Coronavirus: Moving Virgin out of Queensland a ‘betrayal of Richard Branson pact’, Peter Beattie says

The man who first lured Virgin Airlines to Australia, Peter Beattie, says the company ‘is worth fighting for’.

Richard Branson and Peter Beattie at the Virgin Blue launch at Brisbane Airport in 2000.

The man who first lured Virgin Airlines to start operations in Australia, former Queensland premier Peter Beattie, has said it would be a betrayal of his pact with the airline’s founder, Sir Richard Branson, if it did not remain based in Queensland.

While Mr Beattie declined to comment on the specifics of the Palaszczuk government’s declared bid for a stake in the troubled airline, he said its loss would be bad for the local tourism industry.

“Virgin is worth fighting for,” he said.

“The Queensland tourism industry desperately needs two competitive airlines and will be devastated if Virgin fails or reduces services to regional Queensland.”

The Beattie government gave $10 million in incentives to Virgin in return for it basing its Australian headquarters in Brisbane.

“If the HQ of Virgin leaves Queensland it will a betrayal of the spirit of the agreement I reached with Virgin and Sir Richard Branson,” he said.

“The federal government, in the national interest, needs to be working hand-in-hand with the Queensland government to save Virgin and not be involved in cheap political point scoring.”

‘They can’t run the trains’

Meanwhile Home Affairs Minister Peter Dutton has intensified his criticisms of the Queensland government’s decision to bid for Virgin Australia, saying the move is “dangerous” and if the bid was successful the airline would be “back on the market in six months.”

“They can’t run a train system,” Mr Dutton told 2GB on Thursday.

Queensland Premier Annastacia Palaszczuk her government’s decision to bid for the struggling airline, saying she “cannot understand” why Queenslanders would not want to win the bid, assuring thousands of jobs stay in the state.

On Wednesday, new Queensland treasurer Cameron Dick said the state would make a bid to purchase the airline out of voluntary administration through the Queensland Investment Corporation, in an effort to keep the airline’s head office in the state and to keep a second national carrier operating at full capacity.

Queensland Premier Annastacia Palaszczuk and Home Affairs Minister Peter Dutton.

Mr Dick said the investment “could take the form of a direct equity stake, a loan, guarantee or other financial incentives”. The airline went into voluntary administration last month, owing almost $7 billion to 12,000 creditors.

Dubbed Project Maroon by the government, the bid drew criticism on Wednesday night from Mr Dutton who tweeted: “Premier Palaszczuk has almost bankrupted Queensland and now in the middle of a crisis they want to buy an airline. It is laughable. She “leads” a government which is corrupt and chaotic.”

Premier Palaszczuk has almost bankrupted Queensland, and now in the middle of a crisis they want to buy an airline. It is laughable. She “leads” a government which is corrupt and chaotic.

— Peter Dutton (@PeterDutton_MP) May 13, 2020

But Mr Dick hit back, telling the federal Member for Dickson to “just stick to cruise ships”, in a reference to the Ruby Princess coronavirus debacle, which has resulted in the deaths of 22 passengers and been linked to almost 700 COVID-19 cases.

Look mate, just stick to cruise ships ... https://t.co/Cb4AArVokL

— Cameron Dick (@camerondickqld) May 13, 2020

On Thursday morning, Mr Dutton ramped up is attack, saying the bid could be a “con” or a “political stunt” designed to drum up support for the Labor government ahead of the state election in October.

“If they are genuine — don’t forget the Premier, every credit card they have is maxed out,” Mr Dutton said. “And yet they are saying they want to spend billions, borrow more … to put into an airline during one of the most significant downturns in the world’s history.

“I mean, Richard Branson is not proposing to wade in like the Queensland government is doing. I think Premier Palaszczuk needs to come out and say ‘this was a bad idea’ and drop it … it’s just fanciful.”

Mr Dutton also said that financing the deal through the QIC was “dangerous” as it would expose the superannuation money of Queensland public sector workers to significant risk.

“I think it is dangerous, and it should be called out,” he said. “Premier Palaszczuk, she might be a nice person, but she’s incompetent.”

The federal government has refused to bail out Virgin Australia, and Deputy Prime Minister and Transport Minister Michael McCormack said the solution must be market, not government, led.

However, Flight Centre chief executive Graham Turner has backed Queensland’s move, and says there’s no reason why two airlines can’t be profitable if they are properly run. “I see nothing wrong with it and I think it’s probably a very positive thing for Queensland,” he told ABC radio.

The airline was a crucial driver of the state’s $13bn tourism industry before the COVID-19 crisis hit, prompting the government to pull out all stops to ensure it survives as Australia emerges from the current economic crisis.

“My No 1 focus as Treasurer is to retain and create jobs for Queenslanders, particularly as we move beyond the COVID-19 crisis,” Mr Dick said.

“We have been very clear: two sustainable national airlines are critical to Australia’s economy.

“We have an opportunity to retain not only head office and crew staff in Queensland but also to grow jobs in the repairs, maintenance and overhaul sector and support both direct and indirect jobs in our tourism sector.

“We saw the punishing increase to the cost of flights after the Ansett collapse, and this government will not stand by and let that happen again.”

He said the QIC would advise on all aspects of the bid “including the optimal partner group, the quantum and structure of the state’s contribution, as well as probity and governance.”

The government had offered $200m to rescue Virgin before it went into administration.

QIC chief executive Damien Frawley said the restructure represented “a significant opportunity for Queensland … We are well-equipped to manage the state’s interest in Virgin Australia Holdings should the consortium be successful. QIC’s track record as an acquirer, owner and manager of nationally critical infrastructure for the Queensland government and long-term investors supports our bid.”

A QIC spokesman later would not say which bodies were partnering with it in the consortium.

However, it is understood that the joint bid will have input from state-based superannuation funds and other commercial investment partners of the QIC.

Mr Dick said administrators were seeking to conclude the sale process by June 2020. “This is a competitive space, but Queensland is a serious contender and discussions with the administrators have been making progress,” he said. “Queensland is Australia’s home of aviation and with all our competitive advantages, we fully intend to stay that way.”

The government’s exposure is set to remain at $200m.