Virgin Australia Need Assurance from Government that Help Is Coming

The Australian Government has announced they want to ensure there is a competitive airline industry after the shutdown, avoiding a monopoly situation by guaranteeing two main players.

Airlines have been some of the hardest-hit businesses due to the Coronavirus Pandemic, with the majority of flights overseas and interstate grounded to slow the spread.

Virgin Australia Plane
Virgin Australia will run out of cash in 6 months, leaving a gaping hole in the industry

Virgin Australia has been financially crippled from the loss in revenue and will require Government assistance in order to survive.

Less financially robust than their counterpart Qantas and with a great deal more debt, they are currently in talks with Government officials and have publicly requested a lifeline in the form of a $1.4 billion loan.

In late March, Virgin was forced to furlough 80% of their 10,000 strong workforce as Domestic and International capacity was cut by over 90%.

“There has never been a travel environment in Australia as restricted as the one we see today… We are now facing what will be the biggest grounding of aircraft in this country’s history,” Chief Executive Officer Paul Scurrah said at the time.

Australian travellers are not expected to be able to travel overseas until the end of the year at the earliest. Virgin is rapidly running out of cash, with aviation experts warning it has less than 6 months before it collapses.

Deputy Prime Minister Michael McCormack said in a recent interview that “We want a two-airline sector coming out of this”.

Qantas and Virgin are the only two realistic options.

It’s clear the Government need to put their money where their mouth is – and announce a comprehensive package that will keep the Airlines afloat while the world slowly normalises.

In-house Analyst


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