By business reporter
Nassim Khadem
Posted 1h ago, updated 48m ago
Virgin's administrator has written to the Federal Government, saying it is worried bidders for the troubled airline might pull out in the absence of government support for the airline industry.
The letter calls on the Government to extend the JobKeeper program for the airline's 9,000 workers for at least another six months, and guarantee Virgin tickets.
The global aviation industry is facing an uncertain future, with coronavirus halting international travel and airlines announcing job cuts and calling on governments for support.
On Monday, Virgin Australia and Qantas grounded their remaining international passenger operations after government funding for the handful of overseas routes they were flying came to an end.
The limited flights had been in operation to allow Australians stranded overseas to return home amid the COVID-19 crisis.
Sources have confirmed Virgin's administrator, Deloitte, wrote to the Government on Tuesday, requesting urgent support.
It said the two current bidders -
Boston-based private investment firm Bain Capital, and global investor Cyrus Capital Partners - are not only concerned about Virgin's financial status, but the general future for airlines given the uncertainty over when international travel could resume.
The Federal Government has consistently argued it will not bail out individual companies, but has given some funding for local flights, including some operated by Qantas and Virgin.
Virgin Australia
went into administration on April 21, owing about
$7 billion to about 12,000 creditors.
About 9000 of those creditors are
Virgin's workers, who are owed $450 million in entitlements.
A number of bidders have been circling the airline, but the initial shortlist of about 20 was
reduced to four, and then narrowed down to two at the start of the month.
Final bids for Virgin are due on June 22.
Bidders are ready to move but want certain guarantees
Sources say the letter says the sale process is at a stage where there are two strong bidders wanting to purchase the company.
But it adds that there is a threat to that sale being finalised unless the Government provides clarity around aviation support measures.
Those measures would include
extending the JobKeeper wage subsidy for aviation workers after the end of September, when the scheme is legislated to end.
The letter also calls for an extension of 'use it or lose it' airline slots at airports, since planes have been grounded and slots are currently not in use.
The letter calls on the Government to ensure fair competition and to make sure Australia's competition watchdog is equipped with strong powers to fight possible
anti-competitive practices such as the dumping of capacity by Qantas.
And it asks the Government to give people who have bought tickets a guarantee that they will not lose out and will be able to book future flights with Virgin.
It also suggests that the
$715 million Australian airline financial relief package, which Transport Minister Michael McCormack announced before Virgin went into voluntary administration, be extended until the end of the year.
The package was aimed at mainly giving airlines relief from government-imposed fees and charges, but has been of limited use given travel bans have grounded planes and domestic carriers have barely been flying.
The letter also urges the Government to extend domestic network subsidies to the end of the year, and to maintain support for trans-Tasman flights, which could soon resume.
Posted 1h ago, updated 48m ago