Richard Branson warns of collapse of Virgin Atlantic without government loan
Virgin mogul Richard Branson warned on Monday April 20 that Virgin Atlantic could collapse under the weight of the coronavirus crisis if it does not receive a loan from the government.
The mogul even suggested that his Caribbean island could be offered as collateral for the loan, noting that his team will “raise as much money against the island as possible to save as many jobs as possible around the group.”
The airline seeks a £ 500million ($ 624million) bailout including commercial loans and guarantees, even as the UK government has warned airlines to seek funding from others first sources.
In an open letter to Virgin’s 70,000 employees, Branson said that while the company will do “anything” to keep the airline going, it will “need government support to make it happen.”
Branson pointed to “the serious uncertainty” surrounding travel and said the airline did not know how long its planes would be down.
“It would be in the form of a business loan – it would not be free money and the airline would pay it back,” Branson wrote, highlighting the £ 600million package given to EasyJet (EZJ.L).
Last month, Chancellor Rishi Sunak warned that airlines would only receive “tailor-made support” from the government if they could not get the help they needed from lenders and shareholders.
Virgin Atlantic was asked last week to resubmit its bailout proposal to the government to demonstrate how well it had sought funding from other sources, according to the Financial Times.
Airlines are facing an extraordinary coronavirus crisis, and analysts have warned many will collapse due to a complete drop in demand from travelers.
“The reality of this unprecedented crisis is that many airlines around the world need government support and many have already received it,” Branson said.
“Without it, there will be no more competition and hundreds of thousands of additional jobs will be lost, along with critical connectivity and enormous economic value.”
Virgin Atlantic, 51% owned by Branson’s Virgin Group, launched a company-wide hiring freeze last month and said that its CEO and senior executives would face significant pay cuts in the short term.
Branson also warned on Monday that Virgin Australia was “fighting to survive” and said she would need support to get through the crisis.
“We hope Virgin Australia can emerge stronger than ever, as a more sustainable and financially viable airline,” he said.
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