Senator the Hon Mathias Cormann

Minister for Finance

18 September 2013 to 30 October 2020

ABC TV - News Breakfast

Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia

Virgin bailout

LISA MILLAR: Let's return now to the top story with Virgin Airlines likely to go into voluntary administration after the Federal Government rebuffed the airline's plea for a bailout. Finance Minister Mathias Cormann joins us now from Canberra. Good morning, Minister. Welcome to Breakfast.

MATHIAS CORMANN: Good morning. Good to be here.

LISA MILLAR: I can imagine you wouldn't want to see any companies going into administration during this period in Australia?

MATHIAS CORMANN: We have provided substantial support to the economy, to businesses to remain in business, and to Australians to ensure that Australians working for those businesses can remain in jobs. Of course we would like businesses to continue to perform well during this period, but Virgin faced a series of challenges prior to the coronavirus crisis and this pandemic, with the effects on the economy and in particular on the aviation industry and travel, has brought things to a head.

LISA MILLAR: What would Australia look like with one airline?

MATHIAS CORMANN: We are committed to two airlines moving forward. We do believe that there continues to be the opportunity to have two airlines into the future. Voluntary administration offers the opportunity to restructure and refocus on performing parts of the business. It offers the opportunity for recapitalisation. It offers the opportunity for private sector interests to come forward and buy the business, or assist with the recapitalisation of the business. There is a lot of opportunity from here on in to ensure that there is a viable second airline in Australia moving forward.

LISA MILLAR: Richard Branson has sent a letter to staff overnight, Minister, and in it he said that if Virgin Australia disappears, Qantas would effectively have a monopoly of the Australian sky, and in quotes, “We all know what that would lead to”. I'm assuming he's talking about higher prices and Australians have seen that before. What's your take on Richard Branson's comments?

MATHIAS CORMANN: This is an anxious time for the staff at Virgin. The first thing we would want to say is that during this period of administration they continue to be eligible for the JobKeeper payment, which the Federal Government has put in place. In relation to competition, of course we support the important need for competition in our aviation sector… interrupted

LISA MILLAR: But what does the support look like then? If you're saying that you want two airlines but you're not going to help to bail out Virgin? How do you support it? How does the commitment and the support reveal itself?

MATHIAS CORMANN: The first responsibility to bail out a company, to bail out a business, lies with its owners. Virgin has very substantial shareholders. Singapore Airlines and Etihad Airlines own 20 per cent each. There is 40 per cent or thereabouts that is owned by substantial Chinese investors. The first responsibility is with the existing shareholders. If the existing shareholders are not prepared to step up, there is the opportunity for a market-led, private sector-led initiative to take over the business, or restructure the business or take over parts of the business that can continue to perform well into the future and that is the process that will now take place.

LISA MILLAR: What if the first thing that the new owners do is pull out of routes like Mount Isa and Albury, Cairns? That's not good either.

MATHIAS CORMANN: I think we are getting way ahead of ourselves now. We do want to see two airlines in Australia and we will work, for example, with the ACCC to ensure that a second airline will have the opportunity to be competitive in an Australian context. These are all issues to be worked through over the next few days and weeks. There is the opportunity to ensure that this comes to a successful conclusion, but the Government stepping in would actually make it harder to find a sustainable private sector-led, market-led solution. The Government is not in the business of owning an airline, but we do want to see two airlines continue and we believe that the opportunity is there out of the administration process for that to happen.

LISA MILLAR: Mathias Cormann, can I ask you about the interview last night with Malcolm Turnbull on 730. Why did you tell the former prime minister to give in to the terrorists?

MATHIAS CORMANN: Let me just say, Malcolm's book is his version of history, it substantially differs from my clear recollection of events, but I am not going to get distracted by all of this. I am not going to get into it. We are dealing with a major pandemic, with the public health and economic consequences of a major pandemic. I wish Malcolm very well for the future. I wish his family very well for the future, but I am just not going to get into a running commentary on his version of history.

LISA MILLAR: So you disagree with it?

MATHIAS CORMANN: I am just not going to get into this.

LISA MILLAR: Thank you very much for your time.

MATHIAS CORMANN: Always good to talk to you.