Qantas and Virgin Australia have been offered $A165 by the Australian government to ensure they maintain key domestic routes across the country.
Both carriers have suspended the majority of operations in the wake of the coronavirus pandemic.
This new funds come on top of a A$198 million assistance package for regional airlines confirmed earlier by officials, as well as a waiver of A$715 million in fees and charges for domestic airlines.
The latest move is seen as a lifeline for Virgin Australia in particular, with the carrier have asked the Australian stock exchange to suspend trading of its shares.
Its future became uncertain after the federal government rebuffed a request for a $A1.4 billion loan.
Virgin Australia is 90 per cent owned by five international companies – Etihad Airways, Singapore Airlines, Nanshan Group and HNA, both of China, and Virgin Group.
Facing their own difficulties, all have signalled they will not inject further capital.
The new funding package gives Virgin Australia more time to find other investors, with survival unlikely beyond September under current circumstances.
The carrier has cut domestic capacity by 90 per cent and temporarily stood down 8,000 of its 10,000 staff.
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