Question

Virgin Airlines (Australia) is struggling with a higher level of debt and revenue losses due to Covid-19 lockdown and ground of flights.

It owes Australian $450mn to its employees in Australia.

In this scenario, do you think, lifeline and rescue package from the government will save the struggling airline?

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Do you think that the lifeline and rescue package by the government will save Virgin Australia?

Answer 1

On 9th April, Australian Government passed Government's wage subsidy scheme for A$ 130 Billion which was to be issued to more than 6 million eligible workers. A payment of A$ 1500 was to be paid fortnightly for 6 months. The amount is to be administered by ATO to employers and then to employees. This would definetly decrease the burden of the company as the fixed cost would be reduced. It would significantly reduce its costs for next 6 months. The higher level of debt may not be favourable for the company but the employees would be able to benifit thus reducing employee salaries for the companies.