Grounded airlines seek massive bail-out

Advertisement

Virgin Australia Holdings’ CEO Paul Scurrah has warned that the airline industry will require a government bailout if the coronavirus pandemic is not contained quickly. Virgin has approached the federal government regarding the potential for it to provide a $1.4 billion loan facility in the event of a sustained downturn. This would see the government become a Virgin shareholder if the loan were not repaid within 2-3 years:

Virgin’s major shareholders — Chinese conglomerate HNA Group, which itself has asked for Chinese government support, China’s Nanshan, Singapore Airlines and Etihad — previously gave Virgin a loan in 2016, but have each come under pressure from the shock to the global aviation industry.

Under the terms of the proposal, the government would take a stake in Virgin Australia if the loan could not be paid back within two or three years.

The full text of this article is available to MacroBusiness subscribers

$1 for your first month, then:
Cancel at any time through our billing provider, Stripe
About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.