New $165m package given to struggling Qantas, Virgin

Australia’s two biggest airlines have been given a $165 million package that will allow them to operate some domestic flights between capital cities.

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Deputy Prime Minister Michael McCormack has announced a $165 million lifeline for Qantas and Virgin Australia.

The package would allow the airlines to operate some domestic flights between capital cities and regional areas.

Mr McCormack told Sky News the package would go towards “saving livelihoods and saving lives”.

“We can have two viable airlines out of this [pandemic] and I’m sure that this eight week period will help commercial airlines such as of course Virgin and Qantas to put passengers from where they need to be”.

Deputy Prime Minister Michael McCormack has announced a $165 million lifeline for Qantas and Virgin Australia. Picture: AAP

It comes after the government dismissed Virgin’s request for a $1.4 billion bailout to keep the airline afloat during the coronavirus crisis.

The Infrastructure, Transport & Regional Development Minister said “we are concerned, we want two viable airlines to come out of the COVID-19 situation”.

“I’m confident that we can, I’m confident that the more than $1 billion that we’ve already put on the table and Virgin have been very much front and centre of that,” he said.

“It has been disastrous for the aviation industry, no question, but we can get through this, we have already put as a government more than a billion dollars on the table.”

VIRGIN SHARES SUSPENDED AMID BAILOUT PLEAS

Virgin’s shares have been suspended for seven days after the federal government rebuffed the airline’s pleas for a $1.4 billion bailout despite it being on the brink of collapse.

Treasurer Josh Frydenberg is instead putting pressure on the company’s shareholders.

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

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.”

The Treasurer said on Wednesday he was aware of reports Virgin was hiring insolvency experts but said the Federal Government remained focused on support for the entire aviation sector, not one particular private airline.

It is feared if Virgin becomes insolvent Australia’s aviation industry will become a monopoly with only Qantas serving domestic travel.

“Australia is a country of 25 million people and I understand that two airlines have served us well, but, at the same time, our approach has been sector-wide support and that’s critical to understand,” Mr Frydenberg said on Wednesday.

“We’ve announced more than $1 billion worth of support measures which help Virgin, which help Qantas, which helps some of those regional airlines.”

Treasurer Josh Frydenberg says Virgin Australia should first turn to shareholders and not taxpayer dollars for financial support. Picture: AAP

Mr Frydenberg said Virgin Australia should first turn to its shareholders for financial support. “Their first point of call is their equity holders, and they’ve got some big equity hold there, as you know, not just Virgin globally, but there’s Etihad, there’s Singapore, there’s two China-related companies who are stakeholders,” he said.

“I know that they’re doing a lot of work.

“The government (has) had open lines of communication with Virgin as we have had with Qantas and as you would expect us to do.”

QANTAS AND VIRGIN CLOSING IN ON DEAL

Qantas and Virgin are closing in on a multi-million dollar deal with the federal government to support flights between capital cities.

The airlines have copped a battering during the coronavirus crisis and there are fears Virgin could soon go into administration.

The company was again placed in a trading halt on Tuesday morning, asking the Australian stock exchange to put the pause in place for two days or until it makes an announcement.

Virgin cited ongoing discussions involving financial assistance and restructuring alternatives.

The airline has already suspended all but one domestic route, stood down 8000 workers and had its credit rating downgraded.

Prime Minister Scott Morrison said any public funding for aviation would be spread across the entire sector.

“We haven’t been picking any winners or picking any favourites here,” he told Nine.

“What we have been doing is ensuring sector-wide support, which has been already quite significant for the aviation sector.” The government has already confirmed it will provide financial support for regional routes and stump up $100 million to address the cashflow crisis among a dozen small airlines.

Empty Virgin Australia check-in terminal at Brisbane Domestic Airport.

Deputy Prime Minister Michael McCormack is now working directly with Qantas and Virgin on ways to subsidise flights between major cities.

“They have already worked together on international routes that are vital not just for bringing people home or getting people to their homes, but also to support much-needed freight and the transfer of medical supplies,” Mr Morrison said.

Labor has welcomed plans for the government to cover the cost of some trunk routes but said it would not be enough to save Virgin from going broke. Opposition Leader Anthony Albanese says the government should purchase equity in airlines that need support so taxpayer money is protected, jobs are saved and Australia is not left with just one operator.

“We’re talking here about 15,000 direct and indirect jobs,” he told reporters in Sydney.

“This isn’t about favouring one airline or another, this is about favouring an industry structure that serves the national interest.” The Australian Council of Trade Unions says the government must do what it can to prevent an airline from collapsing, as Ansett did nearly a decade ago. The union says the government’s first support package is no longer fit for purpose because most of it is for fuel excise relief, which doesn’t help airlines when planes aren’t flying.

The government’s total commitment to the aviation sector so far is more than $1 billion.

Originally published as New $165m package given to struggling Qantas, Virgin