ABC MELBOURNE MORNINGS WITH VIRGINIA TRIOLI
TUESDAY, 21 APRIL 2020
SUBJECTS: Support for Australian aviation industry during Covid-19; Virgin Australia.
VIRGINIA TRIOLI: Listening to that conversation is Catherine King. She’s the Shadow Minister for Infrastructure, Transport and Regional Development. Catherine King. Good morning.
CATHERINE KING, SHADOW MINISTER FOR TRANSPORT, INFRASTRUCTURE AND REGIONAL DEVELOPMENT: Good morning, Virginia.
TRIOLI: You heard that story that from our captain this morning, Captain Daniel Lang. It’s not an unusual one of people who have had to pivot very quickly and try and get some kind of a job. But should it have come to this in your mind?
KING: No, it shouldn’t. I want to thank Captain Lang and the many, many Virgin workers who’ve been fighting pretty hard to save their industry, and save their jobs. It’s a heartbreaking story that’s repeated 16,000 times across the country today, people desperate to keep their jobs. Virgin is very much a family and often you have both partners working at the company so this is a devastating blow for many of them. I think it’s a real failure of leadership from Scott Morrison not to have actually understood the complexity of the aviation industry and its importance to the economy. This is not just any ordinary business. I know when you’re talking about taxpayer money you can’t save every business and you can’t intervene in the market every time. But when you’re talking about aviation and the importance it plays in our economy, I think he’s really failed us today, and I think he’s failed those 16,000 workers.
TRIOLI: Look, I get from a political perspective, and even from a financial perspective why you might argue that. But, Virgin wanted $1.4 billion from the Government, it had been unprofitable for seven years, it says it would have converted that loan, it said, to equity if it was unpaid, but Qantas’ argument needs to be recognised here as well, doesn’t it Catherine King, that Virgin’s poor financial record, and the amount of debt that it was carrying, shouldn’t be rewarded with a bailout?
KING: I think there’s a couple of things here. What Virgin was asking for was a guarantee on a line of credit, so that it could go out to the market and raise more debt so it could keep trading. Labor was saying that should be, for taxpayers’ value, you could turn that into an equity stake in the airline. We’ve talked about that in the past. So that’s what Virgin was asking for several months ago, and their ask got reduced as it became apparent that the Government was not going to step in. Of course you don’t want to see taxpayers having to bail companies out, but what we’ve got is Virgin entered this in a very different position. I’m not going to make excuses for poor decisions that they’ve made in the past, but they were on the path to restructure, had substantially changed their management, were working pretty hard to reduce that debt. They got hit initially by bushfires, as we saw tourism got absolutely smashed over summer, got hit then, and then we entered into Coronavirus. This is, pretty extraordinary times. This is not normal business, when you see the entire aviation industry shut down. If the Government wants to see the economy recover, it needs to have aviation as a key part of that. You have got to have two strong players competing otherwise you’re going to end up with a closure of routes, particularly in regional Australia, and in some of those beautiful tourism destinations we have, that are not as financially viable to market. And you’re going to see airfares go up. I think the Government’s kidding itself if it thinks private equity is not going to strip Virgin back to the bones, we’re going to see only one strong aviation player, and fares will go up. It’s been a real failure of leadership from Scott Morrison.
TRIOLI: Good to talk to you, briefly. Catherine King is the Shadow Minister for Infrastructure, Transport and Regional Development.