FILE PHOTO: A Virgin Atlantic Airbus comes in to land at Heathrow aiport in London, Britain, June 25, 2018. REUTERS/Toby Melville/File Photo
March 31, 2020
SYDNEY (Reuters) – Virgin Australia Holdings Ltd <VAH.AX> is seeking a government loan of A$1.4 billion ($863.38 million) to help it weather the coronavirus crisis, a person with knowledge of the matter said on Tuesday.
The loan package would allow the government to take an ownership stake in Australia’s second-largest airline if it was unable to repay the loan in two to three years and is part of a broader request for A$5 billion of airline industry aid, said the source, who was not authorized to speak with media.
The proposal was first reported in The Australian newspaper.
“We have been in ongoing discussions with government about the support the whole industry will need if this crisis is prolonged,” a Virgin Australia spokesman said, without providing further details of its request.
Virgin is in a financially weaker position than its larger rival Qantas Airways Ltd <QAN.AX> and has said it will put 8,000 workers on leave and cut more than 1,000 jobs permanently as it grounds the majority of its fleet due to a drop in demand.
Virgin’s shares are tightly controlled by a group of foreign airlines including Singapore Airlines Ltd <SIAL.SI>, Etihad Airways and Chinese conglomerate HNA Group that have also seen a sharp deterioration in revenues due to the coronavirus crisis.
The Australian government has already announced some aid to the airline industry, including refunding and waiving charges such as domestic air traffic control fees worth A$715 million and A$198 million in support for regional aviation.
($1 = 1.6221 Australian dollars)
(Reporting by Jamie Freed; Editing by Cynthia Osterman; Editing by Chris Reese)
