Virgin Australia may not get the government support it is seeking, according to local media reports.
Citing sources, the Australian Financial Review reported on 2 April that the federal government wants two strong airlines after the coronavirus crisis and would help a new carrier enter the market if Virgin Australia collapses.
Virgin Australia, the country’s second largest airline, confirmed on 31 March that it was seeking A$1.4 billion ($850 million) in financial support from the government, which could potentially be converted into equity.
Separately, prime minister Scott Morrison did not give a direct response when asked about the Virgin loan at a media briefing in Canberra on 2 April.
“I can only point to the decisions the government has made and those decisions have been made on a sector-wide basis,” the Australian Associated Press quotes him as saying.
On 18 March, the government announced 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 on 28 March.
Speaking on an ABC Radio National programme, Virgin Australia chief executive Paul Scurrah said on 2 April any expectations that another airline could emerge quickly to rival Qantas were unrealistic.
He stated: “Pretty much every single airline in the world is being supported by their governments and none of those governments will accept those airlines spending the rescue packages they have been given in another country.”
Virgin Australia’s main shareholders are Etihad Airways and Singapore Airlines, along with Chinese conglomerates Nanshan Group and HNA Group, as well as original founder Richard Branson.
Scurrah said Virgin Australia is talking to its shareholders about financial support, but highlighted that they themselves, as aviation groups, are also struggling with the crisis.
“It’s important to point out that a lot of our owners are in the same boat, hence us talking to the government about a bridging facility to help us get through,” he said.
Alan Joyce, chief executive of rival Qantas has previously said that the Australian government must treat all airlines equally and that nationalising Virgin Australia would be unfair.
He said on 20 March: “One of the things that the government has to do, is that it can’t pick winners and losers. Whatever aid is given to one company has to be given to everybody in that sector. Qantas needs to be treated equally.”