BRITISH airline Virgin Atlantic is facing the prospect of collapse as the total loss of clientele and passengers as a result of the coronavirus shutdown has forced it to the point of bankruptcy according to its owner Richard Branson.
One of the world’s leading edge airlines that prides itself on innovation and good customer care, Virgin has cornered some of the most lucrative aviation routes in the world including London to New York and London to Lagos. At one stage, it even had a wholly owned Nigerian subsidiary called Virgin Nigeria but had to scrap it when government officials started demanding bribes.
With the global lockdown, aviation has been totally grounded and Virgin has been hard-hit, threatening its very existence as it groans under the weight of the current crisis. Earlier today, Mr Branson said the company is seeking a £500m ($624m) rescue package involving commercial loans and guarantees and could fold if it does not the bailout.
In an open letter to Virgin’s 70,000 employees, Mr Branson said that while the company would do everything to keep the airline going, it will need government support to achieve that. He pointed to the severe uncertainty surrounding travel adding that the airline did not know how long its aircraft would be grounded for.
This comes as the UK government has warned aviation firms to first seek funding from other sources before approaching the treasury. Mr Branson has suggested that his Caribbean island could be offered as collateral for any government 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.
Last month, chancellor UK Rishi Sunak warned that airlines would only receive bespoke support from the government if they could not secure the required assistance from lenders and shareholders. No frills airline Easyjet has already received a £600m bailout and Virgin are hoping for the same treatment.
Mr Branson said: “This would be in the form of a commercial loan. It wouldn’t be free money and the airline would pay it back.”
Last week, Virgin Atlantic was told to resubmit its bailout proposal to the government to demonstrate the extent to which it had sought funding from other sources. Airlines are confronting an extraordinary crisis in coronavirus, and analysts have warned that many will collapse due to a complete fall-off in demand from travellers.
Mr Branson added: “The reality of this unprecedented crisis is that many airlines around the world need government support and many have already received it. Without it there won’t be any competition left and hundreds of thousands more jobs will be lost, along with critical connectivity and huge economic value.”
Virgin Atlantic, which is 51% owned by Branson’s Virgin Group, last month initiated a recruitment freeze across the company and said that its chief executive and senior leaders would take significant short-term pay cuts. Mr Branson also warned that Virgin Australia was fighting to survive and said it would need support to get through the crisis.