Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
Date: Tuesday, 21 April 2020
QUESTION: Virgin Minister, we’ve seen concerns today that the airline could go into voluntary administration. Would there be any circumstance under which the Federal Government would consider providing extra funding to Virgin?
MATHIAS CORMANN: We have provided substantial fiscal support to the economy and to business, but we have done so on an economy-wide, sector-wide basis, including to the aviation sector. We have provided fee relief, they have access to the JobKeeper program and we are providing direct financial support to keep certain domestic and international routes going through this period. But in terms of any individual business that finds itself in difficulty, the first responsibility always lies with its owners, its shareholders. Virgin has very substantial shareholders. Singapore Airlines and Etihad both own twenty per cent. About forty per cent of Virgin is owned by two major Chinese investors. Richard Branson’s company owns about ten per cent. If those shareholders are not prepared to step in, then there is a process available to test the market to see whether any other private sector interest is prepared to step up and be part of a process of recapitalising the business, restructuring the business, refocusing the business on its performing bits. It would not be appropriate for the Government to get in the way of that process, because we would actually be standing in the way of a viable, profitable airline on the other side of this process. The process in front of us is a process that has every opportunity to lead to a viable airline on the other side. The Government certainly wants to see a continuation of two airlines into the future for the obvious public interest reason that competition in the aviation sector is important for us moving forward.
QUESTION: Is the real problem that there might not be a marketplace for one airline in the skies at the rate that we are going?
MATHIAS CORMANN: We have a more optimistic view of our economy on the other side of this coronavirus induced crisis. We do believe that there is a public interest in preserving two airlines on the other side. But we also believe that in terms of Virgin, as an individual business, the first responsibility to bail any business out is with its shareholders. The second step should be and has to be a testing of the market to see whether there is any other private sector interest to do what needs to be done in order to help make Virgin a successful business on the other side. We will engage through that process.
QUESTION: Is it likely on the market at the moment, we have seen the oil prices going negative. Now that should be a good thing for consumers, but are there any threats that you see in what we have seen overnight.
MATHIAS CORMANN: These are very challenging times. There is a whole range of unprecedented developments along the way. We will continue to assess and monitor and take advice in relation to these things and make judgements as appropriate. I cannot see this lasting over an extended period.
QUESTION: What do you say, you mentioned that this is a coronavirus induced crisis. What does Australia and the Australian economy look like on the other side?
MATHIAS CORMANN: We want to see a strong bounce back, a strong recovery on the other side. We do believe that we will see a strong bounce back and a strong recovery on the other side… interrupted
QUESTION: On what basis is there a strong bounce back though?
MATHIAS CORMANN: There are specific reasons why the economy is where it is at right now. We had to make decisions for public health reasons to close certain businesses down effectively, to restrict large sections of the economy in the context of social distancing and other requirements designed to save lives. That at some point will be eased. At some point will come to an end. Beyond that the Government will have a Budget, we will deliver a Budget in early October. In that Budget we will be presenting our economic plan to maximise the strength of the bounce back on the other side. It will involve initiatives to encourage businesses to invest and hire more Australians. Once we are on the other side of this health crisis, there will be an opportunity for the economy to return to normal. The fundamentals in our economy were sound as we went into this crisis. We believe the fundamentals in the Australian economy will be sound on the other side.
QUESTION: But are you concerned that each day that this goes, the more permanent some of this damage will be, and that the sooner we can get out of lockdown, where there are lives on both sides of the ledger aren’t there, this is a difficult balancing act.
MATHIAS CORMANN: It is a difficult balancing act. We constantly assess the advice. In the end, we have made judgements to protect lives by slowing and hopefully stopping the spread of the virus. Yes we would love to be able to ease restrictions sooner rather than later. But in the end, we can only do so based on medical advice that it is safe to do so.