With cash-starved Virgin Atlantic fighting for survival, Airbus, Rolls Royce, and Heathrow Airport have urged the British government to support the beleaguered carrier.
Per Sky News, Airbus, Rolls-Royce Holdings and Heathrow Airport each delivered letters of support to Grant Shapps, the UK Transport Secretary, urging the government to “do all it can to support Virgin in these extremely difficult times”.
Airbus warned Virgin Atlantic’s “collapse could have an extremely negative impact on the A330 programme.” The letter noted Virgin’s pending order:
“As you will be aware, all wings for these aircraft are designed and manufactured in the UK, and orders from airlines like Virgin are vital for the continuation of our business.”
Last summer, Virgin ordered 20 Airbus A330-900neos, including a firm order for 14. Deliveries were scheduled to have began in 2021.
Sky News reported the letters were written per the urgent request of Virgin Atlantic.
With demand down 90%, Virgin Atlantic has slashed flights and asked staff to take eight weeks of unpaid leave. Although majority owner Richard Branson has infused $100MN of his own cash into the airline, that is not enough says the airline. Virgin is seeking a far larger loan from the UK government.
Thus far, however, the government has appeared reluctant to grant it, noting that shareholder options have not been exhausted. Branson owns 51% while Delta owns 49%. It appears the UK government wants Virgin to hit up Branson and Delta first. Rishi Sunak, the Chancellor of the Exchequer, said a bailout would come only as a “last resort”.
All three letters stressed that Virgin Atlantic provided vital competition in the UK, a poke at British Airways, which has vocally opposed any bailout. By starving Virgin, British Airways hopes to be the last airline standing.
CONCLUSION
It is hardly surprising that three of Virgin Atlantic’s top vendors would support their customer. But the letters paint a starker picture than originally imagined for Virgin: that collapse is not just a worst-case scenario but a very reasonable possibility.
For the sake of UK customers and all those who travel through or to London and Manchester, I hope that however it happens, Virgin Atlantic finds a way to survive.
Should Virgin Atlantic receive government aid?
Just another exaggerated plea by Delta for another handout. They can borrow money and will survive.
They will likely fail. Times will get worse.
There’s no need whatever for Virgin to collapse. Old Beardy has more than enough money to keep it afloat way past the end of the year however he would prefer a tax payer bail out rather than spend his own obscene amount of money.
I have already written to my MP asking them to oppose any bail out to any part of the Virgin group at any time because I don’t want to make Old Beardy richer than he already is.
How very kind of you. NOT!!!
Think of all of the ppl who would lose their jobs.
This is where Virgin Atlantic’s business plan hurts them. The airline’s sole reason for existence is US to London flights. With the UK on lockdown (much more than the US), there is no market for them to fly. They don’t have enough route diversification.
I agree that they have nowhere to fly, but it seems those that do (like U.S. airlines) are still losing money every time a plane takes off due to load factors of 5-10%.
Yes, US airlines are suffering but at least they have domestic flights to buttress them. Virgin doesn’t. Virgin also doesn’t benefit from corporate travelers, outside New York and London. Maybe Boston. I don’t know why anyone would fly Virgin out of say Manchester when it doesn’t offer a consistent experience on-the-ground, despite airfares about the same in business-class as Heathrow.
To be fair, Virgin would probably agree with you that they need/want greater route diversification. When you have such limited and expensive Heathrow slots, you go for the big money, which is US-UK routes, and you don’t have slots left over like BA to expand elsewhere.
Their plan for a Heathrow expansion primarily focused on expanding in Asia/Africa/South America and offering continental Europe service as well so they could be a true BA competitor.
If I book an award flight with Virgin operated by Delta and Virgin folds would my ticket be canceled?
Very unlikely.
Richard Branson has enough cash to keep it afloat.
It seems like yesterday that Virgin announced its huge growth strategy to so many new markets starting in 2021. Man, how quickly times change. She will survive, I believe, but clearly go back perhaps 10-20 years in markets and size in order to do so. It’s astounding to me each day how this virus has reshaped our world for years to come. The airline industry is offering us an immediate glimpse into the new realities that will extend into everything.
my family had a Virgin trip planned for April 17 but had to cancel !! Virgin not refunding we are getting a CREDIT
no thrilled about that.
I know Boarding Area is responsible for Ads on this site, but I had one pop up that was charging extortionate prices for things like hand sanitizer, TP, face masks, and most impressively $200.99 for hand wipes.
You may want to tell the BA folks to take that down and possibly report the company. I’m sure that’s illegal in most states.
I really like Virgin Atlantic – hope they survive. I think their miles have their uses and partnership with Delta is quite useful.
Perhaps there’s some middle ground here, particularly considering BA’s overwhelming advantages. One way to approach this might be for the British government to match any cash infusion by Branson and Delta. If the government wanted to have some benefit for the customer from that agreement, they could require that Virgin adhere to whatever rules govern consumer compensation in the EU, such as EU261. Win/win, although the employees are still hosed.
I think Delta should pull their finger out and do something here to help VS . Delta made billions last financial year I am sure they have enough money to play around if they wants to .
Virgin should get money from delta not from UK govt !