News
Virgin Australia CEO asks government for statement of confidence in the carrier
April 9th 2020
Virgin Australia [VA] has taken out full-page advertisements in the country's newspapers pressing its case for government assistance and warning of the dangers of Australia returning to an airline monopoly. Read More »
The advertisements appeared this week and followed the airline group’s confirmation it had written to the Australian government to seek A$1.4 billion (US$860 million) in support funding as part of a proposed broader package of assistance for the country's aviation sector.
"A monopoly in Australian skies will be good for no one," the advertisement stated. "Not the 25 million people who fly with Virgin Australia, who have seen a 37% reduction in airfares over the 20 years we’ve been operating.
"Our biggest competitors need a challenger to keep them honest and innovative. A monopoly won’t even work for them."
The advertisement ends: "Let’s keep the air fair".
VA CEO, Paul Scurrah, said this week he also had asked the federal government for a “statement of confidence ASAP” for the airline.
“We would like to get a statement of confidence from the government as quickly as we can, in much the same way as they would do for a bank,” Scurrah told The Australian newspaper.
“We are not looking for a bailout. We are looking for a hand-up, for assistance to bridge the crisis. Confidence is a very important thing for airlines.”
The airline group was working with the government for a bridging facility to make sure there was confidence people could look forward with certainty that there would be a competitive and robust airline industry coming out of the crisis, Scurrah said.
VA, which has posted seven consecutive years of annual losses, recently announced it would stand down 8,000 of its 10,000 staff and ground the majority of its fleet as governments tightened travel restrictions and imposed stay-at-home orders to slow the spread of the coronavirus.
VA has noted previously it had a cash position of about A$1 billion at December 31, 2019, no significant debt maturities until October 2021 and no new aircraft deliveries until July 2021, but the changed market conditions had led to ratings agencies lowering their outlooks for the company.
Scurrah said the airline group was exploring all potential sources of capital.
In response to the VA proposal, Qantas said last week it would put its hand up for a $A4.2 billion loan to level the playing field should its local rival receive aid from the Australian government.
Qantas Group CEO, Alan Joyce, has spoken out against VA receiving government assistance and called on staff to lobby politicians not to give the rival carrier any support.
