Virgin Australia: Final Two Bidders Ask For More Government Support

According to the ABC, Virgin's administrator Deloitte has written to the Federal Government, saying it is concerned that the final two bidders for the stricken airline may pull out in the absence of government support for the airline industry.

According to the ABC, Virgin’s administrator Deloitte has written to the Federal Government, saying it is concerned that the final two bidders for the stricken airline may pull out in the absence of government support for the airline industry.

Virgin Australia’s administrators Deloitte reportedly sent the letter to The Federal Government calling to extend the JobKeeper program for the airline’s 10,000 workers for at least another six months, and guarantee people who have bought tickets will not lose out and will be able to book future flights with Virgin.

The letter, sent on Tuesday outlined fears from the two current bidders Bain Capital and Cyrus Capital Partners about Virgin’s financial status and the general future for aviation given the ongoing uncertainty over when international travel will resume.

Other key points from the letter included:

  • A threat to the sale being finalised unless the Government provides certainty around aviation support measures.
  • Extending JobKeeper for aviation workers after the end of September.
  • An extension of ‘use it or lose it’ airline slots at airports, since planes have been grounded and slots are currently not in use.
  • Ensuring fair competition and to make sure Australia’s competition watchdog is equipped with strong powers
  • Extending the $715 million Australian airline financial relief package until the end of the year. The package was aimed at giving airlines relief from government-imposed fees and charges but has been of limited use given travel bans have grounded planes and domestic carriers have barely been flying.
  • Extending domestic network subsidies to the end of the year and to maintain support for trans-Tasman flights, which could soon resume.
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Before VA went into voluntary administration on April 21, the company was bleeding cash, with some aviation experts warning it had until September to be rescued.

Some initial bidders were concerned that the company could run out of cash by the end of June with a recent report suggesting the Federal government would need to step in to make up the shortfall of funds needed to ensure a sustainable bid.

The Guardian had previously reported that sources close to the sales process “were becoming increasingly worried about a period estimated at between four to six weeks during which the airline will have no cash”.

At the time of Virgin Australia entering into administration, Virgin Australia Group Chief Executive Officer, Paul Scurrah, had said their decision was about securing the future of the Virgin Australia Group and emerging on the other side of the COVID-19 crisis.

“Australia needs a second airline, and we are determined to keep flying. Virgin Australia will play a vital role in getting the Australian economy back on its feet after the COVID-19 pandemic by ensuring the country has access to competitive and high-quality air travel.”

Paul Scurrah, Virgin Australia Group Chief Executive Officer

The Final bids for Virgin Australia are now due on June 22.