a good thing given the number of people who are employed by Virgin here,” he said. “Everyone acknowledges we need a strong Virgin so I think it is a good thing.

“The Government invests in a lot of things though QIC, including Brisbane Airport. This is not actually that unusual.

Mr Donovan also pointed out NZ Government backing for national airline Air NZ in 2001 with $885 million – and offering a $900 million loan facility in March as coronavirus hit: “The government in NZ has propped up Air NZ on two occasions.”

BILLIONAIRE’S CIRCLING AROUND VIRGIN SALE

Paul Donovan and Tom Tate both back the QIC investment. Picture: Glenn Hampson

“Aviation is critical for tourism on the Gold Coast and throughout Queensland, so this is a good thing.”

Mayor Tom Tate threw his weight behind the Virgin bid, saying it would bring significant economic benefits for the Gold Coast and the state.

“I welcome the initiative. It’s not just about return on investment, this is protecting our tourism industry statewide,” he said.

“This will give us the ability to navigate our own destination. This is the most prudent thing to do.”

Virgin collapsed last month amid the COVID-19 downturn, owing creditors around $7 billion.

Civic leaders say the Gold Coast needs two air carriers. Picture: Evan Morgan

About 19 bidders are considering taking a stake in the restructured airline ahead of a sale, which administrator Deloitte hopes to complete next month.

QIC CEO Damien Frawley said there was “a lot more to do” before deciding whether Virgin would be a good investment for the state of Queensland and poured water on suggestions the purchase was a fait accompli.

“If it doesn’t stack up we’ll be advising our client as such,” he said.

“We’re not going to lose our mind and ignore the fundamentals and the numbers.

“The numbers need to make sense and need to work.”

On top of whether Virgin is a sound asset for Queensland, QIC will also consider flow-on benefits for state tourism and employment.

Mr Frawley said a non-binding offer would be lodged today ahead of talks next week about partnering with another consortium. If QIC determines Virgin is a good investment for Queensland it will lodge a formal offer to purchase in early June.

Other states are understood to be mulling a bid.

Minister for Home Affairs Peter Dutton. (AAP Image/Mick Tsikas)

Mr Dutton, an LNP frontbencher, blasted the Labor State Government’s move, declaring Premier Annastacia Palaszczuk “completely out of her depth”.

“She’s putting Queensland on a path to economic disaster. If the Queensland Government buys this, they can’t run trains on time, how are they going to run an airline?

The investment, according to State Treasurer Cameron Dick, could take the form of a direct equity stake, a loan, a guarantee or other financial incentives.

Queensland Premier Annastacia Palaszczuk and Treasurer Cameron Dick are spearheading the proposal (AAP Image/Dan Peled)

Gold Coast Central Chamber of Commerce president Martin Hall: “It’s a two-edged sword. Having a second airline is good for the region and businesses whiche because we so heavily rely on tourists.

“(But) Queensland businesses need a direct shot of adrenaline to keep going and this kind of funding potentially needs to come from the same pot of money.

“Some traders cannot open until tourists come back and getting them here by air is the easiest way, but perhaps the money could be used to help them keep the lights on.”

LNP leader Deb Frecklington said the state’s $200 million could be better spent marketing the region.