News
Virgin Australia requests government assistance, Qantas says what about us?
April 3rd 2020
Virgin Australia (VA) has written to the Australian government seeking financial support as part of a proposed broader package of assistance for the country's aviation sector and was awaiting a response at press time. Read More »
In a statement to the Australian Securities Exchange on March 31, the airline group said it had submitted a request for A$1.4 billion (US$853 million) in support funding.
"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," the VA statement said. It would be a loan, repayable to the lender, it said.
The airline group, which has posted seven consecutive years of annual losses, recently announced it would stand down 8,000 of its 10,000 staff and ground the majority of its fleet as governments tightened travel restrictions and imposed stay-at-home orders to slow the spread of the coronavirus.
While the airline has noted previously it had a cash position of about A$1 billion, no significant debt maturities until October 2021 and no new aircraft deliveries until July 2021, the changed market conditions had led to ratings agencies lowering their outlook for the carrier group.
"Companies like the Virgin Australia Group are taking a range of measures to respond and manage the financial impact," VA said. “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."
When news of VA’s proposal became public, Qantas immediately responded. It said it would put its hand up for a $A4.2 billion loan to level the playing field should its local rival receive aid from the Australian government.
Qantas Group CEO, Alan Joyce, has spoken out against VA receiving government assistance and called on staff to lobby politicians not to give the rival carrier any support.
Two-thirds of Qantas's 30,000 employees have been stood down as the airline group reduced flying and grounded aircraft in response to market conditions.
Recently, Qantas secured an A$1 billion loan to boost its liquidity as income was smashed almost non-existent demand in recent months.
