The Victorian government has admitted it considered joining an apparent bailout bidding war with Queensland and NSW to save Virgin in exchange for the airline relocating to Melbourne.
Victorian Treasurer Tim Pallas confirmed an earlier exclusive by The Age but then appeared to hint his state could still play a role in rescuing the business, which is now in administration.
On Monday, Queensland slapped down NSW after it offered a bailout to Virgin in exchange for shifting its headquarters from Brisbane to Sydney. At the time, Victoria said it wasn’t interested in joining the race.
However, on Wednesday, Pallas both admitted discussions took place and hinted an offer could still be made.
“We’ve looked at the Virgin proposition, but the first point I would make is it’s a federally regulated industry,” he said.
“The capacity to fly, load factors, are all dependent upon federal government policy around the aviation industry, so it was something we couldn’t control in effect and therefore may have put a level of risk the state would have to bear beyond the $500 million and could have cost considerably more.
“We would expect to see more jobs come to Victoria. We are almost exactly identical in size to Sydney and in practical terms, we don’t have a major domestic carrier based here and that strikes us as a little unreasonable.
“We will play our part but we are not going to bankroll essentially this company at the risk of considerable cost to the taxpayer.”
The Age’s original story suggested the Victorian government was in discussion with transport billionaire Lindsay Fox about a joint deal to help the airline, which collapsed into administration on Tuesday morning.
It followed a very public argument between NSW and Queensland, who became embroiled in a bidding war to save Virgin.
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.
Finally, on Monday morning, Queensland angrily hit back, with State Development Minister Cameron 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.
Minister Dick then dramatically told NSW to “back right off” and said, “There is nothing more dangerous than Queenslanders with their backs to the wall.”
The airline group confirmed its collapse on Tuesday morning, after the announcement leaked the previous evening. The business was struggling to service a $4.8 billion debt pile with little revenue coming in.
On Tuesday morning, in a hastily arranged press conference with new Deloitte administrator Vaughan Strawbridge, chief executive Paul Scurrah revealed more than 10 parties have expressed interest in recapitalising the company.
Strawbridge also cited his determination to wrap up the process as quickly as possible, describing potential suitors as “very sophisticated parties”.
“We plan to run that process very hard with our advisers, in order to make sure that that process is as short a period of time as possible,” he said.
“We are calling for expressions of interest, which we expect we will receive within the next couple of weeks.
For more of our in-depth coverage, click the links below:
- Velocity Frequent Flyer points have been paused, but won’t be cancelled;
- Sir Richard Branson hits out at the Australian government as he pays tribute to Virgin staff;
- The TWU and opposition urges the government to make a ‘bold’ move to save the airline;
- Virgin’s administrator, Deloitte, insisted there are ‘several’ interested parties in the running to save the business, thought to include BGH Capital, a private equity operator run by Ben Gray.