SKY NEWS FIRST EDITION
FRIDAY, 26 JUNE 2020
SUBJECTS: Virgin Australia; Qantas.
PETER STEFANOVIC, HOST: We’ve got some breaking news that’s just in, it relates to Virgin Airlines. Cyrus Capital Partners has withdrawn its bid for Virgin Australia. Joining me now Shadow Minister for Infrastructure, Transport and Regional Development Catherine King. Catherine, good morning to you. Thanks for joining us. So that basically means that Bain wins. What do you think?
CATHERINE KING: Well, I think that’s actually really alarming news. The fact that we’ve had Virgin go into administration, we’ve now only got one bidder, as well as some bondholders who came into the tender to some extent late in the piece to put an offer on the table for a raising of funds to keep the company in current hands. I think the administrators have got a really hard job on their hands now, and this is what we warned of all the way along. The Morrison Government said that they were going to let the market go on this, they were going to seek a market solution for Virgin and this is what’s happening. The market is in such turmoil at the moment. It’s a very difficult prospect purchasing an airline in the current context, and this is an airline that we need to get us out of this crisis. We need these two strong airlines, yet the Government’s been incredibly hands off when it comes to this administration. I think that’s really quite frankly alarming news. I think Cyrus was the preferred bidder for the trade unions and the workers, they thought they had a much better deal under them. I think it’s going to be up to the administrators now to make their way through all of this.
STEFANOVIC: But the Government to its credit, I mean, and a lot of people agree with this, is that why should the Australian taxpayer have to kick in so much money for a company that was so badly handled in the first place?
KING: Well, I don’t think anyone was criticizing that. I think it was true that Virgin entered this crisis in a much worse position than Qantas, but you’ve obviously seen Qantas under considerable pressure as well. But what we did see was a company that had restructured, was working its way through some of those problems. We then had bushfires, it lost a huge amount of its business through there, and then Coronavirus hit. So if the Government wants to stick with the principle that we have two major, strong, competitive airlines in this country, then it is going to have to intervene in some way because we are going to be terribly reliant on both of them to get us out of it. Our tourism sector, our regions, everybody’s going to need those airlines to actually make sure the country continues to grow economically when we get out of this crisis.
STEFANOVIC: Well, just onto Bain Capital, and this came from the Australian Licensed Aircraft Engineers Association’s Federal Secretary just a couple of days ago, he’d actually backed Cyrus Capital Partners in that Virgin bidding war because there had been concerns that Bain Capital wouldn’t keep most of the staff if it succeeded. Now, according to Bain Capital, it will honour the $450 million of entitlements that are owed to its workers. So are you satisfied with that?
KING: Well, again, it’s an independent administration process, but what I think is absolutely clear is that however this ends up, we are going to see job losses at Virgin and we are going to see regional routes lost as well and I think that’s an outcome that’s incredibly disappointing from the public’s point of view. I think that loss of routes, particularly in regional Queensland, will be absolutely devastating for tourism, and I think that’s what we’re going to see, a much scaled back Virgin. Our view is that the Government should have intervened to make sure that the company didn’t fall into administration. We said they could think about taking an equity stake, so the Australian taxpayer would actually have a stake in Virgin itself and then sell that off later when things get better, but the Government’s obviously decided to take a very hands off approach and this is the result. We will see substantial job losses at Virgin I have no doubt.
STEFANOVIC: Just onto Qantas, it was horrific kind of numbers that were talked about yesterday from Alan Joyce. 6,000 people, 20 per cent of its workforce was basically laid off. You know, that is tough news. It’s hard news and it’s a reminder of the of the serious situation we are in at the moment. But, Alan Joyce has got an airline to run and, you know, we had a former executive on the show earlier saying he didn’t really have a choice in that because Qantas needs to stay afloat, do you accept that?
KING: I certainly accept that the aviation industry is in incredibly tough times and it’s why we’ve been calling for months now for the Government to take a sector-wide approach to aviation, to understand the complexity, not just airlines, but also what’s happening at our airports as well as major economic and employment hubs for their region. It’s decided to take pretty hands-off and then piecemeal approach to aviation overall, and I think we’re seeing the results of that. One of the issues, of course, is we’ve had the administrators of Virgin and now the Qantas chief call for the extension of JobKeeper to create certainty for those industries. We’re heading into the end of the financial year, we’re seeing these businesses make decisions now about what’s going to happen for the next financial year. The Government’s sitting on a report of the JobKeeper review, I think there is absolutely no excuse now. If it’s going to extend JobKeeper to the aviation industry, well now would be a very good time to be telling people about it.
STEFANOVIC: Okay, Catherine King appreciate your time this morning. Thanks so much for joining us.
KING: Really good to talk to you Peter.