Virgin Atlantic’s Chairman Sir Richard Branson, who has stepped in to save the overall business, has said in a letter to staff that without a commercial loan, fully repayable of £500m from the UK Government, the airline is not going to survive.
Sir Richard has already offered to place the remainder of his personal fortune, £200m into the airline.
Sir Richard wrote: “Over the five decades I have been in business, this is the most challenging time we have ever faced.
“It is hard to find the words to convey what a devastating impact this pandemic continues to have on so many communities, businesses and people around the world.Advertisement
“From a business perspective, the damage to many is unprecedented and the length of the disruption remains worryingly unknown.”
“Together with the team at Virgin Atlantic, we will do everything we can to keep the airline going – but we will need government support to achieve that in the face of the severe uncertainty surrounding travel today and not knowing how long the planes will be grounded for”.
“This would be in the form of a commercial loan – it wouldn’t be free money and the airline would pay it back (as easyJet will do for the £600m loan the government recently gave them).”
Sir Richard, who doesn’t run the airlines day to day business, and hasn’t since 2010, also addressed the personal criticism that has been levied at him, and at Virgin all of which is considered unfounded.
Virgin Group is the largest shareholder in the airline at 51%, with Delta Airlines seemingly shirking its responsibilities over its own 49% share of the airline, as it concentrates completely on its own problems.
Delta’s shareholding is now looking like a “we don’t know who you are” moment, as its no longer convenient for them to have to help out the company it was keen to buy up.
Problems at Virgin Australia – Virgin Group owns just 10% of it and has a remote relationship at best, is entering administration in Australia and is suffering from the very same unwillingness from its shareholders, the largest of which seem to have little or no money or interest.
In the UK Virgin Atlantic has been heavily supported by Rolls Royce, Manchester and Heathrow Airports, who all think it would be a disaster for them and the UK in general if it collapsed. all of them have urged the government to help. It supports some 70,000 jobs employed directly in the group and around another 50,000 indirectly.
One has to ask why the UK government has taken so long to help. It bailed out easyJet quickly, even when they had millions in assets and credit facilities they hadn’t even started to use. However when it comes to one of the best loved brands in the UK, they seem to find it difficult to do.