- Virgin Australia (VAH) has requested $1.4 billion from the Australian Government to keep the business off the ground
- Under the proposal, the government would take accrue interest in the company if it fails to repay the loan within three years
- CEO Paul Scurrah said Virgin does not need the money straight away, but if the COVID-19 pandemic goes longer than 6 months, it will become essential
- Qantas has responded to the announcement today, saying it does not believe help should be offered to businesses that have been “badly managed”
- The CEO of Australia’s national carrier has referred to the pandemic’s impact on airlines as a “survival of the fittest” scenario
- Qantas expects the Federal Government to level the playing field if a Virgin bailout is in the works, meaning it would be up to nab a $4.2 billion loan
- Virgin is up 21.3 per cent on the market this afternoon, selling shares for 9.7 cents
Virgin Australia (VAH) has requested $1.4 billion from the Australian Government to keep the business off the ground.
The news comes as Virgin stepped out of a trading halt to confirm the news this morning, following earlier media speculation.
The halt came as the ASX sought market disclosure from the airline following reports in The Australian about the bailout request.
Under the proposal, the government would accrue interest in the company if it fails to repay the loan within three years.
CEO Paul Scurrah said Virgin does not need the money straight away, but if the COVID-19 pandemic goes longer than 6 months, it will become essential.
Companies like the Virgin Australia Group are taking a range of measures to respond and manage the financial impact.
Already, the group has stood down 8000 airline staff.
“However, support will be necessary for the industry if this crisis continues indefinitely, to protect jobs and ensure Australia retains a strong, competitive aviation and tourism sector once this crisis is over,” the company told the market.
Qantas Responds
Qantas CEO Alan Joyce warned against the Federal Government assistance to the airline competitor, saying help should not be offered to businesses that had been “badly managed.”
Alan has said airlines are facing a “survival of the fittest” scenario as the coronavirus pandemic hits the travel industry.
He has also previously said Qantas is not looking for a bailout, but has warned that if Virgin gets government aid, it needs to “level the playing field” to avoid twisting the market.
So if a Virgin bailout is in the works, Qantas would be up to nab a $4.2 billion loan. The national carrier brings in triple the revenue compared to its competitor.
Virgin is up 21.3 per cent on the market this afternoon, selling shares for 9.7 cents at 1:37 pm AEDT.