Home » News » ASIC to investigate Virgin-Qantas stoush, as airlines jostle for billion-dollar bailouts

1 April, 2020

ASIC to investigate Virgin-Qantas stoush, as airlines jostle for billion-dollar bailouts

Australia’s corporate regulator is reportedly investigating the legality of comments allegedly made by Qantas about the financial position of Virgin Australia.

The allegations, which have been bubbling away for a while and stem from the impact of the COVID-19 pandemic, are that Qantas got the rumour mill going among journalists that its rival was cash-strapped and had appointed administrators.

According to The Sydney Morning Herald, the Australian Securities & Investments Commission (ASIC) is looking whether Qantas broke the law and made false or misleading statements about Virgin, which could have impacted the share prices of both airlines.

Both ASIC and Virgin declined to comment when contacted by Travel Weekly, while Qantas is yet to reply. However, the corporate regulator told SMH and The Age it had been in contact with Virgin to make inquiries about the damning claims.

Furthermore, Qantas told the Nine publications that the allegations are “categorically wrong” and that it would work with ASIC if the regulator requested the national carrier’s assistance.

ASIC hasn’t been the only regulator roped into the stoush between the rival airlines, with the Australian Competition & Consumer Commission confirming to Travel Weekly last week it would look into the issues raised in a letter sent by Virgin boss Paul Scurrah about comments made by Qantas CEO Alan Joyce.

These latest revelations come as Virgin pulled itself out of a trading halt on the ASX to confirm it was seeking a bailout from the federal government to the tune of $1.4 billion “as part of a broader industry support package to prepare for a prolonged crisis”.

“Companies like Virgin Australia Group are taking a range of measures to respond [to] and manage the financial impact,” the company said in a statement on Tuesday.

“However, support will be necessary for the industry if this crisis continues indefinitely to protect jobs and ensure Australia retains a strong, competitive aviation and tourism sector once this crisis is over.”

It’s been reported that based on its revenue, Qantas will ask for $4.2 billion in proportional government funding, if Virgin was granted its requested package.

Last week, Qantas revealed it had secured $1.05 billion in additional liquidity, with one analyst predicting the airline could last roughly seven to 11 months before running out of cash.

There is also speculation that Singapore Airlines (SIA), which has a 20 per cent stake in Virgin, could launch a takeover bid for the carrier, which also counts Etihad, HNA, Nanshan, and Richard Branson among its backers.

Travel Weekly has questioned Virgin – which just last week had its credit rating downgraded by Standard & Poor’s and Fitch – about the potential for a takeover at the hands of SIA, but it declined to comment.

SIA, which recently announced it would issue billions of dollars in new equity to shareholders, also declined to comment.

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