New twist in Virgin Australia crisis as Victoria refuses to prop up the struggling Airline

The Victorian government has refused to prop up embattled Virgin Australia, which is teetering on the brink of collapse due to the coronavirus crisis.

The company is drowning in almost $5billion worth of debt and bosses are reportedly in discussions with Chinese airlines, who are poised for a last-minute takeover.

The Queensland government threw the carrier a last minute lifeline and said it would offer Virgin $200million towards a bailout in the hope that other states will follow suit.

However these hopes were dashed on Saturday when Victoria said it ‘had no ‘plans’ to prop up the flailing airline, the Sydney Morning Herald reported.

The statement came after Victorian Health Minister Jenny Mikakos said the government had no further announcements to make on the aviation industry on Friday.

Queensland’s State Development Minister Cameron Dick on Friday that two airlines were needed ‘if we’re going to get through this pandemic’.

‘All governments need to come together to ensure that is the case,’ he said.

‘Queensland can’t do this on its own. This is a national airline weathering a national crisis and it needs a national response which is why we’re asking the Australian government to take the lead on this.’

The Federal Government has ignored the airline’s pleas for a $1.4 billion loan but has offered $165 million to both Qantas and Virgin to keep the carriers operating essential domestic routes.

Yesterday it was reported that China Southern Airlines, China East Airlines and Air China were all in discussions about purchasing Virgin Australia in a last-minute takeover.

The Chinese government-owned airlines were yet to make a decision but have the power to stop the company’s ‘catastrophic’ collapse.

Any offer could provide a much-needed lifeline to Virgin Australia and the market-led cash solution the Morrison government urged them to find.

Virgin Australia has already suspended all but one domestic route, stood down 8,000 workers and had its credit rating downgraded.

The airline also suspended its trading on Thursday.

Deputy Prime Minister Michael McCormack welcomed Queensland’s $200 million commitment to ailing airline Virgin Australia and insisted the Morrison government is also exploring all avenues to keep two airlines in the air.

‘Sustaining Australia’s aviation industry is critical to protecting livelihoods and saving lives and the federal government is exploring all possible avenues to keep two airlines in the air, throughout this pandemic and on the other side of it,’ Mr McCormack told AAP on Saturday.

‘I welcome states and territories exploring ways to assist their local aviation businesses and welcome the Queensland government’s commitment to Virgin.’

Labor’s transport spokeswoman Catherine King said the Queensland government is demonstrating the clear national leadership needed to support Australia’s aviation industry through the COVID-19 crisis.

‘Scott Morrison must provide a lifeline to Virgin through extending or guaranteeing lines of credit and taking an equity stake,’ Ms King said in a statement.

‘Such an intervention will give the government the temporary ability to support the airline through this crisis before the industry bounces back – and it will – when the government can recoup its investment,’ she said

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