The NSW and Queensland governments have become embroiled in a war of words over where the headquarters of Virgin would be if the airline received a combined bailout funded by a number of states.
On Monday morning, Queensland insisted it would be “nonsense” for Virgin to bow to a NSW demand that it move its headquarters to Sydney in return for aid.
State Development Minister Cameron Dick dramatically told NSW to “back right off” and said, “There is nothing more dangerous than Queenslanders with their backs to the wall.”
So far, the federal government has resisted calls to provide Virgin Australia Group with a $1.4 billion loan to survive the coronavirus crisis, leading to the airline approaching states and territories for help.
The row began on Saturday, when the Palaszczuk government offered Virgin a $200 million lifeline on the condition that other states also contribute and the business maintains its base in Brisbane.
However, the next day, NSW Treasurer Dominic Perrottet hinted that any contribution from its government would require the airline to move to Sydney, instead.
“Virgin should have their headquarters for both Virgin and Tiger in Sydney,” Perrottet told Sky on Sunday night.
“I’m always open for businesses right across the country to relocate to New South Wales and create jobs here in our state, particularly when you look at the aerotroplis in western Sydney.
“It provides a significant opportunity for Virgin and other airlines to relocate.”
Finally, on Monday morning, Queensland angrily hit back, with Minister Dick insisting the move would force 1,200 staff to move states to remain in a job.
“It’s a nonsense to think the Prime Minister would even consider a NSW plan to move the airline there,” he said.
Any deal to save the airline would likely need additional help from the Victorian government, which has played down its intention to contribute to the emergency fund.
A spokesperson said, “The Victorian government currently has no plans to provide funding to Virgin.”
The row comes as newspapers have reported rumours that private equity firms are considering purchasing the airline’s assets if it goes into administration.
The Australian Financial Review speculated that BGH Capital, a private equity operator run by Ben Gray, was doing the numbers on the business.
Then, the SMH followed by reporting that, in fact, a number of private equity operators and hedge funds were interested.
One big private equity operator, it reported, said he knew of 20 funds looking for a deal but would only make a move if administration happened, and debts were therefore wiped out: “Nobody will put money in and be behind the existing debt.”
The company’s current shareholders include Singapore Airlines, China’s HNA Group and Nanshan Group, Etihad and Richard Branson’s Virgin Group, which together hold 90 per cent of the company.
On Thursday, the federal government provided some relief for Virgin by finalising a deal with the airline and Qantas to underwrite a minimum domestic network, to the value of $165 million.
The services will cover all capital cities and begin to roll out immediately before being reviewed in eight weeks’ time.
It means the number of passenger flights operated by the Qantas Group will increase from 105 to 164 per week; while Virgin will shift from running only Sydney-Melbourne services to now flying 64 return services.
The latter has already confirmed it is now in a position to rehire some of its stood-down employees, which Australian Aviation understands could number 200.
The financial aid followed increasing reports of Australians arriving back in the country, completing their 14-day hotel isolation, but then struggling to find flights across states to return home.
While both airlines have suspended their normal international network, they are still committed to flying a handful of repatriation flights, part-funded by the government, from London, Los Angeles, Hong Kong and Auckland.