NSW has engaged in a bidding war in an attempt to entice Virgin Australia south from Queensland even as it was reported the airline was heading into voluntary administration.

Analysts say the federal government will have to ensure Qantas doesn’t exploit any market monopoly left by Virgin’s potential demise as investors wait to swoop.

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Virgin Australia declined to comment on media reports on Monday evening that it will file for voluntary administration due to crippling debts exacerbated by the coronavirus lockdowns.

At least 10,000 jobs would be at stake if the airline folds.

Virgin is carrying about $5 billion in debt and had sought federal help to keep operating but the Morrison government rejected a $1.4 billion bailout.

“They have some very big shareholders with deep pockets,” Treasurer Josh Frydenberg said on Monday.

Grounded Virgin Australia aircraft are seen parked at Brisbane Airport in Brisbane, Tuesday, April 7, 2020. Brisbane Airport Corporation (BAC) is working with airlines by accommodating up to 100 grounded aircraft free of charge in response to government-mandated travel restrictions that have grounded a significant proportion of Australia's airline fleet because of the Coronavirus (COVID-19). (AAP Image/Darren England) NO ARCHIVING Credit: DARREN ENGLAND / AAPIMAGE

Virgin Australia is 90 per cent foreign-owned, with Singapore Airlines, Etihad Airways and Chinese conglomerates HNA Group and Hanshan owning 80 per cent between them, while Richard Branson’s Virgin Group still owns 10 per cent.

‘Terrifying moment’

Transport Workers’ Union national secretary Michael Kaine says it is a “terrifying moment for thousands of Virgin workers”.

“There is still time for the federal government to work on an investment plan to get through this period of crisis and taxpayers will get a double benefit,” Mr Kaine said in a statement on Monday.

“The government will retain a competitive aviation market and they will get a return on their equity stake.”

The TWU says a crisis roundtable was held on Friday with Virgin chief executive Paul Scurrah and trade unions representing airport workers.

The meeting “heard a call for the federal government to take an equity stake in return for bailing out airlines,” the union said.

Virgin Australia employee Tony Smith (2nd right) speaks to the media during a press conference at Melbourne Airport in Melbourne, Monday, April 20, 2020. Credit: JAMES ROSS / AAPIMAGE

Independent analyst Brendan Sobie from Sobie Aviation says it’s crucial to maintain competition in the Australian market.

“That can be achieved through several different measures, it doesn’t necessarily have to be achieved by a federal or state government taking over the airline,” he said on Monday.

“(Governments) just have to be supportive of whoever comes in, whoever the new investor is, and put in place the right policies and the right support to make sure that competition is maintained (by) whoever fills the void of Virgin Australia or whoever takes over Virgin Australia.”

Mr Sobie says if Virgin enters into administration or folds altogether the federal government may have to temporarily step in.

“Australia has an open market but in an extraordinary situation, they could consider doing something to make sure ... if there’s a monopoly on some routes Qantas doesn’t abuse that,” the analyst said.

“They could put in something like a fare cap.”

File image of Virgin Australia plane. Credit: James D. Morgan / Getty Images

The Australian airline market is still attractive over the long term, particularly the domestic segment.

“That’s why you see all these investors waiting in the wings” to move on Virgin or finance a second airline, Mr Sobie said.

Queensland earlier on Monday declared it would “stop at nothing” to keep Virgin Australia headquartered in Brisbane.

NSW has announced it could offer a financial lifeline if the airline moved its base to the new Western Sydney Airport.

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“We’re thinking about what we can do to keep as many jobs going now, but also how we can actually start recovering the economy,” NSW Premier Gladys Berejiklian told reporters on Monday.

“If that means encouraging businesses to set up shop in NSW, if it means bringing jobs to our state, we will, of course, consider all those things.”

Stern rebuke

Queensland state development minister Cameron Dick issued a stern rebuke.

“NSW might want to bring a pea-shooter to the fight. We will bring a bazooka and we’re not afraid to use it,” he said.

“At a time when their jobs hang in the balance, the 1200 Queensland families who depend on those head office jobs should not have to face the threat of being forced to move to Sydney,” he said when urging a national response.