Virgin Atlantic to seek millions in state aid amid Covid-19 slump
Virgin Atlantic is applying for hundreds of millions of pounds in state aid to keep afloat during the coronavirus crisis, after the chancellor told the stricken aviation sector this week he would consider assisting firms on a case-by-case basis.
With a purely long-haul and passenger business, Sir Richard Branson’s carrier has been hit hard by the travel bans and does not have the cash reserves of larger rivals such as British Airways or easyJet.
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Virgin led calls for state aid for airlines two weeks ago as bookings dropped almost to zero. Almost all staff have accepted unpaid leave, and Branson has said he will inject $250m into the group, including the new Virgin Voyages cruise line.
The airline declined to comment, but was understood to have approached the government and bankers, Rothschild, who are handling negotiations, for a package worth hundreds of millions of pounds in commercial loans and guarantees.
The loans would cover fixed costs rather than staffing. Credit guarantees would allow passenger revenues for future bookings to be passed on to the airline rather than retained by credit card companies – removing one of the issues that helped sink Flybe as its financial woes became apparent.
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EasyJet also indicated it may seek assistance, although British Airways’ owner IAG has so far distanced itself from calls for state aid.
Airports are also likely to call for immediate help after being disappointed by the lack of special measures across the sector from the chancellor, Rishi Sunak. Regional airports are in particular peril, and layoffs have already begun at Edinburgh. However, the issue is not limited to smaller airports – Gatwick, London’s second airport, announced that it would close one of its two terminals next week.
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