Virgin locks in $200m boost from Queensland Govt
The state government's investment includes a small slice of equity in the rescued and rebooted airline.
By David Flynn, October 6 2020
Queensland has made good on its pledge to tip $200 million into the coffers of Virgin Australia in return for the airline keeping Brisbane as its base, and will also become a shareholder under new owners Bain Capital.
The state-owned Queensland Investment Corporation said the $200 million – first flagged as Project Maroon in the weeks following Virgin's collapse into administration with almost $7 billion of debt – would largely encompass loans to provide working capital, along with a range of financial incentives and subsidies.
This also includes an equity investment of around $20 million for what's suggested to be a 2% stake in Virgin Australia, and requires Virgin to keep its headquarters in Brisbane for the next 10 years.
Virgin has already abandoned its long-held Virgin Village hub at Bowen Hills and moved into five floors of more centrally-located Southpoint building at Southbank, which also serves as Flight Centre HQ.
US-based Bain Capital is on track to officially take ownership of the airline by the end of this month, largely by assuming outstanding debt in a $3.5 billion 'rescue and reboot' play which sees existing shareholders – including the likes of Singapore Airlines, Etihad Airways and Sir Richard Branson's Virgin Group – bundled out.
Queensland Treasurer Cameron Dick said "the return to the Queensland taxpayer on that ($200m) investment will be about 7% over the duration of that agreement."
"This airline was going into administration and may very well have collapsed," Dick added. "We stepped up to the plate and supported this airline."
"Without competition, monopoly pricing would have crushed regional Queensland and that’s what we wanted to avoid at all costs. We saw that when Ansett collapsed... the price was paid by regional Queenslanders."
Also read: Virgin Australia's restart fleet, routes taking shape
David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.
Qantas - Qantas Frequent Flyer
07 Aug 2013
Total posts 248
With the Queensland government a minor shareholder in VA - I see potential for the 2 to work together to open up new routes when time is right / partner on boosting Queensland tourism which could be a big boost to VAs recovery.
Qantas - Qantas Frequent Flyer
21 Jan 2014
Total posts 319
So governments are getting back into the airline business, if Qld are happy to pay $200 million into this debacle of a business imagine what QF will be asking for their head office and operations.
Qantas - Qantas Frequent Flyer
07 Aug 2013
Total posts 248
Sorta why Qantas is hyping up moving to different states...i think it would be a massive cost for them to move HQ and relocate management and staff packages to suit which is a no go in this current environment when they are financially bleeding themselves. It's all a ploy for them to start a bidding war would be interesting to see if another state government will pay to have them - the difference between QF and VA though was that it became political when federal (liberal) government wouldn't support VA buyout but then state government (Labour) pays a whopping $200m and supports them. Albanese said he would have supported (although probs just talk from opposition).
Qantas - Qantas Frequent Flyer
07 Aug 2013
Total posts 248
I don't see NSW (being liberal) paying to keep Qantas and as for Vic after what they went through probs don't have cash to spend when they need to boost their economy with infrastructure projects, housing etc. Meanwhile QF will stay in Mascot..they ain't gonna pay to move themselves.
Qantas
19 Apr 2012
Total posts 1429
Dan Gladys will love a corporate headquarters and/or associated infrastructure at western Sydney, so QF may get a very generous land deal to move various stuff there.
Qantas - Qantas Frequent Flyer
07 Aug 2013
Total posts 248
True but can you imagine Joyce and comuting to Western Sydney rather then mascot...it's just a game QF is playing probably Hopi g NSW will pay to keep them in the state regardless of Western Sydney Iroort or not. When most of Qantas flights operate out of Sydney Intl airport it suits to be close by.
Qantas
19 Apr 2012
Total posts 1429
Dan I suspect it will be associated infrastructure (rather than head office) as space is tight a Sydney Airport and they can consolidate maintenance etc in one place. Ana from Qld won't like it though nor will Dan. We shall see!!!
09 Sep 2020
Total posts 13
No drama with this, now I wish that Mr Scurrah would be upfront with the resumption of Long Haul flights time wise, 2 year, 3 year or longer as the longer Virgin take to do so will leave QANTAS ahead of the game. 2022, 2024 , or late 2021. Please Virgin give us look to date and not the "we look forward to returning to Long Haul travel" without giving hope to a loyal group of travellers
Hi Guest, join in the discussion on Virgin locks in $200m boost from Queensland Govt