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Government resists Virgin Australia bailout

Published: (Updated: ) in Australian News by .

Deputy Prime Minister Michael McCormack has welcomed a consortium reportedly looking at buying Virgin Australia.

Deputy Prime Minister Michael McCormack has welcomed a consortium reportedly looking at buying Virgin Australia.

It comes after the government announced it would underwrite flights from Virgin and Qantas to the tune of $165 million.

"If you read reports today, that there are some people who are interested in capitalising Virgin and we hope that comes off," Mr McCormack said.

"We want to see a market resolution and a market solution for Virgin.

"Let's see what happens."

Virgin Australia jets sit idly.

Mr McCormack, also the Transport Minister, was optimistic that Virgin Australia could recover after the pandemic.

"There is no reason that they cannot come out of COVID-19 and get more assets," he said.

"I want to see an airline solution, I want to see both airlines come through COVID-19."

US private equity firm Bain Capital is considering taking an equity stake in Virgin Australia, the Australian Financial Review reported earlier today.

Defeated presidential contender Mitt Romney in Cedar Rapids, Iowa. (AAP)

Founded by former presidential candidate Mitt Romney, Bain Capital has a reputation for buying struggling companies for cheap and gutting them.

The government's $165m injection will allow Virgin to continue flights between major cities and regional centres, but the airline remains in dire financial straits.

The underwritten flights will last for eight weeks, with the government to consider further help later.

Passengers on previously cancelled flights are urged to re-book online or to contact their travel agents.

From today, Virgin Australia will operate 64 return services each week, connecting capital cities and regional centres like Rockhampton, Townsville, Broome and Port Hedland.

Virgin is seeking $1.4b as a bailout to stay alive, but thus far the government is holding back.

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"We want to see Virgin continue, we want to see two airlines in the domestic market, but we're not in the business of owning an airline," Treasurer Josh Frydenberg said.

Labor's shadow transport minister Catherine King today called on the government to provide a lifeline to Virgin Australia.

"Instead of dreaming that the market will solve a problem created by necessary travel restrictions imposed by governments, Scott Morrison must extend an urgent lifeline to Virgin Australia to support the airline and its workforce through this crisis," she said in a statement.

"A private equity takeover of Virgin would likely see thousands of workers lose their jobs and provides no guarantee of ongoing access to affordable flights for the travelling public."

Trading on Virgin Australia Holdings was halted by the ASX on Tuesday, and again on Thursday.

Before the coronavirus pandemic, Virgin Australia employed about 10,000 people.

The company is largely owned by overseas interests like Etihad Airways, Singapore Airways and Chinese conglomerates Nanshan Group and HNA Group.

Source: 9News https://www.9news.com.au/national/virgin-australia-bailout-consortium-bain-capital-private-equity-michael-mccormack/38861099-20c1-4f8b-9d43-50a29444c808

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