Qantas and Virgin are closing in on a multi-million dollar deal with the federal government to support flights between capital cities.
The airlines have copped a battering during the coronavirus crisis and there are fears Virgin could soon go into administration.
The company was again placed in a trading halt this morning, asking the Australian stock exchange to put the pause in place for two days or until it makes an announcement.
Virgin cited ongoing discussions involving financial assistance and restructuring alternatives.
The airline has already suspended all but one domestic route, stood down 8000 workers and had its credit rating downgraded.
Prime Minister Scott Morrison said any public funding for aviation would be spread across the entire sector.
"We haven't been picking any winners or picking any favourites here," he told Nine.
"What we have been doing is ensuring sector-wide support, which has been already quite significant for the aviation sector."
The government has already confirmed it will provide financial support for regional routes and stump up $100 million to address the cashflow crisis among a dozen small airlines.
Deputy Prime Minister Michael McCormack is now working directly with Qantas and Virgin on ways to subsidise flights between major cities.
"They have already worked together on international routes that are vital not just for bringing people home or getting people to their homes, but also to support much-needed freight and the transfer of medical supplies," Mr Morrison said.
Labor has welcomed plans for the government to cover the cost of some trunk routes but said it would not be enough to save Virgin from going broke.
Opposition Leader Anthony Albanese says the government should purchase equity in airlines that need support so taxpayer money is protected, jobs are saved and Australia is not left with just one operator.
"We're talking here about 15,000 direct and indirect jobs," he told reporters in Sydney.
"This isn't about favouring one airline or another, this is about favouring an industry structure that serves the national interest."
The Australian Council of Trade Unions says the government must do what it can to prevent an airline from collapsing, as Ansett did nearly a decade ago.
The union says the government's first support package is no longer fit for purpose because most of it is for fuel excise relief, which doesn't help airlines when planes aren't flying.
The government's total commitment to the aviation sector so far is more than $1 billion.
By AAP
