Virgin Australia CEO John Borghetti has lashed out at Qantas over indications that the Flying Kangaroo could receive government support to shore up its debt, accusing the airline of "trying to get a free ride" to hold their 65% domestic market share and "knock out" competition in Australian skies.
“This is all about Qantas trying to get a free ride, there is no doubt about that, in order to continue their 65 per cent line in the sand strategy which is determined to knock out the competition domestically in this country,” Borghetti said on the ABC Radio National network this morning.
The proposed government backing would be similar to the guarantee extended to Australia’s banking sector during the global financial crises and establish the Federal Government as an underwriter for Qantas' debt.
Not only would this lower the cost of future borrowings by the airline and potentially allow the refinancing of existing debt, but the show of 'sovereign support' would lower Qantas’ risk factor in the eyes of the financial market and potentially help it bounce back up from ‘junk’ status.
Borghetti maintains that any government assistance to Qantas should also be available to Virgin Australian and other Australian airlines such as regional carrier Rex – and should the Federal Government give Qantas a debt guarantee, he would be asking for the same support "within 24 hours."
However, Borghetti said he supported changes to the Qantas Sale Act which would allow Qantas to accept higher levels of foreign ownership and move more of its aircraft maintenance offshore.
“The Qantas Sale Act is outdated and it should be removed and there is no doubt about that" Borghetti said, but cautioned that "two wrongs don't make a right."
"Just because the Qantas Sale Act is wrong, making another wrong by providing a debt guarantee does not make the situation right."
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