From The Australian “Scott Morrison Refuses to Budge on Bailout for Virgin”
The federal government has no *intention of being Virgin’s “white knight”, dismissing growing calls for it to intervene to save the airline or even take a temporary *equity stake to prevent its collapse.
Senior government sources fear ongoing speculation about the commonwealth bailing out the foreign-owned Virgin is counter-productive, crowding out any *potential market-led solution.
While the Morrison government is concerned about the *future of Virgin, and job losses in aviation, sources insist the JobKeeper package is designed to help businesses ravaged by COVID-19 and a Virgin-specific bailout, including taking an equity stake, won’t happen.
Scott Morrison told Sky News on Tuesday: “Our plan has always been about preserving businesses as the centre of the economy, not the government at the centre of our economy. Businesses are at the centre of our economy and we want to *ensure they get through this intact … so they can lead the recovery … on the other side.”
Sources told The Australian that, despite speculation and support from Labor, this would not include any special rescue package for Virgin. The government *believes a bailout for Virgin would open the floodgates for other struggling businesses.
Deputy Prime Minister *Michael McCormack has been trying to secure an agreement from the airlines to operate a *minimum number of flights *between major centres to maintain freight connections and carry Australians to their home town or city after *enforced quarantine.
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Virgin races to restructure debtBut a planned announcement on Tuesday was progressively pushed back as Virgin Australia sought assurances it would not be left out of pocket as a result of the flights. It is understood the airline has been unhappy with relief measures announced by the government to date.
Despite Mr McCormack’s promise that $159m of a $715m fee relief package would be paid to Qantas and Virgin, neither airline has yet to receive any money.
With flying reduced to almost nothing, Virgin estimated the total cost benefit of the package from February 1 to September 30 would amount to less than $70m.
For the second time this month, Virgin shares were placed in a trading halt on Tuesday pending an announcement about financial assistance and debt restructuring by Thursday.
Virgin chief executive Paul Scurrah is working on a restructuring plan with investment bank Houlihan Lokey and, with the backing of Labor, he *believes the airline is crucial to Australia’s economic recovery and the government should take an *equity stake to secure its future.
But the Prime Minister and Josh Frydenberg insisted any further support for the aviation sector would be spread across the industry. “We haven’t been picking any winners or picking any favourites here,” Mr Morrison told the Nine Network. “What we’ve been doing is ensuring we’re giving sector-wide support. So we’ll continue to deal with the sector on a sector-wide basis.”
The Treasurer also ruled out a Virgin-specific rescue package and suggested talk of the airline’s collapse was “speculating about the future”.
“Nobody knows where those issues will end up,” Mr Frydenberg said. “Australia’s been well served by having two major airlines operating in the domestic market. But Virgin and Qantas are both publicly listed companies, both with substantial shareholders.”