Virgin Australia CEO lambasts Qantas
18th Feb 2014
The feisty CEO of Virgin Australia, John Borghetti, has lambasted Qantas after hearing from the grapevine that the government will come to its rescue to prevent the flag carrier from going bankrupt by shoring up its debt, thus giving the flag carrier a new lease in life and ensuring its continued dominance in the domestic market with its current 65% share.
John Borghetti was visibly not amused by what he heard and accused Qantas for playing dirty in its game to prevent its competitors from gaining advantage in its expense by resorting to a strategy that would undermine fair business practices.
The recent proposal by the government to extend its assistance to Qantas is similar to the support it extended to the banking sector during the global financial crises wherein the Federal Government was made as the flag carrier's debt underwriter.
The showing of government's support to the airline will definitely lower the cost of future borrowings and would potentially allow re-financing its existing debt. Furthermore, it will enable the financial market to view the airline's risk factor as comparatively low making it attractive to investors.
The CEO said that the Australian government should not play favoritism by only supporting the flag carrier. The same assistance should also be extended to all other Australian airlines including Virgin Australia. He further said that his airline would gladly take the opportunity should the Federal Government offer debt guarantee to them.
Borghetti, though, supports changes to the Qantas Sale Act allowing bigger shares of foreign ownership in the flag carrier while moving more of its aircraft maintenance elsewhere outside the country.
He noted that the Qantas Sale Act is flawed and antiquated and should be scrapped altogether. Therefore if Qantas Sale Act is wrong, it's also wrong to provide debt guarantee to the airline. A wrong act definitely can't correct another wrong act, he ended.