Virgin Australia proposes $1.4 billion bailout from Federal Government
31 March 2020, Written by David Simmons
Virgin Australia (ASX: VAH) has proposed a $1.4 billion bailout from the Federal Government so it can position itself to survive the Covid-19 crisis.
The 90 per cent foreign-owned airline confirmed a report in today's edition of The Australian where it was revealed Virgin Australia was considering asking for the sum.
The $1.4 billion would come on top of the $715 million support package for the broader aviation industry already announced by the Federal Government.
The request is a "preliminary proposal" according to VAH and remains subject to approval by the company's board.
VAH also confirmed in its ASX statement that the support "may or may not include conversion to equity in certain circumstances".
This would give the Federal Government a sizeable slice of the company which is currently owned by Singapore Airlines, Etihad Airways, Chinese investment group HNA, Chinese airline Nanshan, and Richard Branson's Virgin Group (through British Virgin Islands-based Corvina Holdings).
"Companies like the Virgin Australia Group are taking a range of measures to respond and manage the financial impact," says VAH.
"However, support will be necessary for the industry if this crisis continues indefinitely, to protect jobs and ensure Australia retains a strong, competitive aviation and tourism sector once this crisis is over."
Updated at 1:01PM AEDT on 31 March 2020.
Author: David Simmons