Queensland Premier Annastacia Palaszczuk will formalise an investment deal between Virgin Australia and the state on Monday. The airline went into voluntary administration amid the CCP virus pandemic before emerging under the ownership of U.S. investment firm Bain Capital.
The premier said the deal was “absolutely important” for Queensland.
“It’s regional jobs, it’s backing Virgin, it’s backing another airline that supports regional Queensland,” the premier told reporters on Monday.
Though sparse on the details, Palaszczuk confirmed the deal guarantees the airline’s headquarters will remain in Queensland.
“We want to make sure as many jobs as possible stay in Queensland,” she said.
Cameron Dick, the state’s treasurer, said state-owned Queensland Investment Corporation would sign an agreement with Virgin’s new owners Bain Capital on Monday “to finalise our commitment to securing Virgin in Queensland.”
“It will be a 10-year agreement, and that will secure the headquarters and as many jobs as we can in Queensland,” he said.
He said the deal to support a second national airline would also ensure competition in Queensland and “keep the air fair.”
The treasurer said the deal would comprise an equity stake at 10 percent of the $200 million in taxpayer funds, a loan, and other financial incentives.
“I can confirm that the return to the taxpayer on that investment will be about 7 percent over the duration of that agreement,” he said.
With the state elections coming up on Oct. 30, both the premier and treasurer took the opportunity to point out that the federal government did not support propping up the airline.
The Epoch Times reached out to Virgin Australia for a comment but did not immediately receive a response.
The debt-laden airline cut 8,000 staff in March and then moved into voluntary administration after failing to secure a federal government bailout when strict travel bans were implemented to control the spread of the CCP (Chinese Communist Party) virus, also known as novel coronavirus.
When the turbulence first hit the airline, unions and the Labor Party had urged the federal government to buy a stake in the airline to prop it up. The federal government refused, preferring the airline to find a commercial solution to its problems.
It was estimated in April by Deloitte that Virgin owed nearly $7 billion to more than 12,000 creditors.
Before its restructure and recapitalisation, the airline was 90 percent foreign-owned by Singapore Airlines, Etihad Airways, and Chinese state-owned conglomerates HNA Group and Hanshan, while Richard Branson’s Virgin Group owned 10 percent.
Under Bain Capital, the airline has cut 3,000 jobs as it refocusses on the domestic market. Virgin will try to retain at least 6,000 staff and hopes to expand up to 8,000 when the aviation market fully recovers.