Richard Branson in race to save Virgin Atlantic
With hopes of government bailout diminishing, the firm is looking to secure a buyer before the end of May
Richard Branson is facing a race against time to secure a bailout for Virgin Atlantic amid reports the billionaire is looking for a buyer to save the airline from going into administration.
The Daily Telegraph says Branson has set an end-of-May deadline to save the airline from collapse after a taxpayer bailout proved beyond his reach.
The paper “has learnt that the pursuit of a £500m government package has been effectively shelved and that the airline is now focused on securing new private investment in the shadow of potential insolvency”.
Those contacted over potential rescue include Lansdowne Partners, the hedge fund run by former chancellor George Osborne’s best man Peter Davies, Singapore sovereign wealth fund Temasek and Northill Capital, the fund that is backed by Italian-born Swiss billionaire Ernesto Bertarelli.
“It’s hoped that the investors will inject cash to help write-off debts or provide equity or convertible loans, which could leave Branson's 51% stake in the business slashed,” says The Sun.
However, the BBC cites sources at the airline as saying the firm had not set an end of May deadline for finding a buyer and that they were “still in talks with the UK government about a coronavirus-related bailout”.
The airline industry has been particularly badly hit by the global coronavirus pandemic. Many struggling firms have been able to access the Treasury's Covid Corporate Financing Facility loans, including easyJet and Wizz Air, “but Virgin Atlantic has failed to meet the criteria for the emergency cash”, says The Sun.
Virgin Atlantic is reportedly burning through cash at a rate of several million pounds per day without any new revenue as the coronavirus pandemic closes down international aviation.
Last week, sister airline Virgin Australia filed for bankruptcy and US carrier Delta, which owns 49% of Virgin Atlantic, ruled out financial assistance as it faced its own “crisis in cash”.
This prompted Branson in an open letter to staff on Tuesday, to write that he was asking the government for a commercial loan, believed to be £500m.
Despite offering to put up his $80 million private Caribbean island as collateral, the request for British taxpayers money from a multi-billionaire who is based in the British Virgin Islands tax haven was met with an outcry from campaigners and politicians.
“None of this detracts from a crucial point - that Virgin Atlantic has long been a fine achievement, an important company and a crucial component of the travel industry in the UK,” writes The Telegraph’s Chris Leadbetter.
“Familiarity with its brand has not bred contempt per se - but you can definitely argue that its successes have been taken for granted,” he says.
Combined with the loss of some 10,000 jobs were the airline to go under, The Independent’s travel correspondent Simon Calder predicts “that a compromise will be found, and that Virgin Atlantic will continue to provide British passengers with something no other European nation has: two excellent airlines locked in ferocious competition”.
“Some British Airways ‘lifers’ may now be scenting blood,” he writes, but “they should be careful of what they wish for: competition from the young, stylish upstart has done BA huge favours, and Virgin Atlantic continues to provide a benchmark by which good airlines measure themselves”.
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