Qantas ‘fair’ cry would net $4.2bn coronavirus bailout if Virgin scores $1.4bn from government

Qantas has upped pressure on the federal government for an all-or-nothing approach to the airline industry, after Virgin sought a $1.4bn bailout.

Workmen are seen working on the Qantas flying kangaroo logo on the side of the Qantas maintenance facility building at Brisbane Airport in Brisbane. Picture: AAP

Qantas has upped pressure on the federal government for an all-or-nothing approach to the em­battled airline industry, after Virgin Australia sought a $1.4bn bailout to see it through the corona­virus crisis.

Virgin Australia chief executive Paul Scurrah confirmed the SOS was made to the government in an update to the ASX, following The Australian’s exclusive report on the plea.

Mr Scurrah said support would be necessary, if the crisis continued indefinitely, to protect jobs and retain a strong and competitive airline industry.

In response, Qantas indicated it would expect its own financial help from the government in the vicinity of $4.2bn, three times Virgin’s proposed loan, to reflect the airline’s much larger revenue base.

A senior Qantas source said the funds were not needed by the airline to survive the coronavirus crisis but it was only fair if the government was giving a lifeline to Virgin Australia.

Chief executive Alan Joyce has previously said the government should not be supporting a company that had been “badly managed for the last 10 years, and should definitely not support a company owned by Singaporeans, Chinese, Abu Dhabi and a British billionaire”.

The Morrison government would not rule out a bailout for Virgin Australia, saying a competitive airline sector was important for the economy.

Finance Minister Mathias Cormann said it was not the intention to take a stake in an airline but to use “policy settings” to ensure there were two major carriers once the COVID-19 crisis was over.

Josh Frydenberg said the government’s $130bn wage subsidy plan would help Virgin Australia stay afloat.

A Virgin Australia spokeswoman said the company was exploring the ­eligibility criteria for the business and team members who had been stood down. However, 220 pilots with low-cost partner Tigerair were likely to miss out, with their redundancies brought forward from April 30 to April 3.

Qantas confirmed it had registered interest in the scheme via the Australian Taxation Office and was going through the detail to understand how it applied to individual employees.

“This will help many Qantas and Jetstar employees who have been temporarily stood down because we’ve had to stop almost all of our flying,” a spokesman said. “Our focus is on protecting as many jobs as possible as once this passes and demand for air travel returns, we’ll need our people back working again.”

Anthony Albanese said the govern­ment should be sympathetic to Virgin’s plea, and buy a stake in the airline that it could sell down at a later date. “A lot of capital has gone into building up our aviation system in Australia and I want to see that continue,” the ­Opposition Leader said.

Commsec senior economist Craig James said if support was required by airlines for a short period, the government should provide that assistance. “It’s certainly in the economy’s interests to have two major airline groups and in consumers’ interests to have a degree of choice,” he said. “If we don’t do that, we have the risk of coming out of (the coronavirus crisis) somewhat poorer as a nation.”

Aviation consultant Neil Hansford said the Australian population was not big enough for two full-service legacy carriers. “Virgin are in trouble because they’ve tried to compete with Qantas and poorly managed it,” he said.

“I agree with Joyce that why should people be rewarded for years of poor management? It’s not up to government to fund overseas-owned airlines.”