Virgin Australia is rapidly running out of cash, with aviation experts warning it has six months at most to find a solution before it collapses.

Key points: Ratings agency Fitch has now downgraded its outlook on Virgin

Ratings agency Fitch has now downgraded its outlook on Virgin CEO Paul Scurrah argues the company should be given a $1.4 billion government loan

CEO Paul Scurrah argues the company should be given a $1.4 billion government loan Senior Cabinet ministers and critics argue the Federal Government is not there to give any airline special treatment

The warning comes as the company's chief executive Paul Scurrah said the prospect of new airlines entering the Australian market to take the place of Virgin was unlikely, meaning Qantas would be left with a monopoly.

This week Virgin Australia called on the Morrison Government to bail it out to the tune of $1.4 billion — something that some senior cabinet ministers appear reluctant to do.

The question many, including Virgin's rival Qantas boss Alan Joyce, are asking is why should government bail out badly managed airlines?

Mr Scurrah told ABC News the airline was asking for "temporary support, not a handout".

"We want to work with government on how best to design this but it will be a repayable loan," he said.

A new airline entering to take the place of Virgin was unlikely, Mr Scurrah said, given many other international carriers were also in trouble because of the coronavirus-related travel bans.

"Airlines around the world are in distress and won't have the cash to invest in a start-up operation in Australia," he said.

"We will end up with a temporary monopoly if this is the case and that's not helpful.

"No business under this kind of pressure and with this level of uncertainty can survive indefinitely."

He said all Australians benefited from having two healthy competing airlines.

"The alternative — a possible monopoly — is not in the public interest as the community stands to lose choice, access and fairer prices," he said.

He pointed out that what Virgin was asking for was no different to many airlines around the world, although critics argue that Virgin is different in that it is majority foreign owned.

"The International Air Transport Association has estimated global revenue losses of $US252 billion, which shows the extent of the challenge faced by airlines," Mr Scurrah said.

"This is why you've already seen governments in the United States and New Zealand deliver loans or relief packages to their airlines."

Virgin Australia CEO Paul Scurrah is pleading for a $1.4 billion loan from the Federal Government. ( ABC News: John Gunn )

Ratings agency Fitch downgrades Virgin

Fitch has now downgraded its rating on Virgin Australia, and has given the airline until September before it runs out of cash and collapses.

Kelly Amato, a director at Fitch Ratings, told ABC News there were two main reasons for the ratings downgrade.

Firstly, Virgin Australia is 90 per cent owned by offshore airlines including Etihad Airways, Singapore Airlines, Nanshan Group, HNA Group, and Richard Branson's Virgin Group.

But these companies are not stepping in to lend a hand because they have also had to halt flights amid the coronavirus pandemic and are facing their own cash flow challenges.

Secondly Virgin Australia has too much debt.

Kelly Amato from Fitch Ratings says Virgin Australia will find it hard to raise funding without government support. ( ABC News )

The airline was struggling before the economy was rocked, and while it had a plan to turn things around, coronavirus has made that plan redundant.

Virgin Australia, like Qantas, has had to ground most of its aircraft and temporarily stand down the majority of its workers.

"The company had $1 billion dollars in liquidity but they're having to ground aircraft with no revenue coming in but still having to pay leases," Ms Amato said.

"They're burning through that cash. So that's why we took the action to notch down in the rating."

Ms Amaro said the ratings agency had given Virgin Australia until the end of June to secure new financing.

"We don't think they will run out of cash by end of June, we think they need new financing, but by September it will come to the crunch."

It is uncertain whether Virgin will be able to secure financing in time.

"Obviously with the credit markets drying up — especially for companies like Virgin — it will be hard for them to borrow," she said.

Will the Federal Government help Virgin?

It was "tough to tell" whether the Morrison Government would instead step in with a $1.4 billion bailout, Ms Amato said.

Qantas chief executive Alan Joyce has said Qantas is not seeking a bailout, but has warned that if Virgin gets government aid, the Federal Government needs to "level the playing field" to avoid distorting the market.

Qantas argues that given the airline's revenue is three times higher than Virgin's, if Virgin gets a $1.4 billion loan, it should get a $4.2 billion loan.

But on Thursday Prime Minister Scott Morrison did not give any indication there would be loan for the troubled airline.

"I can only point to the decisions the Government has made and those decisions have been made on a sector-wide basis," Mr Morrison said.

Meanwhile, Deputy Prime Minister Michael McCormack told The Australian that Virgin Australia would not get any special treatment.

"We can't just pick and select individuals and winners out of this," he said.

Mr McCormack said there had been more than $1 billion of support offered to the industry since the crisis began and that Virgin should consider raising capital from its existing shareholders.

Aviation expert Peter Harbison has warned by the end of May most airlines worldwide may be bankrupt (assuming they are not bailed out by their governments) and there may just be 20 to 30 airlines left after the coronavirus catastrophe ends.

"And the big airlines that survive will be smaller than they are now," he told ABC News.

Ms Amato could not say how many airlines would be left, but pointed to a number of smaller airlines in the UK that have already gone bankrupt.

"There will be support for airlines [from governments] globally — it's just a question how far and wide that support is," she told ABC News.

"You're definitely going to see … a lot of the smaller airlines under pressure but national airlines have a better chance to get through this."

Prime Minister Scott Morrison has not indicated the Federal Government will support Virgin Australia. ( AAP: Lukas Coch )

The airline industry is shrinking

Mr Harbison, who is also chairman of the Centre for Aviation, said he hoped that when the crisis was over there would still be strong competition in Australia's aviation market.

Mr Harbison said he thought the Federal Government needed to help bailout Virgin, but argued Qantas did not need financial support.

Last week, Qantas said it had raised about $1 billion in additional debt from the market in a loan secured against aircraft it owns.

The company has $3.5 billion in other remaining assets it can use to raise more cash.

"Nothing is fair in the airline industry," Mr Harbison said.

"Does Qantas need it [a bailout]? Qantas is massively dominant in the Australian domestic industry, it's been generating $1 billion profit before this [crisis] while Virgin was not making profits."

He said on the other side of coronavirus when Australia potentially had up to 15 to 20 per cent unemployment, the question people need to ask is, "do we want a single monopoly airline?"

He said if the Australian Government was relying on Virgin Australia's foreign parents to bail out, "hopefully there is someone engaged in sensitive government to government talks with two of our very close allies — Singapore and the UAE".

"Australia needs functioning, full service airline competition when we emerge from this tragedy," he said.

"That is simply not going to happen if Virgin Australia disappears in the next few months.

"Obviously establishing a replacement airline in what will be extremely troubled times, in say 2021, is a difficult and time consuming process, with comprehensive safety hurdles to jump over."

The situation for airlines is made more difficult by the fact that it is hard to predict how long the coronavirus crisis will last.

"If this goes on for six to nine months and there's no cash bailout for Virgin, its situation is very precarious," Mr Harbison said.