Branson’s Virgin Atlantic in virus bailout talks

Virgin Atlantic says it is still in talks with the UK government about a coronavirus-related bailout.

It follows reports in the Sunday Telegraph that billionaire Virgin Group boss Sir Richard Branson is seeking a buyer for the airline.

Virgin Atlantic said talks were “ongoing and constructive”, but added that it is also looking at raising cash from the private sector.

Many airlines have been struggling as revenues have dropped amid travel bans.

However, sources at the airline told the BBC that the firm had not set an end of May deadline for finding a buyer.

Coronavirus crisis

They added: “Because of significant costs to our business caused by unprecedented market conditions which the Covid-19 crisis has brought with it, we are exploring all available options to obtain additional external funding.”

Sir Richard Branson said in an open letter to staff on Tuesday that he was asking the government for a commercial loan, believed to be £500m.

In the blog post, he said: “We will do everything we can to keep the airline going – but we will need government support to achieve that”.

He added that his luxury island resort Necker Island could be used as collateral to help secure state aid for Virgin Atlantic.

The Department for Transport said: “The aviation sector is important to the UK economy, and firms can draw upon the unprecedented package of measures announced by the chancellor, including schemes to raise capital, flexibilities with tax bills, and financial support for employees.”

A spokesperson added that they were willing to consider individual firms’ situations, after all alternatives had been explored, “including raising capital from existing investors”.

In March, Chancellor Rishi Sunak wrote to airlines and airports urging them to find other forms of funding, and that the government would only step in as “a last resort” during the coronavirus crisis.

Cash injection

Sir Richard offered to inject £250m into the group last month, with most of that going to Virgin Atlantic.

Sir Richard’s Virgin Group currently owns 51% of Virgin Atlantic, while the US airline Delta owns the other 49%.

The investment bank Houlihan Lokey has now been hired by the airline to help it find additional private investment.

The move came after the group’s airline in Australia entered administration.

The country’s second-largest carrier was already struggling with a long-term A$5bn (£2.55bn; $3.17bn) debt prior to lockdown measures coming in.

Virgin Australia is seeking new buyers and investors, after failing to get a loan from Australia’s government.

Source: BBC