Virgin’s $200m from state

Qld stumps up cash to keep airline base

THE Queensland government has confirmed it will invest millions of dollars in Virgin Australia to ensure the embattled airline remains in the state for at least the next decade.

At a Boeing testing facility in Brisbane’s west on Monday, Premier Annastacia Palaszczuk confirmed the Queensland Investment Corporation (QIC) would inject $200m as part of Virgin’s restructuring plan set up by new owners Bain Capital.

The deal, which includes an equity investment and debt loans provided by the QIC to Virgin, is part of an agreement to keep the company’s headquarters in Brisbane for the next 10 years.

Queensland Treasurer Cameron Dick said: “QIC will sign an agreement with Bain (Capital) today to finalise our commitment to securing Virgin in Queensland.”

Mr Dick said the deal did not safeguard future jobs at the major airline but would ensure two airlines would continue to operate across the country.

“We don’t run the airline,” Mr Dick said.

“This airline was going into administration and may very well have collapsed. We stepped up to the plate and supported this airline.”

Approximately 10 per cent of the funding will be through a capital investment, with the remainder of support facilitated by debt loans.

Mr Dick also noted the government’s stake in Virgin would provide a 7 per cent return on investment.

“Without competition, monopoly pricing would have crushed regional Queensland and that’s what we wanted to avoid at all costs, Mr Dick said.

“We saw that when Ansett collapsed … the price was paid by regional Queenslanders.”

Bain Capital is a Us-based private equity firm that won the bid to take over Virgin Australia after it entered voluntary administration after the coronavirus pandemic grounded the aviation industry.

At the beginning of the pandemic, Virgin had a debt position of $6.8bn.

Bain Capital is seeking to implement a significant cost cutting plan that has seen large staff cuts and a significant reduction in operating routes.