TREASURER PLAYS DOWN VIRGIN RESCUE AS TRADING SUSPENDED

Federal Treasurer Josh Frydenberg has played down speculation the government could bail out Virgin, and urged its shareholders to step in.

Speaking to the ABC on Thursday morning, Frydenberg said, “We want to see Virgin continue. We want to see two airlines in the domestic market, but we’re not in the business of owning an airline.”

The intervention came on the morning Virgin Australia Group suspended its shares from trading for another seven days after its initial two-day ASX trading halt expired.

The business is struggling to service its $4.8 billion debt pile with little revenue coming in, and is currently attempting to secure a $1.4 billion government loan to help it survive during the coronavirus crisis.

The government has previously dampened speculation it could help rescue Virgin, but today’s quotes from the Treasurer are the most explicit yet.

He added that the business’ shareholders have “got deep pockets” and “our focus has been on providing industry-wide support”.

In a statement to the ASX announcing the suspension of share trading, the Virgin Australia Group said, “Discussions have continued over the last two days including discussions which remain confidential and are incomplete. The company is not presently in a position to make an announcement to the market with respect to these matters.”

Later, the Association for Virgin Australia Group Pilots, which represents approximately half of the airline’s 1,500 pilots, released a statement arguing that a failure to save the company would be “devastating” for the economy.

VIPA president John Lyons said, “The Morrison government must act now to save Virgin Australia Airlines. More than 16,000 workers are employed directly and indirectly by the airline.

“If Virgin Australia Airlines collapses the cost of travel for all Australians will skyrocket. We must have a healthy and competitive airfare market to keep the air fair for all travellers.

“Virgin Australia Airlines services many rural and regional areas. The Morrison government cannot turn their back on Australians living in these areas and leave them unable to access flights.”

On Wednesday, The Australian Financial Review reported that four of the airline’s biggest shareholders, Etihad, Singapore, Nanshan Group and HNA Group, opted out of pouring in extra funds to recapitalise the business.

The Guardian, meanwhile, speculated the business is even considering administration.

The move would also allow it to disclaim uneconomical contracts, thereby freeing the company from its more onerous obligations.

However, to succeed, a deed of company arrangement would require support from 50 per cent of its creditors by amount owed and number.

The dash to find extra funding comes after the company announced it was suspending all regular commercial flights, bar services between Sydney and Melbourne, just before the Easter weekend.

The airline has already stood down 8,000 employees since the coronavirus crisis took hold and its lobbying push for aid has included placing a full-page advert in The Daily Telegraph warning of the dangers of a Qantas monopoly.

Leave a Reply

Your email address will not be published. Required fields are marked *