Virgin Australia has been placed in a trading halt as the airline battles to survive the coronavirus crisis.
The airline, which was struggling financially before the pandemic, is expected to make an announcement later on Tuesday, after trading in the company was paused at 9.52am.
Overnight it was revealed that Virgin Australia was seeking financial support from the federal government.
Passengers are seen waiting for a Virgin Australia flight in Perth on Monday
The carrier, Australia’s second biggest after Qantas, wants a rescue package of up to $1.4billion.
Virgin Australia has confirmed it is seeking financial help but has not confirmed the amount or nature of potential bailout.
It could involve the government becoming a part-owner.
‘We have been in ongoing discussions with government about the support the whole industry will need if this crisis is prolonged,’ a Virgin Australia spokesperson told Daily Mail Australia on Tuesday.
‘Companies like ours are taking a range of measures to respond and manage the financial impact.
‘However, the support we’ve proposed 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.’
Virgin Australia has entered a trading halt as the airline struggles to make it through the coronavirus crisis. Flight attendants are seen in Hobart
The government is currently considering the bailout, with Mr Scurrah recommending a package be made available to other airlines as part of a $5billion scheme, The Australian reported.
Under the plan, the government would take an ownership stake in Virgin if the airline was unable to repay its debt within three years.
Mr Scurrah said the situation is unprecedented after Virgin was forced to ground its entire fleet of 125 planes and stand down around 8,000 staff members without pay.
‘There has never been a travel environment in Australia as restricted as the one we see today and the extraordinary steps we’ve taken have been in response to the Federal and State Governments’ latest travel advice,’ he said recently.
‘We are now facing what will be the biggest grounding of aircraft in this country’s history.’
Treasurer Josh Frydenberg declined to comment on any ‘specifics’, saying ‘we support strongly, the aviation industry’.
‘I’ve been in close contact with leaders of the business community including the aviation sector (Virgin boss) Paul Scurrah and (Qantas chief) Alan Joyce,’ he told ABC radio.
‘But we have already illustrated our commitment to having a viable, sustainable aviation sector with more than $700 million in fees being waived.’
Mr Frydenberg said the transport of freight and people was important to the economy.
‘We’ll continue that dialogue with key stakeholders,’ he said.
Tom Youl, an aviation analyst with IBISWorld, told Daily Mail Australia earlier this month that Virgin Australia’s high debt levels threatened the viability of the airline, which employed 9,800 people.
‘If it continues to stretch on, the amount of debt they have, there is going to be a concern there,’ he said.
‘In terms of actual viability of the company, it is of concern.’
A Virgin Australia spokeswoman however said at the time the airline ‘strongly rejected’ suggestions its future was at risk, citing the listed company’s $1billion cash balance and the retention of the B+ S&P credit rating.
The airline recently cut its workforce by 80 per cent and its capacity by 90 per cent.
Global credit rating agency Fitch on Monday both put Virgin Australia on rating watch negative citing a drop in demand in the aviation market due to the coronavirus.
Virgin CEO Paul Scurrah (pictured) made the request last week, telling the government the carrier didn’t need the cash immediately, but it would if the pandemic continued beyond six months
Virgin redundancies to top 1,000, CEO says
Virgin Australia boss Paul Scurrah says more than 1,000 of the workers it stood down last week will probably be made redundant during the coronavirus pandemic.
Virgin Australia had said it would suspend 8,000 of its 10,000 workers as it slashed domestic flights.
Mr Scurrah last Thursday gave more detail to ABC TV and said: ‘This is the worst airline crisis the world has ever seen.’
All 8,000 affected staff have been encouraged to take leave, and consider leave without pay.
Qantas CEO Alan Joyce (right) and Virgin Australia boss Paul Scurrah (left)
Those to be made redundant could include pilots at Tigerair’s Melbourne base. About 220 pilot jobs could go.
About 500 crew and pilots in New Zealand could suffer the same fate, according to Virgin.
Remaining workers are providing essential services such as transporting critical freight.
Mr Scurrah said Virgin was talking to major employers about finding work for affected employees.
The airline had already announced 750 layoffs late last year in a bid to turn around its flagging financial performance.
Elsewhere in the travel industry, Qantas earlier this month stood down 20,000 of its 30,000 workers, while bookings agency Flight Centre says an initial 6,000 sales and support staff will either be stood down or made redundant.
Another travel agency, Helloworld, said it will be sack 275 people and stand down another 1,300 workers.
The federal government two weeks ago provided a $715 million rescue package for airlines, which will involve forgoing fuel excise, air service charges and regional security fees.
Virgin Australia last week accused its rival Qantas of spreading rumours it would collapse amid the coronavirus crisis.
Both carriers have suspended international flights until mid-year.
Virgin Australia complained to the Australian Competition and Consumer Commission after Qantas chief executive Alan Joyce told Sky News it would be unfair for the government to effectively nationalise Virgin to stop it from being placed into administration.
‘The government can’t pick winners and losers,’ Mr Joyce said on Friday last week.
‘Whatever aid is given to one company has to be given to every company in that sector.’
ACCC chairman Rod Sims confirmed Mr Scurrah had launched a complaint against Qantas, following Mr Joyce’s comments.
‘The complaint that we’ve had from Paul Scurrah is that Qantas is engaging in anti-competitive conduct, designed to damage Virgin as a competitor,’ he told the ABC.
‘We have to look at whether the behaviour has the purpose or the effect of substantially limiting competition.’