Virgin Atlantic calls on government for £7.5bn airline bailout package
Virgin Atlantic’s chiefs are preparing to send a letter to Prime Minister Boris Johnson calling for the government to provide a £7.5bn package to support airlines, which have been decimated by the coronavirus outbreak.
Sky News reported that Virgin Group chairman Peter Norris will write to Johnson on Monday warning him of the potentially devastating impact that the pandemic could have on the sector.
The letter, which is also reported to be signed by chief executive Shai Weiss, will come ahead of what is expected to be a turbulent week for the industry, as more and more flights are cancelled as countries step up their response to the disease.
In it, Norris will ask the government to provide airlines with a credit facility for the duration of the outbreak, which will then be paid back once normal service resumes.
Last week saw airline stocks around the world tumble as president Donald Trump instigated a travel ban on visitors from 26 EU countries, piling on the pain for an industry already reeling from mass cancellations of flights to and from China.
The decision to extend the ban to the UK and Ireland, which was taken over the weekend, will put further pressure on airlines like Virgin Atlantic, British Airways, and Norwegian, which many people are expecting to go bust as a result.
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Yesterday British Airways boss Alex Cruz informed staff in a memo called “The Survival of British Airways” that it would have to ground planes “like never before” as well as laying off staff.
On Thursday Norwegian, which analysts think is especially exposed due to its large debt pile, announced that it would cut 4000 flights and lay off 50 per cent of its staff.
Chief executive Jacob Schram has called on the Norwegian government to implement “powerful and extraordinary measures” in order to strengthen the firm’s liquidity:
“It is crucial for us that the government will work on solutions for a phase two. We are asking for these solutions to come quickly.
“At the same time, we will take all measures necessary to reduce the financial losses this situation is causing us, no matter how painful they are”.
Norris’ request comes just weeks after Flybe, which Virgin Atlantic part-owned, went bankrupt after failing to secure a bailout from the government.
Virgin had been funding the regional carrier, but was forced to refuse injecting any more money due to the impact of the pandemic on its own operations.