Virgin Australia: Government won’t give airline an individual bailout

Prime Minister Scott Morrison said the Government will not help Virgin Australia with an independent bailout, despite the airline nearing collapse.

The future of Virgin Australia hangs in limbo. Picture: AAP Image/Darren England.

The future of Virgin Australia remains in limbo, after the Federal Government held firm against Virgin Australia’s pleas for a $1.4 billion bailout despite the airline being on the brink of collapse.

Prime Minister Scott Morrison said the Government would not budge on independent financial support for the airline, and that any assistance will be provided on a sector-wide basis.

“I’m aware that there are many market-based options that are currently being pursued, and I would wish those discussions every success,” Mr Morrison said when questioned about the Virgin bailout on Thursday.

“As a Government, we appreciate the value of two competitive viable airlines in the Australian economy.

“Any responses the Commonwealth Government will have will be done on a sector-wide basis, and that’s the way we will continue to pursue those issues.”

Despite the prime minister’s comments, a spokesperson from Virgin Australia told news.com.au conversations were still on the table.

“Discussions regarding financial assistance are ongoing,” the statement read.

“Australians have been able to make the most of cheaper travel, with a 37 per cent reduction in the price of airfares since we started operating 20 years ago. Thanks to a competitive aviation industry, Australians have benefited from cheaper air fares allowing them to travel and go on holiday more often.”

Currently, Virgin Australia has just one plane in the air each day, leaving 129 grounded. Picture: Darren England/AAP

RELATED: Virgin Australia threatens to go into voluntary administration

Earlier today, Treasurer Josh Frydenberg put the pressure on the company’s shareholders to cough up the money to save the carrier.

“They’ve got deep pockets,” he told ABC radio on Thursday.

Mr Frydenberg said the Government was continuing to talk to the company as well as Qantas, having already provided more than $1 billion in relief for the aviation industry.

“We want to see Virgin continue, we want to see two airlines in the domestic market, but we’re not in the business of owning an airline,” he said.

“Where our focus has been is on providing industry-wide support.”

On Thursday, Virgin announced a further seven-day trading halt for its shares to continue talks on financial aid and restructuring alternatives to help it weather the crisis.

But the airline didn’t identify who the talks are with.

RELATED: Virgin Australia goes into trading halt

Reuters reports Virgin is also in talks with creditors about debt restructuring options. Picture: Glenn Hunt/The Australian

Reuters reports Virgin is also in talks with creditors about debt restructuring options such as a debt-for-equity swap and has hired UBS, Morgan Stanley, Houlihan Lokey and Deloitte as advisers.

A person with knowledge of the matter told the news agency that entering voluntary administration was a last resort but the airline believes it needs a decision on government aid by next week.

Australian airlines around the world have copped a battering during the coronavirus crisis, with Virgin already suspending all but one domestic route. The airline has also stood down 8000 workers and had its credit rating downgraded. Qantas has stood down 20,000 employees.

Prime Minister Scott Morrison said there will not be a bailout for Virgin Australia.

While the Morrison Government is holding fire on a bailout, the International Air Transport Association said governments worldwide should do all they can to support the airline industry.

The industry body released data this week showing that the COVID-19 crisis will see passenger revenue drop by $314 billion in 2020, which is a 50 per cent drop compared to 2019.

Currently, Virgin Australia has just one plane in the air each day, leaving 129 grounded.