Give Virgin Australia $1.4bn to save jobs, Labor says

Labor has warned the federal government it will be signing Virgin Australia’s death warrant if it does not provide a $1.4bn loan.

It’s widely through that Virgin will not survive the pandemic aviation crisis without government assistance. Picture: AAP

Labor has warned the federal government it will be sealing Virgin Australia’s fate if it fails to grant the airline’s requested $1.4bn lifeline.

Speaking to parliament in favour of the government’s $130bn wage subsidy package, shadow transport minister Catherine King told parliament the payments would help the aviation sector keep people on.

But she cautioned that the subsidy alone would not be the “saviour of this sector” because of the significant fixed costs airlines faced.

“Labor believes the government must be flexible and be open to financially supporting our large aviation companies, including extending or guaranteeing lines of credit or taking an equity stake in the industry,” said Ms King.

She said recent comments in the media from government members, suggesting they were prepared to let Virgin fail because a new entrant would quickly take its place, “did not serve Australians well”.

“The government must extend a lifeline to Virgin if we are going to continue to see the current aviation structure survive this crisis,” Ms King said.

“If it does not, it is taking an active decision to see one of our major airlines fail in this country, and that will have significant consequences for hundreds of workers in the aviation sector and across our economy to come.”

Her comments followed an appeal by Virgin Australia CEO Paul Scurrah for the government to make an urgent “statement of confidence” for the airline, as discussions on a rescue package continued.

“We are not looking for a bailout,” Mr Scurrah told The Australian.

“We are looking for a hand-up, for assistance to bridge through the crisis. Confidence is a very important thing for airlines.”

Qantas has previously suggested that if the government assisted Virgin Australia, it should expect a proportionate loan of $4.2bn.

Pilots have also bought into the debate, saying Virgin should press its own shareholders before leaning on taxpayers.

In a message to members, the Australian and International Pilots’ Association said they did not want to see Qantas competing with a state-owned Virgin “as well as the myriad of state-owned carriers we already compete with”.

“Assistance must be industry-wide and should not be allowed to unduly distort the commercial landscape that existed prior to this crisis by favouring one participant over another,” said AIPA president Mark Sedgwick.

“This would be unfair to Qantas Group employees, particularly those who are stood down.”

The crisis has proven costly to both major carriers, with Qantas standing down more than 20,000 employees, and 8000 Virgin Australia employees either stood down or made redundant.

Mr Sedgwick suggested any assistance provided to Virgin Australia should be similar to the New Zealand government’s $883m loan to Air New Zealand, which was structured as a “last resort” facility.

“We are supportive of measures to protect Australian jobs but more should be done first to press the shareholders of Virgin Australia to support their own workers through this period, many of those shareholders have links to foreign governments that should be obligated to step up,” Mr Sedgwick wrote.