Aviation

Virgin halts trading as government bailout discussions continue

Huntley Mitchell

Huntley Mitchell

Virgin Australia has halted trading on the ASX as it looks to secure additional federal government support and restructure billions worth of debt.

Travel Weekly understands the company’s discussions with the government for a $1.4 billion bailout to help survive the impact of COVID-19 are ongoing and have so far been constructive.

Virgin is also understood to have appointed Houlihan Lokey to advise on the restructuring of its $5 billion debt.

“Virgin Australia has requested a trading halt as it continues to consider ongoing issues with respect to financial assistance and restructuring alternatives,” a company spokesperson told Travel Weekly.

“This has arisen due to the unprecedented COVID-19 crisis which has particularly impacted the aviation sector.

“We value the ongoing support of our customers. Virgin Australia has been keeping the air fair in Australia for 20 years and we want to continue to provide a valuable service to all Australians, the 16,000 people employed directly and indirectly, and enable the broader economy to restart quickly once we emerge from this crisis.”

The federal government is currently in talks with Virgin and Qantas about subsidising domestic flights in a bid to keep both airlines flying, according to ABC News.

Travel Weekly understands Virgin has been in ongoing discussions with the government about operating underwritten flights, but is yet to finalise anything.

Virgin declined to comment, while Travel Weekly has contacted Qantas for comment.

On Friday, Virgin confirmed it would shrink its domestic capacity to a daily service between Melbourne and Sydney.

“We continue to monitor passenger numbers and adjust our capacity requirements as necessary,” A Virgin spokesperson told Travel Weekly.

“As a result of government restrictions, less people are travelling, and we have made changes to our schedules to reflect this.”

Virgin is continuing to provide cargo transport locally and overseas, and operate charter flights, including assisting the government in bringing Australians home.

TWU calls for national plan

The Transport Workers’ Union (TWU) has called on the government to implement a national plan to save the aviation industry that would not only protect jobs and companies, but also ensure a return for taxpayers.

With Virgin having halted trading, TWU national secretary Michael Kaine said the government needed to step in an ensure the airline survived.

“The federal government needs to make a bold, aggressive move, like it did on the wage subsidy, and ensure the survival of Virgin and the thousands of jobs that depend on it,” he said.

“It is clear that subsidising a handful of flights a day won’t cut it in terms of helping the situation.

“There is no doubt that other airlines and aviation companies will need similar assistance, which is why we are urging a national plan for the sector.

“But there should be strict conditions set down to allow for a government equity stake, caps on executive pay and bonuses and a guarantee for quality jobs into the future.”

Featured image credit: iStock/peterfz30

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