Virgin Atlantic founder Richard Branson has appealed to the UK Government for a bailout to help save the airline. The billionaire is seeking a government loan and has pledged to mortgage his luxury home, Necker Island in the British Virgin Islands to help the ailing business to survive.
Airline told to resubmit funding request last week
The pledge was made in a letter to staff, posted on Sir Richard’s personal blog on Monday and was made a day before Virgin Australia which is 10 per cent owned by the billionaire’s company — collapsed into administration after failing to secure a government bailout. Virgin was told to resubmit its bid for government help last week with sources saying the airline hadn’t demonstrated that it had explored other options before appealing for state aid.
Support for Virgin Atlantic, which the Branson owns 51 per cents of, is threatened by Branson’s tax status. But Branson said the carrier could only “keep going” with government support and has asked for a package of £500m in commercial loans and state guarantees to help pay its fixed costs and bolster liquidity.
Branson said: “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),” he wrote, in the letter, which first appeared on Sky News.
Airline collapses will result in a loss of competition
“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.”
The failure of Virgin Atlantic would also cause a major blow to Airbus. The carrier still has an order for 18 Airbus jets which are yet to be delivered to Virgin.
IATA calls for greater support after loss of Norwegian and Virgin Australia
The International Air Transport Association (IATA) has also called for greater support from governments as Virgin Australia entered voluntary administration and Norwegian filed for bankruptcy in the last 24 hours. IATA is calling for urgent aid to protect jobs and ensure that air services can be maintained.
In a joint statement issued with the International Transport Workers’ Federation, the body warned the economic situation facing the aviation industry remained severe with air passenger demand down by 80 per cent.
Airlines face liquidity crisis
IATA said airlines were facing a liquidity crisis, threatening the viability of 25 million jobs which relied both directly and indirectly dependent upon aviation, including jobs in the tourism and hospitality sectors.
It urged officials to provide immediate financial and regulatory support for airlines, in order to maintain the sustainability of terms and conditions for air transport workers, as well as assisting the industry to restart quickly by adapting regulations and lifting travel restrictions in a predictable and efficient manner.
Alexandre de Juniac, IATA director general said: “Airlines are facing the most critical period in the history of commercial aviation. Some governments have stepped in to help, and we thank them. But much, much more is needed.
“Direct financial support is essential to maintain jobs and ensure airlines can remain viable businesses.”
“And when the world is ready to start travelling again, the global economy will need aviation at its best to help restore connectivity, tourism and global supply chains. That will require a harmonised approach with industry, workers and governments working together.”