The government of Queensland has formally submitted a bid to invest in Australia's second-largest airline, Virgin Australia, to help its restructuring and eventual sale. The airline, which is based on Queensland, filed for voluntary administration last month following its failed attempt to get a bailout package from the government.
Following its announcement that it was looking for a potential buyer or investors willing to help in its restructuring, Virgin Australia revealed that it had received a number of inquiries from interested parties. On Wednesday, Queensland officials confirmed that they had submitted their own bid to invest in the airline, which will involve a direct equity stake, a guarantee, a loan, or some other form of financial agreement.
Queensland does have a vested interest in helping Virgin Australia get back on its feet amid the global travel demand slump, given that the company is based in the state. Virgin Australia is estimated to have a workforce of around 10,000 employees, most of whom are working in its headquarters in Brisbane. The company also has around 6,000 other workers, which it indirectly employs.
The state's tourism industry has been heavily hit by the disruptions caused by the coronavirus pandemic. Travel to its iconic destinations such as the Whitsunday Islands and the Great Barrier Reef has dipped sharply, causing thousands of lost income and jobs. Queensland can ill-afford to see Virgin Australia collapse as it already has the second-highest unemployment rate among all other states and territories in Australia.
Queensland Treasurer, Cameron Dick, mentioned in a statement on Wednesday that retaining and creating new jobs is their number one priority, particularly during these trying times as the economy slowly recovers from the effects of the coronavirus pandemic. He added that investing in Virgin Australia is a big opportunity for the state to retain and create jobs. Apart from retaining the company's head office and crew staff, new jobs in the repairs and maintenance sector, as well as, the state's tourism sector can be created.
Prior to filing for administration, Virgin Australia and its founder Richard Branson had attempted to secure funding from the Australian government to prevent the company from collapsing. Branson, who had already invested $250 million into Virgin Group, did everything he could to secure additional funding to support his companies during the pandemic.
Unfortunately, federal authorities in Australia had declined to intervene and stated that the company should tap into the private sector for help. Australian officials later reasoned that the country was not in the business of owning airlines.
