The Queensland Government has announced that the sunshine state will contribute $200 million to the $1.4 billion needed to keep Virgin Australia afloat. But the offer comes with a range of conditions.
The Queensland Government has announced that it will tip in $200 million but says the offer would not be enough alone to keep the airline afloat and comes with several conditions.
Queensland Minister for State Development Cameron Dick said the $200 million was conditional on Federal Government backing, debt restructuring, shareholders and bondholders doing their bit, Virgin’s HQ remaining in Brisbane and the airline committing to maintaining regional flights.
The hope now is that other states and territories will also chip in to make up the $1.2 billion balance needed to keep Virgin alive.
Speaking to the ABC, Minister for State Development Cameron Dick said: “The Queensland Government is ready to do its bit to support, offering $200 million towards a national support package to help get Virgin back in the skies,
“But we can’t do it alone, and nor should we, because all parts of Australia benefit from two national airlines.”
The Minister is now calling on the Federal Government to lead a national effort to keep Virgin in the air and Queensland jobs protected.
“We know that it can cost up to 25 per cent more to fly on single-carrier routes, and we want to avoid that at all costs when we emerge from this crisis,” he said.
“Queensland has given Australia both our national airlines, we won’t let them go or let thousands of families watch their jobs go, without a fight.”
Minister for State Development Cameron Dick
The news follows the announcement from the Federal Government two days ago of a $165 million support package given to Virgin and Qantas to help maintain a limited domestic schedule until June 7, 2020.
READ: Qantas And Virgin To Keep Flying Domestically Thanks To Government Backing
The Federal Government said the Commonwealth would underwrite the cost of some flights to all capital cities and around 11 regional centres over the next eight weeks.
The very welcome news means that Virgin Australia would still be able to run its domestic schedule until early June, enabling it to reinstate 200 pilots, cabin crew and ground staff.
The initial eight week run of flights would be reviewed after eight weeks, or mid-June said Transport Minister and Deputy Prime Minister Michael McCormack.
“As Australians are asked to stay home unless absolutely necessary, we are ensuring secure and affordable access for passengers who need to travel, including our essential workers such as frontline medical personnel and defence personnel, as well as supporting the movement of essential freight such as critical medicine and personal protective equipment,”
Transport Minister and Deputy Prime Minister Michael McCormack
“We know that a strong domestic aviation network is critical to Australia’s success and today’s announcement demonstrates our commitment, yet again, to maintaining connectivity during this pandemic.
“This investment will also help Australians returning from overseas, who find themselves in a different city after 14 days of mandatory quarantine, complete their journey home safely.”
The question now is will the Queensland Government’s $200 million offer spark interest and a commitment from other states and territories? And will it put further pressure on the Federal Government to step in to bail Virgin Australia out?
There are also rumours of a number of other interested parties including many overseas entities waiting in the wings to potentially invest in the airline for the right price.
Virgin’s shares are currently controlled by a group of foreign airlines including Singapore Airlines, Etihad Airways and Chinese conglomerate HNA Group that have also seen a sharp deterioration in revenues due to the coronavirus crisis.