The Queensland government is aiming to buy a stake in Virgin Australia

The Queensland government is wanting to buy a stake in Virgin Australia Holdings Limited (ASX:VAH). Here's what you need to know…

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The future of embattled airline Virgin Australia Holdings Limited (ASX: VAH) is looking a little brighter this morning after the Queensland government threw it a lifeline.

What has happened?

Late on Wednesday Queensland Treasurer Cameron Dick revealed that the state-owned Queensland Investment Corporation (QIC) will make an official bid for a stake in the airline.

Virgin Australia is currently in voluntary administration after failing to find the funding required to see it through the coronavirus travel restrictions.

The survival of Virgin Australia is very important for the Queensland government given how many jobs the company provides in the state. Virgin Australia's headquarters are based in Brisbane.

In addition to this, the airline brings a lot of traffic into Brisbane Airport, which QIC owns a stake in.

Treasurer Dick commented: "We have an opportunity to retain not only head office and crew staff in Queensland, but also to grow jobs in the repairs, maintenance and overhaul sector and support both direct and indirect jobs in our tourism sector."

He also believes that saving Virgin Australia is imperative, as Australia needs another sustainable, national airline to compete with Qantas Airways Limited (ASX: QAN).

A "laughable" move.

Not everyone believes that this is a good move by the Queensland government.

Last night Home Affairs minister, Peter Dutton, criticised the plan.

He tweeted: "Premier Palaszczuk has almost bankrupted Queensland, and now in the middle of a crisis they want to buy an airline. It is laughable. She "leads" a government which is corrupt and chaotic."

What now?

Administrators are understood to be looking to conclude the sale process by next month.

But just because the QIC is bidding for a stake, doesn't necessarily mean it will succeed. There are a number of rumoured suitors looking over Virgin Australia.

However, Mr Dick appears optimistic. He said: "This is a competitive space, but Queensland is a serious contender and our discussions with the administrators have been making progress. Queensland is Australia's home of aviation and with all our competitive advantages, we fully intend to stay that way."

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Boys making faces and flexing.
Opinions

3 ASX 300 shares to buy and hold for the long run

I believe these stocks have loads of growth potential.

Read more »

Young girl drinking milk showing off muscles.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a great end to the trading week for ASX investors today.

Read more »

Hands reaching high for a trophy with a sunset in the background.
Record Highs

The ASX 200 Index is on its way to another all-time high today. Here's why

These blue chip stocks are driving the index towards a new record today...

Read more »

Group of friends trading stocks on their phones. symbolising the 3 most traded ASX 200 shares today
Share Market News

3 ASX mining stocks topping the most-traded list in October

Chinese stimulus news and company announcements likely contributed to the higher trading activity.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Share Gainers

3 ASX 200 stocks smashing the benchmark this week

These three ASX 200 stocks are leading the charge this week. Here’s how.

Read more »

Two people tired and resting after sports race.
Broker Notes

Fundie rates 2 ASX 200 stocks in short-term pain but with long-term gain potential

Blackwattle Investment Partners sees these 2 ASX 200 stocks as worthy of a buy and hold strategy.

Read more »

A young woman holding her phone smiles broadly and looks excited, after receiving good news.
Share Gainers

Why A2 Milk, EOS, GQG, and Mineral Resources shares are racing higher today

These shares are ending the week strongly. But why?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Megaport, Pilbara Minerals, Vysarn, and WiseTech shares are falling today

These shares are ending the week in the red. But why?

Read more »