Virgin Australia appears unlikely to get specific help from the federal government to save it from collapse, with Treasurer Josh Frydenberg ruling out a package for the ailing airline.
Virgin went into a trading halt on Tuesday, its second in as many weeks as it seeks a $1.4 billion loan from the federal government.
Canberra has been under pressure to help the struggling airline, which has grounded its aircraft and stood down thousands of workers because of the coronavirus pandemic.
But Mr Frydenberg said talk of Virgin’s collapse was “speculating about the future and nobody knows where those issues will end up”.
“Australia’s been well served by having two major airlines
operating in the domestic market,” he said.
“But Virgin and Qantas are both publicly listed companies, both with substantial shareholders.”
However, both companies are closing in on a multimillion-dollar deal with the federal government to support flights between capital cities.
- Virgin suspends domestic flights in virus crisis
- Virgin cuts fleet, quits routes
- Virgin stands down thousands of employees
Mr Frydenberg said airlines had been hit particularly hard by the coronavirus fallout.
“We look at all these issues on an objective basis and, again, there is still quite a way to go in terms of the aviation sector and some of the challenges [of] those particular companies are being worked through.”
The government has already confirmed it will provide financial support for regional routes and stump up $100 million to resolve the cashflow crisis among a dozen small airlines.
Deputy Prime Minister Michael McCormack is working directly with Qantas and Virgin on ways to subsidise flights between major cities.
Labor has welcomed plans for the government to cover the cost of some trunk routes, but said it would not be enough to save Virgin from going broke.
Labor leader Anthony Albanese said the government should buy equity in airlines that need support so taxpayer money was protected, jobs were saved and Australia was not left with just one operator.
“We’re talking here about 15,000 direct and indirect jobs,” he said on Tuesday.
“This isn’t about favouring one airline or another, this is about favouring an industry structure that serves the national interest.”
Virgin Australia chief executive Paul Scurrah has urged the federal government to help it stay afloat.
Without a cash injection, aviation industry experts have predicted the airline will struggle to survive beyond September.
There are also suggestions Virgin is considering an alternative that could involve restructuring its debt if the government does not step in with financial assistance.
“Virgin Australia has requested a trading halt as it continues to consider ongoing issues with respect to financial assistance and restructuring alternatives,” a spokesman for Virgin Australia said on Tuesday.
“This has arisen due to the unprecedented COVID-19 crisis which has particularly impacted the aviation sector.”