Richard Branson warns Virgin Atlantic needs coronavirus loan to survive
Virgin Atlantic owner Sir Richard Branson has warned that the beleaguered airline will need government financial support in order to survive the coronavirus crisis.
In a blog post to Virgin employees, Branson said: “The reality of this unprecedented crisis is that many airlines around the world need government support and many have already received it.
“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)”.
Virgin has applied for a state-aid package of commercial loans and guarantees worth hundreds of millions of pounds.
The coronavirus crisis has caused severe disruption across the aviation industry as airlines have been forced to ground the majority of lights.
Virgin specialises in the long-haul sector, which is expected to be hardest hit by the pandemic. The airline had just £83m available in net cash according to its latest report, and leases 75 per cent of its 46 aircraft.
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Aerospace giants Airbus and Rolls-Royce, along with Heathrow and Manchester airports, have come out in support of a bail-out for the carrier.
Chancellor Rishi Sunak has said that state financial aid will only be given to airlines as a “last resort” after all other funding options have been exhausted.
Earlier this month budget carrier Easyjet availed itself of £600m in loans from the Bank of England’s Corporate Covid Finance Facility.
The Department for Transport is also in negotiations with regional carrier Loganair over a possible survival deal.
Branson also warned that budget flier Virgin Australia, which has reportedly been put into administration, was also “fighting for survival” and needed state support:
“The same is true in Australia, where the brilliant Virgin Australia team is fighting to survive and need support to get through this catastrophic global crisis.
“We are hopeful that Virgin Australia can emerge stronger than ever, as a more sustainable, financially viable airline”.
More to follow.