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Virgin Atlantic to ask for state aid to avoid bankruptcy

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The Financial Times has reported this afternoon that Virgin Atlantic is about to submit an official request for state aid to avoid bankruptcy.

The article is behind a paywall but you can see it by clicking here to trigger the correct Google search and then clicking the top result.

As we covered on Monday, the Government has ruled out offering a sector-wide package of support for the aviation industry.  The letter from the Chancellor – there is a PDF of the letter in our article – said that the Government would only be willing to open discussions as a ‘last resort’.

Virgin Atlantic to ask for state aid

The FT claims that easyJet, Loganair, Eastern and Norwegian are considering a similar request.  Loganair and Eastern are considered more likely to be successful given their role in supporting the UK regions – although this logic didn’t help Flybe when it requested support.  I imagine that Loganair would get support from the Scottish Parliament if it came to the crunch.

The strategy of trying to end up as ‘last man standing’ before asking for support, because you can’t let the last man collapse, does work as you can see.

Part of the problem is believed to be the diverse ownership base of UK airlines.  British Airways is part of a Spanish company whose dominant shareholder is the state of Qatar.  Virgin Atlantic is 49% owned by a US airline.  Wizz, Norwegian and Ryanair’s UK operations are subsidiaries of Hungarian, Norwegian and Irish airlines.  Even easyJet, which is UK headquartered and listed, is 36% controlled by Sir Stelios Haji-Ioannou who is based in Monaco.

The article also contains some interesting cash burn figures:

Ryanair has enough cash to not fly for 18 months, and could do a sale and leaseback of its aircraft which would support it for an additional 30+ months

easyJet has enough cash to last for 10 months and could do a sale and leaseback on 70% of its fleet to gain a further substantial extension (easyJet’s actions in recent weeks do not necessarily fit with this claim – it is not acting like an airline with enough cash in the bank to weather a 10 month shutdown)

Virgin Atlantic had cash of £489m at the end of 2018 but net debt stood at £1.5bn.  It only owned 25% of its fleet outright, giving it minimal flexibility to raise funds via a sale and leaseback

You can find out more in the full Financial Times article using the link in the second paragraph.

HFP Virgin Atlantic Rewards credit card

How to earn Virgin Points from UK credit cards (September 2021)

As a reminder, there are various ways of earning Virgin Points from UK credit cards.  Many cards also have generous sign-up bonuses.

You can choose from two official Virgin Atlantic credit cards (apply here, one has a bonus of 30,000 Points until 15th October 2021):

Virgin Rewards credit card

Virgin Atlantic Reward Mastercard

The UK’s most generous free Visa or Mastercard at 0.75 points / £1 Read our full review

Virgin Rewards Plus credit card

Virgin Atlantic Reward+ Mastercard

30,000 points bonus and the most generous non-Amex for day to day spending Read our full review

You can also earn Virgin Points from various American Express cards – and these have sign-up bonuses too.

American Express Preferred Rewards Gold is FREE for a year and comes with 30,000 Membership Rewards points, which convert into 30,000 Virgin Points:

Nectar American Express

American Express Preferred Rewards Gold

Your best beginner’s card – 30,000 points, FREE for a year & two airport lounge passes Read our full review

Until 2nd November 2021, there is a special offer on The Platinum Card from American Express.

You will receive a sign-up bonus of 60,000 Amex points which converts into 60,000 Virgin Points.

American Express Platinum card Amex

The Platinum Card from American Express

60,000 points and an unbeatable set of travel benefits – for a fee Read our full review

Click here to read our detailed summary of all UK credit cards which earn Virgin Points

(Want to earn more Virgin Points?  Click here to see our recent articles on Virgin Atlantic and Flying Club and click here for our home page with the latest news on earning and spending other airline and hotel points.)

Comments (296)

  • Neil Donoghue says:

    Thoughts Rob on the safety of Virgin points or is it too early to make assumptions?

  • WillPS says:

    I’m politically very much on the left, I believe in a large state and the benefits of nationalisation of public services.

    Virgin Atlantic is not worth saving. My only hope is that the staff are able to keep on drawing 80% of their salaries until this is over.

    Whatever happens, the planes will not be scrapped (unless they were already heading that way anyway) and the slots at airports they service will eventually be filled up, no doubt by operators who will run services identical to those formerly run by Virgin Atlantic. Indeed, if he feels strongly enough then Richard Branson could slap the Virgin logo on one of these upstarts.

    There was a case for Flybe, there really isn’t for VA.

    • BlueThroughCrimp says:

      Privatise profits, nationalise losses is the Branson way.
      Every sympathy with the staff, none for him.

  • Andrew says:

    If Virgin had been nicer to their own employees when this first kicked off, then the government might be more inclined to help out.

  • David says:

    SRB should be putting more into Virgin Atlantic. He has reportedly put £200million into Virgin Group but I believe this is close to 500 companies so I’d like to know how much has gone directly to VA….I suspect not much.

  • John says:

    Virgin Atlantic should not be offered state aid. The routes it operate are covered by other airlines, including BA. On that point, Flybe had a stronger case in that it was the only operator on some routes that provided a public / social requirement.
    If Richard Branson thinks the airline is a viable concern longer term, then he should stump up his own cash – as should the investors in Delta which owns 49%. The British government has better things to spend money on during this crisis than bailing out a billionaire’s vanity project. If it fails, post-crisis there will be new players ready to fill the gap.

    • Mike says:

      Virgin’s routes may be covered by other airlines in London, but not from Manchester where routes to the States and Caribbean were mainly Thomas Cook or Virgin with a few seasonal flights on Tui and one service each from AA and UA. The load factors were high on both TC and VA but I don’t see anyone else stepping up – BA certainly won’t.

      • Doug M says:

        You can’t bank load factors, only cash. If you could make real money out of Manchester don’t you think BA would have had their snout in the Manchester trough. Wanting something and it being economically viable are different things.

  • Nigel says:

    Looks like it is time to cashout on some of the Virgin Miles I have…..

    • Freddy says:

      What’s the best options?

      • philco says:

        Hilton is probably the least worst option but honestly isn’t great and you have to call in. It can take up to two weeks in normal times. No idea if longer now or whether they are even doing it since I could see them stopping this if they are short of cash. You can explore the options on the VS website. I have already come to terms that I’ll likely lose six to seven figures of points across various frequent traveler programs before this is over and VS is one of my larger balances because I found them hard to burn leaving in US (all earned on CC spend). Alas the FB partnership didn’t ramp up until just before COVID hit.

        • BrianW says:

          Or use their text / WhatsApp service, was painless for me a few days ago and actioned quickly with no need to call them 👍🏻

          • philco says:

            Thanks I may try that. While I don’t really need more Hilton points it might be time to take some of the VS points off the table.

          • Trev says:

            Hi folks
            What is the number to text to for the Virgin\Hilton transfer or is there a link to the website? I can’t find it at the moment.

          • Jason Robinson says:

            I used the text service, text them at 7pm, they replied at 3.30am, needless to say I was asleep!

  • Anna says:

    Airlines run by tax avoiders asking for aid from the UK taxpayer, it’s nauseating. Ditto the cruise companies. The world’s governments need to come together to tackle the issue before they impose the next bout of austerity, including the EU member states who have so far refused to sign up to anti-tax avoidance measures.

    • Ken says:

      Well said Anna.

      If there is a competition reason for saving Virgin, then it only should be done if the shareholders are wiped out.

      Same goes for EasyJet.

  • Paul says:

    Good financial breakdown on three companies but still only a cash/credit line number for IAG/BA
    How many aircraft have they?
    How many do they own?
    What other assets do they have?
    What’s there cash burn rate?
    If we know the answers to this then we can make a judgement.
    Very impressed by the quoted Ryanair numbers

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