Branson lashes out at aid for Qantas

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Sir Richard Branson has taken out full-page ads in a number of Australian newspapers protesting suggestions that the Australian government may offer financial assistance to Qantas.

Branson’s Virgin Group maintains a 10% stake in rival carrier Virgin Australia. Qantas maintains that foreign airlines are using Virgin Australia to attack it in the domestic market.

Qantas has been in talks with the government for possible assistance after losing its investment-grade credit rating in November, when it announced that it would lose up to A$300 million ($271 million) for the six months to 31 December.

“Should the Australian taxpayer be forced by the Australian government to prop up the Qantas group as federal Treasurer Joe Hockey is suggesting, business people worldwide should think twice about investing in Australia for fear of such intervention in their sectors,” he said.

Qantas is understood to have sought a government guarantee facility for its debt, and a relaxation of the Qantas Sale Act that restricts its foreign ownership to 49%. Virgin Australia has no such restriction.

Branson said, however, that if the government granted Qantas a guaranteed debt facility that it would impact competition in the country.

“Qantas has gone cap in hand to the government. If the government fill their hat it will severely damage competition in Australia,” he said.

He goes on to say that giving aid to Qantas would enable it to reinstate the monopoly it held on regional and corporate travel after the collapse of Ansett Australia in 2001.

Branson’s comments echo earlier statements from Virgin Australia, which has called for the government to extend any financial assistance to Qantas to it as well.

Virgin has flagged that it will also announce an underlying loss before tax of around A$49 million for the first half.