Queensland will try to strike a hard bargain as it bids for a stake in Australia’s debt-laden second airline.

May 15, 2020

Queensland will try to “strike a very hard bargain” as it attempts to save 5000 jobs by securing a stake in Virgin Australia, the state Treasurer Cameron Dick says.

The state government is negotiating to join a consortium of investors to rescue Virgin Australia and is willing to tip in at least $200 million to keep the airline flying.

Mr Dick says the Queensland Investment Corporation will engage with the airline’s administrator, which is hunting for buyers.

“We are going to strike a very hard bargain. Foreign banks and foreign bondholders are going to have to take a hair cut,” he told reporters on Thursday.

“They’re going to have to pay a price because we need the best possible airline in the best possible shape out of administration to look after Queensland.”

The government is not seeking outright ownership of the carrier, which went into voluntary administration last month.

But, taxpayers could end up owning part of Virgin Australia, or funding a loan, guarantee or some other financial tool.

It also wants a strategic stake to ensure the restructured airline keeps 5000 workers in their jobs and remains headquartered in Queensland.

If a monopoly situation were to re-occur, with Qantas the only carrier, the business, industrial and tourism sectors would suffer, he said.

Mr Dick downplayed the risk to taxpayers of buying into a company that owes almost $7 billion to about 12,000 creditors.

The size and form of any taxpayer investment should be known within two months, but Mr Dick indicated it could be dramatically more than $200 million if the deal is right.

Administrators Deloitte want to conclude the sale process by June, with the first indicative bids likely to be received by Friday.

The federal government has ridiculed Queensland’s plan, with Home Affairs Minister Peter Dutton, a Queenslander, describing it as laughable.

He said it was either dangerous and crazy amid the global aviation shutdown sparked by the coronavirus, or a fanciful pre-election stunt.