Virgin Atlantic to seek millions in state aid amid Covid-19 slump

Bookings drop almost to zero at hard-hit carrier as almost all staff agree to take unpaid leave

Virgin Atlantic is applying for hundreds of millions of pounds in state aid to keep afloat during the coronavirus crisis, after the chancellor told the stricken aviation sector this week he would consider assisting firms on a case-by-case basis.

With a purely long-haul and passenger business, Sir Richard Branson’s carrier has been hit hard by the travel bans and does not have the cash reserves of larger rivals such as British Airways or easyJet.

Virgin led calls for state aid for airlines two weeks ago as bookings dropped almost to zero. Almost all staff have accepted unpaid leave, and Branson has said he will inject $250m into the group, including the new Virgin Voyages cruise line.

The airline declined to comment, but was understood to have approached the government and bankers, Rothschild, who are handling negotiations, for a package worth hundreds of millions of pounds in commercial loans and guarantees.

The loans would cover fixed costs rather than staffing. Credit guarantees would allow passenger revenues for future bookings to be passed on to the airline rather than retained by credit card companies – removing one of the issues that helped sink Flybe as its financial woes became apparent.

EasyJet also indicated it may seek assistance, although British Airways’ owner IAG has so far distanced itself from calls for state aid.

Airports are also likely to call for immediate help after being disappointed by the lack of special measures across the sector from the chancellor, Rishi Sunak. Regional airports are in particular peril, and layoffs have already begun at Edinburgh. However, the issue is not limited to smaller airports – Gatwick, London’s second airport, announced that it would close one of its two terminals next week.

Contributor

Gwyn Topham

The GuardianTramp

Related Content

Article image
Virgin Atlantic agrees £1.2bn rescue deal amid coronavirus slump
Investors pump in funds, loans and deferrals alongside Branson’s £200m injection

Gwyn Topham Transport correspondent

14, Jul, 2020 @4:00 PM

Article image
Virgin Atlantic bailout backed by Rolls-Royce, Airbus and Heathrow
Transport secretary Grant Shapps urged to help airline, which seeks large cash injection

Gwyn Topham Transport correspondent

01, Apr, 2020 @4:47 PM

Article image
Airlines make dramatic cuts to services and call for state bailouts
Aviation consultancy warns that international industry could collapse within months

Rupert Neate

16, Mar, 2020 @3:14 PM

Article image
Virgin v British Airways: was the Corbyn saga part of the old rivalry?
Richard Branson tweeted CCTV images on the day BA flew Olympic athletes home – the latest twist in a long PR battle

Graham Ruddick

26, Aug, 2016 @12:06 PM

Article image
EU frees airlines to halt ‘ghost flights’ in coronavirus fightback
Brussels relaxes airport landing rules to allow carriers to stop flying empty planes

Daniel Boffey in Brussels

10, Mar, 2020 @6:30 PM

Article image
Travel firms drop £2bn in value after France added to UK Covid quarantine list
The British Airways owner, IAG, and struggling tourism group Tui among the fallers

Mark Sweney

14, Aug, 2020 @8:32 AM

Article image
EasyJet grounds entire fleet of planes because of coronavirus crisis
Firm wants to reduce £4.5bn in spending, including payments for new aircraft from Airbus

Jasper Jolly

30, Mar, 2020 @7:43 AM

Article image
Let's hope the no state aid to Flybe is true and stays true | Nils Pratley
The rescue deal could prove a pragmatic fudge, as long as it doesn’t underwrite the owners

Nils Pratley

15, Jan, 2020 @7:47 PM

Article image
Virgin Atlantic swoops on troubled Flybe with £2.2m bid
Shares in regional airline fall 90% after consortium led by Virgin offers cut-price deal

Jasper Jolly

11, Jan, 2019 @10:36 AM

Article image
BA and Virgin Atlantic put aside rivalry for return of leisure flights to US
First transatlantic flights since Covid travel ban in March 2020 will take off from Heathrow at same time

Gwyn Topham Transport correspondent

08, Nov, 2021 @12:01 AM