Unions are calling on the government to help support Virgin Australia after the airline entered voluntary administration today.
The country’s second-largest carrier has appointed Deloitte to help it recapitalise and make it through the coronavirus crisis after talks with various parties, including the government, to secure financial support failed to produce a solution.
The Transport Workers’ Union (TWU) said the government should work out a plan with trade unions to go before the administrators.
TWU national secretary Michael Kaine said in a statement today: “There is still time to rescue Virgin and for the federal government to take a bold move to ensure that the Australian economy is ready to bounce back when the crisis abates. Governments around the world are taking the difficult decisions to protect their economy and jobs and we urge the Australian government to follow suit.”
The Association for Virgin Australia Group Pilots (VIPA) says it is also disappointed that the federal government hadn’t stepped in to provide support.
“We would ideally like the government to support Virgin Australia, like governments have done in other countries,” general manager Warwick Renton tells Cirium, citing the United States, Singapore, New Zealand and the United Kingdom as examples.
He says ideally Virgin’s shareholders would step in, but as they are airline groups themselves, his understanding is that they are not in a position to help.
Still, Renton says he is quietly confident that Virgin Australia will get through. “It does sound like doom and gloom, but it gives the company an opportunity to restructure and refinance. It puts everything on hold.”
He adds that redundancies are not allowed during voluntary administration and pilots are able to access the Australian government’s “Jobkeeper” wage subsidy scheme.
Virgin Australia stated in today’s stock-exchange announcement that there are several parties interested in a recapitalisation.
VIPA’s Renton highlights the carrier’s estimate that it contributes approximately A$11 billion to the Australian economy each year.
“On that basis, it’s very attractive,” he says.
After Virgin Australia’s announcement, Australian treasurer Josh Frydenberg said the government wants a market-led solution for the carrier and declined to comment whether Canberra will help a new airline enter the market should recapitalisation efforts be unsuccessful.
The TWU estimates that the government faces a potential entitlements and redundancy bill of A$800 million if it allows Virgin to collapse.
Kaine added: “Unions stand ready to work with the government on helping to devise a solution on Virgin’s future to ensure good jobs, a decent reliable service for the public and a return for taxpayers.”
Separately, charter carrier Alliance Aviation Services said today its exposure to Virgin Australia is approximately A$250,000-300,000. It operates flights between Brisbane, Gladstone and Bundaberg under a marketing agreement with Virgin Australia and added that these will continue despite the voluntary administration.