Virgin Atlantic to ask for state aid to avoid bankruptcy

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• Jonathan Pang says:

  28 Mar28 March 13:42

  I’ve booked reward flights in December using VA miles from Aberdeen to Singapore via Paris and Amsterdam on Air France and KLM metal. Already ticketed.

  Any idea what would happen if VA went under?

  • Mikeact says:

    28 Mar28 March 14:07

    I understand that your partner tickets are not actually paid for at the booking stage. If Virgin do go belly up, then say goodbye, as they’ll be no money in the kitty to pay for them.

  • Charlieface says:

    28 Mar28 March 20:31

    Pay with credit card for S75, £100 is valued against the whole ticket not just the taxes

• Opuada says:

  28 Mar28 March 13:51

  Virgin jumps in and out of profitability (more out of it than in) they have failed to sure consistency in profitability over the last 10 years and going into this debacle had 83M sitting in cash. 75% of their fleet is leased meaning they can’t even generate cash from assets because they don’t have a lot. They should let it die. In terms of operations they will easily be covered so on that front they are not essential. I do feel sorry for the wonderful employees who have put their sweat into the company but sorry the airline just doesn’t seem to be able to sustain profits at all. BA has made a clean profit for the last 11 years. They aren’t the same to be fair. But really virgin does not bring much to the market, their competition clearly isn’t that effective to British airways because their profits have grown ridiculously over the years, they compete really with other legacy US carriers and european carriers. Let them go

  • Mikeact says:

    28 Mar28 March 15:04

    @Opuada. I tend to agree but obviously @JP _MCO below doesn’t.

    • JP_MCO says:

      28 Mar28 March 15:07

      I disagree because if it were really the case that Virgin’s competition is not effective against BA then why would BA repeatedly resort to dirty tricks to try and put them out of business? BA does not like competition.

      • Opuada says:

        28 Mar28 March 23:13

        That’s a fair point but nobody likes competition to be fair. And in recent times BA have been quiet on that front on trying to take virgin out and have focused on growing their profitability which has worked better for them, virgin on the other hand has upped their game by pushing for heathrows third runway so they can become britain’s “second flag carrier” with a unsubstantiated growth plan just to remove the IAG monopoly from heathrow. I’m sure that plan is very much out the window now. But honestly

• JP_MCO says:

  28 Mar28 March 14:39

  As much as I think the Virgin executive team acted in haste and deplorably towards their staff I am in full support of a Government bailout for 3 main reasons; the first reason is the human element – I simply cannot understand how anyone who feels Virgin’s staff were horribly treated would like to see the airline go bankrupt just to spite Richard Branson. This is illogical. I have no desire to see 8700 people unable to pay their mortgages/rent or feed their families just because I don’t like the billionaire owner who lives on a private island. I wouldn’t mind Branson taking a huge financial hit but I would much rather see the airline survive – perhaps we can have both.

  The second reason is the future of the UK aviation industry. Eventually we will get back to normal – perhaps a new normal. After this I would absolutely hate to see BA gain a monopoly. It’s what they’ve craved for a long time and I fear that without healthy competition they would simply downgrade their product even further than they already have. When you’ve got a ‘take it or leave it’ market what’s the incentive to be the best? I mean I understand why BA crave a transatlantic monopoly but why can’t it just be a meritocracy? Why do they have to put Virgin out of business? Some companies see competition as a challenge that makes you strive to innovate and standout – BA’s whole attitude towards competition stinks. It must be part of their organisational culture. Also, this game that they’re playing with the bailout just to try and put Virgin out of business is about the worst example of corporate behaviour I’ve seen in a long time – especially when the industry, nation and world is hurting so bad. Whoever came up with that strategy has no morals and has no place in modern business. It is entirely possible to have a strong, healthy business and operate within a competitive market.

  Finally, I have to wonder why the Government who had no qualms in a £500bn bailout for the banks has an issue lending £7.5bn to the UK airline industry. It’s not like they’ve been caught selling subprime mortgages or repackaging debt and that bubble has finally burst – this is not their fault in the slightest. The stimulus that airlines create the world over from tranporting passengers to places where they eat in restaurants, stay in hotels, rent cars, use taxis – it’s all connected. If we eventually want life to return to normal, and I know I do, then we need our airlines and now more than ever – they need us.

  I would hazard to guess that most people who read and comment on Head for Points share a love of travel. If we ever want to enjoy travel again like we used to then we need a strong, competitive aviation industry in the UK and saving Virgin Atlantic is the first step we need to take.

  • Jamie says:

    28 Mar28 March 14:51

    +100

  • marcw says:

    28 Mar28 March 14:54

    Virign Atlantic is NOT going to survive this storm. Even with a bailout. Their business plan is not up to date anymore. Long haul traffic will take at least a decade to recover, especially the business market (not business class) – businesses have learnt (the hard way) online voice/video conferences, and realised they aren’t that bad. In fact, they can be even better (save time and money travelling).

    Even if they get bailed out, they can’t fill their wallets with 250 GBP return fares to the US.

    • TGLoyalty says:

      28 Mar28 March 16:08

      No amount of remote working technology can replace the human interaction of a face to face meeting. There are still many non service based interaction that has to take place, Like engineering, testing etc

      We’ve been working remotely over multiple offices for years and still can’t beat an actual trip to the office to solve things quickly.

      • Craig says:

        28 Mar28 March 16:47

        100% agree. Service sector will start travelling again. It may work for now (virtual meetings) but I work in investment and people do like talking face to face when they are discussing putting billions of pounds of pounds at risk and assessing strategy. Virtual meetings have worked okay I agree. But when building relationships and becoming a “trusted advisor” you really have to meet face to face regularly, the client spends too much money on the advice for it to feel virtual. the instant travel restrictions are lifted Business travel will take off again (excuse the pun)

  • Mikeact says:

    28 Mar28 March 14:58

    Would you mind spelling out where BA have said ‘Let’s get rid of Virgin ‘ ? And I dont mean the early days .

    • JP_MCO says:

      28 Mar28 March 15:04

      First of all, I don’t understand why their dirty tricks in the 90s is off limits – their campaign to put Virgin under has been going on a long time. It’s been widely reported that BA has been very vocal against a Government bailout but said they’ll take some if it’s offered. Why else would you do that? What does BA stand to gain from a bailout being refused other than their main transatlantic competition going under? They don’t have to say it but it’s pretty obvious. Think about it.

      • Mikeact says:

        28 Mar28 March 15:15

        One competitor going under….you do realise the numerous ways to cross the pond, nobody has to go with BA ,that’s for sure. You should ask yourself why Virgins numbers have been so flaky over the years, and it’s not just trans atlantic they fly…plenty of money to be made on some of those other routes and plenty of competition as well.

        • Novice says:

          28 Mar28 March 15:38

          👍 That’s what I don’t understand. Why are people talking as though BA and Virgin are the only ways to get across the pond. I don’t think companies will fork out for business travel in future as it has been proven now most things can be done using remote communication devices.

          Yes I feel bad for employees but what about other industries too don’t they deserve bailouts? Aren’t they people, those employees?

        • marcw says:

          28 Mar28 March 15:53

          Coronavirus has indeed accelerated digital transformation like never bvefore.

        • Mikeact says:

          28 Mar28 March 16:30

          People are happy to have a go at BA management, and quite right too at times. But take a look at Virgin’s impeccable management… what happened to Little Red….what about the recent Flybe fiasco….what about the long haul routes they’ve pulled back on (because of competition), and they have had the opportunity to get hold of slots at Heathrow…where are they now ? Leased out to other airlines.
          I would suggest that they have been stung more across the Atlantic by Norwegian than BA.

  • KINGB says:

    28 Mar28 March 16:03

    Sorry but save a penny for your thoughts for FLYBE MONARCH THOMAS COOK! They EMPLOYED 1000’s of BRITISH staff that are also no longer without a JOB!
    The Taxpayers have a right to voice where their money is spent, and it SHOULD NOT be spent on PRIVATE COMPANIES that DO NOT BENEFIT the tax payer

    • jack says:

      28 Mar28 March 16:22

      The aviation sector does benefit the economy and taxpayers, which is why BA, Air France, Lufthansa etc are considered and essential and will not be allowed to go bust. A competitive aviation sector also benefits the economy and individual consumers but the government may not consider it essential, hopefully they do!

    • BlueThroughCrimp says:

      28 Mar28 March 16:59

      Yep, and they paid to the UK taxpayer.
      Now maybe the Virgin Group should try the BVI for a bailout first.

      • TGLoyalty says:

        28 Mar28 March 17:44

        Virgin Atlantic is registered in the BVI?

        • BlueThroughCrimp says:

          28 Mar28 March 17:55

          The Group is, I didn’t type Atlantic, I guess you noticed that.
          The Group is funding £200 Million for the other companies, it could dig deeper.

        • TGLoyalty says:

          28 Mar28 March 18:02

          A different “Virgin Group Limited” than company 02857673 registered with companies house in the UK and headquartered from the UK?

        • Rob says:

          28 Mar28 March 18:10

          It wouldn’t be allowed to own 51% of VS if it wasn’t EU domiciled ….

        • BlueThroughCrimp says:

          28 Mar28 March 18:10

          No, the parent company Virgin Group Holdings

        • TGLoyalty says:

          28 Mar28 March 18:13

          There’s also “Virgin Group Holdings” that owns that which is incorporated in the UK (03609453)

          Point is that while ultimately they may or may not pay any corporation tax they all contribute to tens of thousands of UK jobs – all of those people pay income tax, NI, employers NI, VAT on their expenditure etc

          There is more to a companies contribution to society than just the corporation tax it pays on its final profit. I believe Branson’s personal wealth will include the value of his business interests and not all hard cash in his bank account and there have been many stories about how he no longer takes dividends and donates much of his annual earnings from speeches/conferences etc to charitable causes.

        • BlueThroughCrimp says:

          28 Mar28 March 18:25

          So they don’t pay corporation tax, but want a tax payer subsidy.
          Imagine if every company did that. The UK would be bankrupt in no time. I’d put any government rescue scheme cash in to companies who pay tax to the country first.

          I find it a bit of a red-herring about employees paying tax and NI, a bit disingenuous to the staff to be honest.

        • TGLoyalty says:

          28 Mar28 March 18:40

          I’m still struggling with this notion that they are registered in the BVI and have shown you two companies you mentioned are registered in the UK.

          Rob quite rightly says they have to be an EU company to own an EU airline 51%.

          ultimately If there are any profits to pay taxes on the they are being paid in the UK. We can keep arguing about how much tax they really pay but ultimately VA provide a genuine boost to the UK economy and competition for a sector with pretty high barriers to entry.

        • BlueThroughCrimp says:

          28 Mar28 March 19:03

          I don’t see how anyone can defend a tax exile’s operations, especially now.
          I guess we’ll just have to agree to disagree.

        • Charlieface says:

          28 Mar28 March 20:38

          BVI is an OCT and citizens are also citizens of the EU

    • Shoestring says:

      28 Mar28 March 17:48

      They EMPLOYED 1000’s of BRITISH staff that are also no longer without a JOB!

      That’s great – so these 1000s still have a job then? You dolt

    • Mr(s) Entitled says:

      28 Mar28 March 17:50

      Not advocating bailing out but (to borrow your caps) THERE IS A DIFFERENCE between companies that fail due to market forces and companies that fail when the UK Government tells people not to fly.

      • BlueThroughCrimp says:

        28 Mar28 March 18:01

        The unpaid leave and the begging bowl were out fast. That well run?
        Flybe didn’t get life support, and arguably flew routes that were of more need to the UK’s connectivity than VS’s

        • TGLoyalty says:

          28 Mar28 March 18:42

          Flybe failed due to them not having enough profits/cash to last the winter, something that comes along every year.

          This is a situation that (hopefully) comes around less than once a lifetime.

  • TGLoyalty says:

    28 Mar28 March 16:11

    Agree 100%

    • James says:

      28 Mar28 March 16:20

      Disagree 100%

      • Jay says:

        28 Mar28 March 16:53

        What bit do you disagree with?

  • James says:

    28 Mar28 March 20:53

    A functioning banking system is critical to a functioning society and there were reasonable prospects that the banks would be able to repay the loans. A second-rate airline is not vital and there is little prospect of seeing any repayment from a rarely profitable, sub-scale airline.

• jack says:

  28 Mar28 March 15:48

  If Lufthansa, Air France/KLM, Finnair, SAS etc all require a bail out what makes anyone think BA are so different? They’ve a bit more time than Virgin but BA will also soon need govt money. Are people happy to let them both go bust?

  • Jay says:

    28 Mar28 March 17:58

    As shown by the figures, I think it’s pretty obvious that BA are a long, long, long way off any of those you mention

  • James says:

    28 Mar28 March 20:55

    Many reasons to think BA are different. Too many, in fact, to list.

• Kathy Mallam says:

  28 Mar28 March 15:56

  There needs to be competition to BA, although not specifically Virgin. I am old enough to remember the days before EasyJet and Ryanair. It was not just ‘cheap’ airfares- it was lack of condidtions. BA and all the airlines at that time insisted on an overnight Saturday stay for a reasonably priced fare. Single fares were horrendous (and indeed mostly still are!). Easyjet and Ryanair introduced one way fares – no need to stay the Saturday night- and BA fares had to come down accordingly. If we lose the cheap airlines – fares will shoot up again.
  Incidentally – dirty tricks between Virgin and BA have not all been one way.
  Finally Rob, following my earlier post today, I think you will find you have quite a big readership of ‘leisure’ travellers and your site has helped us to have a great time- thank you, and may it continue when the dust settles.

• Stephen says:

  28 Mar28 March 16:06

  Does anyone know if a subsequential loss claim could be made with AMEX for a reward flight booked with Virgin (ANA), and taxes paid with AMEX Gold charge card (business)?

  Would AMEX just refund the tax component / or return the miles transferred across?

  Or would they cover the difference in the cost of a replacement cash flight?

  • TGLoyalty says:

    28 Mar28 March 16:16

    Charge cards aren’t a credit product so I think they would refund your fees as part of their purchases Guarantee but no consequential losses.

• Secret Squirrel says:

  28 Mar28 March 16:21

  9.17am SMS VA to transfer points, 4.06pm SMS acknowledged request.

• Paul Whelan says:

  28 Mar28 March 16:37

  Quick question – if I transfer my VA miles to somewhere else (IHG, Hilton or similar), would I be able to transfer them back to VA should it survive this current situation?

  • Craig says:

    28 Mar28 March 16:53

    Yes but not at a good rate. IHG as an example you get 1:1 on the way to IHG but the transferring back you get 5:1 (I think). So 100k flying club miles would end up being 20k if you did the round trip

  • Lady London says:

    28 Mar28 March 17:50

    Only if you want a haircut on the way out and a shave on the way back.

    • Pangolin says:

      28 Mar28 March 21:45

      🙂

      Yeah, it’s even worse than going to an Airport Travelex and changing currency A to currency B, then changing it back to A.

  • Rob says:

    28 Mar28 March 18:19

    No.

    Well, yes, but terrible rates:
    1000 Virgin = 1500 Hilton = 150 Virgin
    1000 Virgin = 1000 IHG = 200 Virgin

    • Genghis says:

      28 Mar28 March 21:54

      Come on Rob!
      1000 Virgin = 1500 Hilton = 225 Virgin

      • Rob says:

        28 Mar28 March 22:46

        Oh yeah, forgot they were on the higher rate!

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