Virgin Australia entered into a trading halt on Tuesday morning as speculation mounts as to whether the airline will receive a bailout.
Shortly after the announcement, Labor leader Anthony Albanese said the idea that another airline could quickly take over from Virgin was “frankly a fantasy” and told the government to “stop the bits and pieces support and provide support for our airline industry”.
The airline is seeking a $1.4 billion loan to help it survive during the coronavirus crisis, and announced before the Easter weekend it was to suspend all regular commercial flights, bar services between Sydney and Melbourne.
In a statement to the ASX, Virgin Australia said it had requested a halt “as it continues to consider ongoing issues with respect to financial assistance and restructuring alternatives”.
The Sydney Morning Herald later reported the airline had appointed American investment bank Houlihan Lokey to try and restructure its debt load, which it is struggling to service with little money coming in.
Federal Opposition Leader Anthony Albanese leapt to the airline’s defence in his daily press conference.
“Our two-airline system in Australia has served the country well,” Albanese said. “So today I say to the government, stop the bits and pieces support, provide support for our airline industry, if that needs equity injections … then the government should go down that route.
“And it should go down that route sooner rather than later. Because we know the pressure on these airlines isn’t about to become less for a long time.”
He indicated that his preference would be for the government to obtain equity in the airline, rather than merely issuing a loan.
“There’s no reason why a government could not make a financial injection through equity and that to be sold down the track,” he added. “What we know is at the moment … this is an ideal time, if anything this is the bottom of the market.”
The airline has already currently stood down 8,000 employees since the coronavirus crisis took hold.
Just before the Easter weekend, Virgin Australia announced it would suspend all domestic services from 10 April, except one return flight between Sydney and Melbourne.
Previously, the airline reduced domestic capacity by 90 per cent, flying to just 19 destinations, and cancelled all international journeys.
The business said in a statement, “As a result of government restrictions, less people are travelling and we have made changes to our schedules to reflect this.
“We continue to operate a daily service between Melbourne and Sydney, provide cargo transport locally and overseas, and operate charter flights including assisting the government in bringing Australians home.”
Virgin Australia’s lobbying push for aid has included placing a full-page advert The Daily Telegraph warning of the dangers of a Qantas monopoly.
In an apparent swipe at its biggest rival, the text read, “Our biggest competitors need a challenger to keep them honest and innovative. A monopoly won’t even work for them.”