Canberra does not want to bail out Virgin Australia and wants to see a “market-led” solution to the airline’s recapitalisation efforts.

Australia’s treasurer Josh Frydenberg told a press conference today: “Virgin Australia is a very good airline, performing a very important role and this is a difficult day for its staff, suppliers and the aviation sector more broadly. But the government was not going to bail out five large foreign shareholders with deep pockets who together own 90% of this airline.”

The carrier entered voluntary administration earlier today and had requested a A$1.4 billion ($880 million) bailout from the federal government.

At the same event, deputy prime minister Michael McCormack highlighted that Virgin Australia has access to government support schemes worth over A$1.28 billion for the aviation industry and its staff will still be able to participate in the government’s “JobKeeper” wage subsidy scheme.

McCormack added: “We want to see a two-airline sector coming out of Covid-19. It has been a dreadful situation. We want to see Virgin come out the other side.”

The government has appointed former Macquarie Group chief executive Nicholas Moore to liaise with the administrators from Deloitte.

Frydenberg said, “Our objective is a market-led solution, our objective is two commercially viable major domestic airlines operating in Australia.”

He stated that the situation is different to that of Ansett Australia, the last major Australian airline to collapse, in 2002.

“This is not liquidation. This is not Ansett. This is not the end of the airline. As the company itself has said in its statement, this is an opportunity to recapitalise and for Virgin Australia to come out stronger on the other side of the coronavirus crisis.”

He cited commercial television network Channel 10 and confectionary company Darrell Lea as examples of local companies that have come through the voluntary administration process successfully.

The treasurer also noted Deloitte’s statement that there are several parties interested in a recapitalisation of Virgin Australia but declined to comment on whether the government will facilitate the entry of a new airline should a market-led solution not materialise.

“We’re not going to speculate on what happens in the weeks and months ahead,” Frydenberg said.

“What we do know is that the voluntary administration process with Deloitte as the administrator is a pathway forward.”