20 April 2020

Virgin Atlantic will fold without government help, warns Sir Richard Branson

Sir Richard Branson has warned that Virgin Atlantic will collapse unless it receives Government support.

The Virgin Group boss said the airline needs taxpayer support in the form of a commercial loan.

It has been reported that the carrier is asking for up to £500 million of public money.

In an open letter to Virgin Group employees, Sir Richard wrote: “We will do everything we can to keep the airline going – but we will need Government support to achieve that in the face of the severe uncertainty surrounding travel today and not knowing how long the planes will be grounded for.

“This would be in the form of a commercial loan – it wouldn’t be free money and the airline would pay it back (as easyJet will do for the £600 million loan the Government recently gave them).

“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.”

Airlines around the world have grounded the vast majority of their aircraft due to the collapse in demand and travel restrictions caused by the coronavirus pandemic.

Earlier this month, Virgin Atlantic called on the Government to offer the UK’s airline industry emergency credit facilities worth up to £7.5 billion.

Chancellor Rishi Sunak has previously said he will not create a specific support package for the sector but the Government is prepared to negotiate with individual firms once they have “exhausted other options”, such as raising cash from existing investors.

Virgin Atlantic, founded by Sir Richard, has told staff to take eight weeks of unpaid leave.

This led to calls for the billionaire to step in to ensure their wages are paid in full.

In his letter to staff, he wrote he has 'seen lots of comments about my net worth' but insisted this is calculated on the value of Virgin businesses before the coronavirus pandemic, rather than 'cash in a bank account ready to withdraw'.

“Over the years, significant profits have never been taken out of the Virgin Group, instead they have been reinvested in building businesses that create value and opportunities,” he explained.

“The challenge right now is that there is no money coming in and lots going out.”

He added: “Today, the cash we have in the Virgin Group and my personal wealth is being invested across many companies around the world to protect as many jobs as possible, with a big part of that going to Virgin Atlantic.”

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