Virgin Australia is seeking A$1.4 billion ($865 million) in financial support from the Australian government to battle the downturn caused by the coronavirus crisis.
“It is a preliminary proposal and remains subject to approval by the Virgin Australia Holdings Board and the Australian government and may or may not include conversion to equity in certain circumstances,” it said today in a stock-exchange disclosure.
The carrier paused trading from today but posted a response to media reports.
Many airlines, now burning through cash reserves as the coronavirus crisis grounds their fleets, have called on governments to provide financial support and help pay wages.
The Australian government announced on 18 March an aviation relief scheme worth A$715 million, comprising the waiver of certain fees and charges. A separate package for regional air travel, worth an initial A$198 million, was unveiled over the weekend.
Justifying its call for support, Virgin Australia, which has suspended most of its domestic and international flying, said it, like other companies, is already taking a range of measures.
“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,” it states.
Other carriers have boosted liquidity by extending loans or raising equity. Virgin Australia’s local rival Qantas said on March 25 that it has secured A$1.05 billion ($625 million) against seven of its Boeing 787-9s.
Singapore Airlines plans to issue S$5.3 billion ($3.7 billion) in equity and S$3.5 billion in 10-year mandatory convertible bonds to help see it through the crisis.
Air New Zealand secured standby funding of up to NZ$900 million ($540 million) from the government to keep it supported.