Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Tuesday, 21 April 2020
KARL STEFANOVIC: The fate of the Virgin Australia is up in the air this morning with the country's second largest airline set to go into voluntary administration after failing to secure a Government lifeline.
ALISON LANGDON: The move threatening the jobs of 10,000 hardworking staff and throwing our entire airline industry into turmoil. We are joined now by the Finance Minister Mathias Cormann. Minister, thanks for your time this morning. Why won't you save Virgin?
MATHIAS CORMANN: We have provided substantial support to the economy, to businesses around Australia and indeed to the aviation sector, but we have done so on an economy-wide and sector-wide basis. In relation to Virgin, they have faced some serious challenges prior to this coronavirus and, indeed, this coronavirus crisis has brought those to a head. There is a process now to ensure that Virgin has the best possible chance at a viable and profitable future.
KARL STEFANOVIC: It looks like the people are manoeuvring around the edges here and private equity as well are manoeuvring around the edges. What do you think that deal is going to look like and when do you think we will see it?
MATHIAS CORMANN: We want to see two viable national airlines into the future. We do believe that the solution should be private sector and market-led. If there is an administrator in place as of today, then the administrator will have the opportunity to test the markets to see what interest there is from potential buyers, or from potential future shareholders who might be part of recapitalising, restructuring, refocusing the business on its well performing parts.
ALISON LANGDON: Okay. Say the administrator comes in and some of that debt is likely to be cleared, would the Government then consider stepping in?
MATHIAS CORMANN: We will continue to engage with the process. I am not going to pre-empt what judgements may be required along the way, except to say for any business that is in difficulty, the first responsibility to bail them out is with its shareholders and Virgin has very substantial shareholders. Singapore Airlines and Etihad both own 20 per cent. About 40 per cent is owned by two major Chinese investors. If those shareholders are not prepared to step in, then the next point of call is to test the market to see whether anybody else wants to step forward and do what needs to be done in order to ensure that there is a viable well performing business on the other side of this process. That is the process we are now about to go into and we are hopeful that this will lead to a successful conclusion.
KARL STEFANOVIC: If this company's billionaire foreign owners don't step in, you’d have to look at it and go why would the Australian Federal Government step in?
MATHIAS CORMANN: This is the question. We have provided support, including to the aviation sector. Virgin is eligible for the JobKeeper program, a $130 billion program. We have provided financial support to keep certain domestic and international routes going and we have provided fee relief. But, the Government should not be making it harder for a private sector solution to help ensure that an individual business has a viable future. We take an approach that is economy-wide, that is sector- wide. We are happy to engage with the process from here, but the first responsibility here is for the owners and the next step is to test market to see whether there is any appetite by others to step up.
KARL STEFANOVIC: Do you buy the argument that if these people, 10,000 people, are going to receiving benefits from the Government, then you may as well step into that value?
MATHIAS CORMANN: We want to see a continuation of a viable business here that continues to employ many, many thousands of Australians. We don't want to end up owning an airline, in a way which makes it more difficult for the airline to be successful over the medium and long term… interrupted
KARL STEFANOVIC: You also don't want to lose your dough.
MATHIAS CORMANN: You are getting a bit ahead of yourself now. There is a process now that probably gives Virgin the best possible chance to emerge as a viable and profitable airline on the other side of all this when we return back to business as usual.
ALISON LANGDON: Did you watch Malcolm Turnbull's interview last night?
MATHIAS CORMANN: No, I didn't. I had other things to do.
ALISON LANGDON: Were you aware that we said you betrayed him and that your betrayal was the most painful of all? What do you say to that?
MATHIAS CORMANN: Malcolm presented his version of history. It substantially differs from my clear recollection of events. I am just not going to get distracted by this. We are in the middle of a pandemic. We are dealing with the public health and economic consequences of all of this. That is what I am focused on. I wish Malcolm and his family all the very best for their future, very sincerely, but I am not going to get distracted by this sort of stuff.
KARL STEFANOVIC: I get what you are saying, but distraction is one thing. But also, he is quoting you as saying something here that I think that you need to respond to. He said you said the way that they operate is to basically bully and intimidate people as a technique of terrorism where you create enough mayhem, enough damage that the people in the middle say it has to come to an end. Did you say that?
MATHIAS CORMANN: As I say, he presented his version of history. It substantially differs from my clear recollection of events. I am just not going to go through a blow by blow engagement with this. It is completely unproductive. These events were dissected in some great detail two years ago. I have said everything that I could possibly say about these events, the reasons for my reasons for judgment at the time and obviously, these are now matters for others to judge. I am focused on the job at hand, which is what the Australian people expect us to do.
KARL STEFANOVIC: Is it fair to say that he really needles you?
MATHIAS CORMANN: I am just not focused on this. I am not going to get distracted by it.
ALISON LANGDON: Alright, good to see. Thank you for joining us this morning, we appreciate it.
MATHIAS CORMANN: Always good to talk to you.