Qantas says the support should be proportional to the size of each business.
Qantas’ revenue is three-times higher than Virgin’s, meaning it would want a $4.2 billion loan, the source said.
The demand complicates the government’s decision of whether or not to help Virgin because it significantly increases the amount it will have to deliver in an industry-wide package.
Last week, Qantas raised $1 billion in fresh debt from the market in a loan secured against aircraft it owns to help it through the crisis. The company has $3.5 billion in other assets it can use to raise more cash.
Qantas boss Alan Joyce has been lobbying against government support for Virgin, saying last week that government should not help companies that “have been badly managed for 10 years” and that helping Virgin and not Qantas would be “completely unfair” on his airline.
Mr Joyce has also highlighted that Virgin is mostly foreign owned, with 90 per cent of shares held by Singapore Airlines, Etihad Airways, Chinese groups HNA and Nanshan, and Richard Branson’s Virgin Group.
On Tuesday morning, it was revealed Virgin had asked for a government loan which could be converted to an ownership stake in Australia’s second largest airline if not repaid in two to three years.
The Australian newspaper first reported the request on Tuesday and The Age and The Sydney Morning Herald later confirmed the details.
Virgin, which already has $5 billion in debt, has a market value of $675 million, meaning the government could become a major owner if Virgin cannot repay the loan and the debt is swapped for an equity stake.
A Virgin spokesman would not provide further details on the request but said it would be “necessary for the industry if this crisis continues indefinitely, to protect jobs and ensure Australia retains a strong, competitive aviation and tourism sector once this crisis is over.”
The federal government has already announced a $715 million support package for the aviation industry, and over the weekend announced close to $300 million more in assistance for regional airlines.
Qantas and Virgin have between them stood-down around 28,000 pilots, cabin crew and other workers in an attempt to cut costs while most of their aircraft are grounded.
Credit Suisse analysts estimated last week that with virtually no revenue coming in, Virgin could burn through most of its $900 million cash balance by June and would require additional liquidity “to be comfortable about surviving the current COVID-19 crisis”.
Analysts say the foreign airline groups that own most of Virgin are facing their own financial challenges due to the coronavirus and are therefore unlikely to support it with more funding.
Business reporter at The Age and Sydney Morning Herald.