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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.
Rod Pickin
says:It is not helpful to see state Govts. behaving like this over the future of VOZ because unless either of them care to make a takeover bid for the enterprise their words are meaningless at best but transferring to a NSW base at this stage is seriously beyond financial reason and comprehension
G Smith
says:So much for “We’re all in this together”
john
says:N.S.W. Seem to be acting like a dog in a manger, REX AND QANTAS are both based in N.S.W. of course if VIRGIN goes belly up that will help REX and QANTAS no end. REX flies to many local Cape York destinations ALL SUBSIDISED by the QUEENSLAND Government. Why does N.S.W. Want it all??
Colin
says:Thought we were all on this together, not fighting over who gets what.
Andy
says:The rhetoric from NSW makes sense.
Practically though, it doesn’t make much sense to bail out the business on the requirement that they spent a fortune relocating their head office!
AgentGerko
says:All NSW is after is somebody to help avoid Badgerys Creek becoming the white elephant it is ure to become. Virgin would be mad to move there unless they could still make the vast majority of their flights use Macot. Badgerys Creek, after a settling in period, will become another Avalon with one or two scattered flights a day.
Dave
says:Just greed right there by NSW. With the Spirit of Sydney already based there does the NSW gov’t really need 3 of the 4 airlines in this country all based in Sydney? Typical of team Gladys though, play politics when there’s a crisis going on with thousands of airline jobs at risk.
(Maybe it should be based in Perth. You know, where they bought Skywest from, reallocated its assets across the country and removed services from country towns, and if they go bust leave WA with nothing…)
Lechuga
says:Trying to force them to move to Sydney is awful. Wouldn’t expect anything less from the grubs in NSW.
Mr Peter Phillips
says:Unfortunately Virgin is predominately a foreign owned airline. I don’t believe that either the Federal or State Governments should be offering big money to bail them out. It would be a shame to see them go, and put Australians out of work, however
the foreign owners should be the ones to stump up the money. I guess they have their own problems though as well though.
No easy answer, as it has not been profitable for the last few years anyway.
Freddie
says:The Headquarters of Virgin are already set up in Brisbane. It is beyond insanity to move the Headquarters to another State. The cost of doing this would be prohibitive. Why move at all when a perfectly good, functioning space is already ‘there’. For others to insist that this happen is only showing them in their true selfish gutter snipe ambition. Nothing like trying to kick ‘somebody/something’ to the kerb when they are down. How would they feel if it was them in this position. Virgin are not asking for a non refundable hand out. They are asking for a fully refundable/covered LOAN. People are ready to go to work and make this airline profitable again…..and that is the difference between the movers and shakers in this industry.
Kim
says:New South Wales is behaving like Qantas MD Alan Joyce. Not nice to see. Wonder where Qld. is going to find $200M though?
John Phillips
says:Completely meaningless political posturing by the Qld Govt., with an election due.
If Virgin goes, so be it. And they sure have taken the Qld Govt for a ride, with all the money they have already tipped in.
Beattie fell in, hook, line, and sinker. Branson far too clever for them.
John Phillips
says:All academic. Virgin have now been placed today in voluntary administration, announcement to be made tomorrow (Tuesday).
Peter
says:Glad Vic is not contributing. We should not aid an airline that often charges more than QF. We have a choice QF/JQ. We give too much to all. DJ 90% owned by foriegn companies . As CHINA owns most of Australia now let our communist so called friends ????????? Bail them out. Or has our PM such christian virtues just want whats left give to the Chinese .Screw DJ and TT as their service is abysmal. Hope Virgin leave even though I have points I dont mind losing. They are trying to immitate QF. No chance.
Peter
says:If Vigin goes , good. Why support a second rate carrier 90% foriegn owned. Let China get more of Australia.???????? Our PM is a typical christian. Give it all away. Screw CHINA, Why support a so called communist country. D. Trump know how to treat them.
Ciaron
says:Grubs ? Just like the Virgin press conference ,full of emotion short on reality . Don’t know why anyone would be angry at a state treasurer trying to do what’s the best for their State , isn’t that his job? Fact is Palaszczuk government offered Virgin $200 million it doesn’t even have ,QLD is drowning in debt if a move to NSW saves Virgin so be it.