TRANSCRIPT: 2GB AFTERNOONS WITH DEBORAH KNIGHT, 21 April 2020
E&OE
Subjects: Virgin Australia, coronavirus;
DEBORAH KNIGHT
We spoke with aviation expert, Peter Harbison, in the first hour of the show for his analysis of Virgin Australia's decision to now enter voluntary administration and he was quite optimistic. I was quite surprised, actually. He was very upbeat about it saying basically it gives the airline an opportunity for a fresh start and Virgin, as you know, they've been asking the Federal Government for this loan, a $1.4 billion loan, to help them get through COVID-19. That was refused. And not everyone in the Government was happy about that decision, either. Nationals’ MP David Gillespie says, "I'm disappointed that we weren't able to support their request for help."
On the line for us now, Deputy PM, Minister for Transport, Michael McCormack. Deputy PM, thanks for jumping on.
MICHAEL MCCORMACK
That's a pleasure, Deb.
DEBORAH KNIGHT
So many people in regional communities, in rural Australia, they rely on Virgin, in particular, for their transport, for their tourism dollars and some of them are telling us they're not happy with the decision by the Government to refuse this $1.4 billion loan. Your own MP David Gillespie among them. You can understand why, can't you?
MICHAEL MCCORMACK
Well, Virgin Australia itself has said, Deb, that it's entering voluntary administration to recapitalise the business and give it the best possible chance to emerge in a stronger financial position on the other side of the COVID-19 crisis.
DEBORAH KNIGHT
But they wanted that $1.4 billion as the initial request, it was denied.
MICHAEL MCCORMACK
Well, the fact is we don't want to tip taxpayers' money, into the very deep pockets of foreign entities such as Sir Richard Branson who, honestly, could mortgage his Caribbean island and help out but he declined to do so. The Chinese consortia, the Etihad Airlines and Singapore Airlines, they all have a huge stake, a huge stake in Virgin. They didn't see fit to do that and the Federal Government, we're using taxpayer dollars. We've already put $1.28 billion, in fact more, on the table and many of those measures that we've put by way of waiving Government charges, supporting those regional routes, by JobKeeper in itself, $130 billion and the 10,000 employees can be beneficiaries of that for Virgin, even through the voluntary administration process. The repatriation flights to bring Australians home from overseas ports and indeed, last week's announcement of $165 million to key domestic operations over coming months, all of those things have helped Virgin and will continue to do so, even during voluntary administration.
DEBORAH KNIGHT
We did see REX announce today they will continue servicing regional airports, which is an outcome you must be pleased with but REX was also offered a lifeline, why them not Virgin?
MICHAEL MCCORMACK
All regional airlines were able to take part in that $100 million and look, back on the 18th of March, we announced the aviation industry assistance package. Now Virgin were able to take part in that and did. Tens of millions of dollars, the CEO Paul Scurrah told me that they were able to get from that because we waived excise fees on fuel, we lifted Airservices Australia fees and screening fees so that put tens of millions of dollars on Virgin's balance sheet.
So that was good and 10 days later there was the $300 million for support for regional air routes, including $100 million in underwriting and that assisted all regional airline companies based in country areas and of course, we need a strong regional aviation sector because they don't have the connectivity that others may well take for granted and that's why we stumped up for them first. It was so important to get those medical personnel, those medical supplies, indeed medicine to those country areas, many of which are remote, I have to say and servicing very much outback communities and it was so important because they were cut off from the rest of the world.
DEBORAH KNIGHT
So in terms of the future of Virgin, obviously it's a foreign-owned company but they're Aussie jobs here, 16,000 of them. What do you tell the Virgin workers, because a lot of them are concerned that if it does emerge as a leaner airline, that their jobs could be on the line?
MICHAEL MCCORMACK
Look, I'd like to see each and every one of those 10,000 employees of Virgin and the 6,000 suppliers keep their jobs and, you know, it's a difficult time for them, I understand that. I saw the emotion on the faces of the baggage handlers, the cabin crew when they stood up today. I understand that. I know what it's like to lose a job. It's tough, it's hard and you do wonder where you're going to go in the future. You do think that your whole world has crashed around you.
But let me tell you, for Virgin employees at the moment, this is the best way forward. Their own company has acknowledged that. It is the best way forward to us having two airlines coming out of this, commercially viable, major airlines coming out of this. It's not liquidation, it's a far cry from what happened to Ansett back in September 2001. I remember it well. And what we want is very much a strong and competitive aviation sector. Today's announcement by Virgin enabled that.
We've also put in, I have to say, Nicholas Moore, former Macquarie Group CEO, to lead engagement with the administrator Deloitte and I know when they run the ruler over the books, we will come out the other side. I've got every confidence in what's going to happen from here and it's going to enable us potentially to have a viable, commercial two-airline sector coming out of COVID-19 and let's hope that's it.
DEBORAH KNIGHT
And when they do run the ruler over the books and they look at the air routes and they look at some of them that haven't been profitable, some of them that service a lot of regional and rural areas, what happens then?
MICHAEL MCCORMACK
Well, sure, but they will also see there was $5 billion of debt that was saddled with Virgin coming into COVID-19 and look, COVID-19's been very hard on that whole aviation sector. It's not just Virgin, it's Qantas as well. They're suffering. It's REX, its regional airlines, it's even, dare I say, those providing pilot training.
DEBORAH KNIGHT
So what happens to those towns, to those communities that perhaps may not be serviced by an airline?
MICHAEL MCCORMACK
Well, that's being a little bit hypothetical. Let's see what happens.
DEBORAH KNIGHT
Sure, but it's a possibility, isn't it?
MICHAEL MCCORMACK
Well … and it's also a possibility that Virgin could have, prior to today, not been there at all. So better to go down this process to make sure we come out the other side with the best possible chance of having a strong, commercially viable two-airline sector than just have one and not give this any hope at all.
DEBORAH KNIGHT
And you are, on another topic too, Deputy PM, during a very tumultuous time for your party with Malcolm Turnbull as leader, the book's out, all sorts of ructions as a result of that. Are you going to be reading it?
MICHAEL MCCORMACK
I haven't read it, Deb.
DEBORAH KNIGHT
Are you going to be reading it?
MICHAEL MCCORMACK
Oh, look, maybe when I get time. Maybe somebody will give it to me for Christmas.
DEBORAH KNIGHT
As long as they pay for it.
MICHAEL MCCORMACK
Well, it will probably be a family member and they'll certainly pay for it. Look, we live in a free world and Malcolm has put his views on paper, you know, good luck to Malcolm. I wish him all the best. I got on well with Malcolm and we live in a free world, everybody's entitled to their views. I know that our Government just at the moment is concentrating on the biggest hit to our health and our economy it's ever had. We're dealing with it, we've had 71 deaths, those are tragic. For those families involved our condolences again go out to them but you compare what Australia's doing and the outcomes that they are experiencing overseas and we're doing very well considering what has happened in the international experience and that's the important thing.
DEBORAH KNIGHT
That is definitely the case. It's very encouraging to see those figures, the low case numbers, that's for sure. Michael, thanks so much for jumping on.
MICHAEL MCCORMACK
Any time at all, Deb. Thank you.
DEBORAH KNIGHT
Michael McCormack there, the Deputy Prime Minister and Transport Minister.