The Queensland government has offered $200 million to help rescue Virgin Australia, as the cash-strapped airline struggles to survive.
The airline suspended trading in its shares to continue talks on financial aid and restructuring alternatives to help it weather the coronavirus downturn.
It has been unsuccessful in its request to the Australian government for $1.4 billion in loans.
Queensland State Development Minister Cameron Dick's says it was imperative Australia has two airlines, to support tourism, jobs and regional investment.
"Queensland has given Australia both our national airlines - we won't let them go, or let thousands of families watch their jobs go, without a fight," he said in a statement on Saturday.
"But we can't do it alone, and nor should we, because all parts of Australia benefit from two national airlines."
Mr Dick said Queensland's support was conditional on debt restructuring, shareholders and bondholders doing their bit.
The airline's headquarters would also need to remain in Brisbane and regional flights would need to continue.
The deal will also require the federal government to chip in, he said.
Coalition MP Andrew Laming says the federal government will not assist the airline without guarantees.
"We can't be distributing taxpayers' money purely on the whim of what is an ambit claim for over $1 billion unless it makes a difference," he told ABC News.
"The ultimate solution is to get the economy rolling again."
Federal opposition frontbencher Jason Clare called on the Morrison Government to help Virgin.
"We need two airlines. If we don't have two, we'll have fewer flights and flights will cost more. It won't mean just 15,000 Aussies losing their jobs, but the task of crawling out of the crater created by the coronavirus will become harder," he said.
Think of all the tourist jobs, all the destinations that Virgin flies to, we need two airlines so we've got enough planes in the sky to help the economy recover after the worst of this virus has come and gone.
Earlier, Premier Annastacia Palaszczuk said there will be no early end to Queensland's tough lockdown restrictions.
Authorities fear it could lead to a rapid spike in the COVID-19 infection rate.
The state's infection rate continues to creep forward with six people testing positive on Friday.
The total now stands at 1007 with 19 people in hospital, with 11 in intensive care.
The death toll remains at five in Queensland.
The state's doubling of cases is now occurring every 40 days, down from a peak of three and below the national rate of 30 days.
"This is a marathon. We do not want to lift the restrictions and see a spike in the infection rate," Ms Palaszczuk said on Friday.
"What we need to be very careful about here. We do not want to see those massive spikes that we saw in European countries and the United States.
Border checkpoints remain in place but the premier warned they could be tightened even further.
Queensland has ramped up its testing regime, carrying out 2503 tests in the past 24 hours - more than half of the 4884 tests carried out nationwide.
