Qantas and Virgin are closing in on a multimillion-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 placed in a trading halt ahead of an announcement to the Australian stock exchange on Tuesday afternoon.

Virgin cited ongoing discussions involving financial assistance and restructuring alternatives.

The airline also emailed its frequent flyer members to thank them for their support and understanding during the challenging times.

“Velocity is set up in a way that safeguards member value by having a trustee that looks after the interests of members,” the email says.

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 would 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 transport spokeswoman Catherine King said thousands of Australian livelihoods were at stake.

“The Morrison Government must stop this piecemeal approach to our aviation industry and actually extend an urgent lifeline to Virgin Australia to support the airline and its 10,000 employees through this crisis,” she said.

“If Scott Morrison and Michael McCormack do not, they are making an active decision to see one of our major airlines fail.

“Such a result will have a devastating impact on Virgin’s employees and on our tourism, freight and services sectors, and will slow our recovery once the COVID-19 outbreak passes.”