State Labor Government Bails Out Virgin Australia, Calls for Federal Help

April 17, 2020 Updated: April 18, 2020

Virgin Australia is on the verge of collapse amid the economic downturn caused by the CCP virus crisis. While the federal Liberal government said no to a loan, the Queensland Labor government has offered a $200 million (US$127 million) bailout.

Queensland State Development Minister Cameron Dick said Australia must have two airlines to support tourism, jobs, and regional investment.

“Virgin benefits regional communities in our states. It benefits our tourism industry which is in such a terrible state at the moment,” he told reporters on April 18.

“This commitment is a strong commitment from our government—from Queensland—to ensure the two airline policy can continue,” said Dick.

Dick said Queensland couldn’t do this on its own and it needs the federal government to help to ensure Australia has two national airlines on the other side of the pandemic.

Dick added that airfares and freight costs would rise without two national airlines, so propping up Virgin is worth it, despite the risk that it could be bought out by a foreign company after the bailout.

In fact, the Courier Mail has reported that Chinese regime-owned airlines China Southern Airlines, China Eastern Airlines, and Air China are considering buying Virgin out.

The Queensland government’s $200 million came with conditions on debt restructuring, and with shareholders and bondholders doing their bit. The company’s headquarters will also need to remain in the state.

Former Queensland Labor premier Peter Beattie originally lured Virgin to set up headquarters in Brisbane, Queensland’s capital city with an $11 million incentive in 2000 ($18.5 million adjusted for inflation).

Earlier in the week, Australia’s tourism and trade minister Simon Birmingham told Patricia Karvelas on ABC radio that having a competitive airline industry is crucial for competition in Australia. While also noting that travel restrictions were needed to protect lives.

The Queensland Labor government’s bailout comes in an election year.

Tourism Hotspot Crushed

The chief executive officer of Tourism Tropical North Queensland (TTNQ) said a competitive aviation industry is important for Cairns, which receives over half of its visitors via the airport.

Airlines are vital for tourism which is a crucial driver for the Cairns economy in the far north of Australia (pdf). Cairns is a favourite with international visitors as a nature-based destination. The region is famous for access to the Great Barrier Reef, and the Daintree Rainforest, the oldest wet tropics forest on earth.

Cairns has been one of the hardest-hit regions amid the pandemic.

TTNQ CEO Mark Olsen said the region had over $200 million (US$127 million) worth of tourism-related cancellations in March when the federal government closed the border to protect Australians from the rapid spread of the CCP (Chinese Communist Party) virus, commonly known as novel coronavirus.

“We have seen over 2,650 jobs lost to date and more than 5,000 people stood down in Tropical North Queensland,” Olsen told The Epoch Times in an emailed statement sent via a spokesperson.

Another 11,000 locals are expected to be out of work by the end of the year.

“We will be one of the last destinations to recover and estimate that the region will lose at least $2.5 billion (US$1.59 billion) in visitor expenditure which is 15 per cent of our Gross Regional Product in 2020,” Olsen said.

Virgin Employees Plea

An aircraft engineer has begged Scott Morrison to help Virgin Australia by providing it with a federal reserve loan, afraid that he and other employees will lose everything if the airline falls over.

In a video posted on Twitter, Andy Curtis, who has been an aircraft engineer for over 30 years—19 of them with Virgin Australia—said that while the decision to close Australia’s international borders was the right thing to do, it means that the airline is under threat of collapse.

“This decision has put the entire aviation industry into a coma. … We need you, Scott Morrison, to help us out,” he said.

While it has not offered to bail out Virgin, the federal government on April 16, announced it would underwrite a temporary and limited schedule of domestic flights to the tune of $165 million (US$105 million). The network will be serviced by Virgin, Qantas, and Jetstar, a subsidiary of Qantas.

Follow Caden on Twitter: @cadenpearson