Virgin Atlantic told to resubmit its proposal for a £500m Government bail-out (FT)

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• Lady London says:

  18 Apr18 April 11:53

  I think I’d ask an insurance man would they sell a policy to cover the government against a potential loss on that loan.

  I think the premium would be 90-95% of the value of the loan. Based on it failing within about a year and some clever investing of the premium in the markets meanwhile. As they’re not able to get a covenant enforceable on any future owner/reconstitution of the airline.

  The insurance man’s response should give us all a clue about the advisability of lending to the current renter of the Virgin Atlantic brand name.

  • Secret Squirrel says:

    18 Apr18 April 11:58

    So, are our VA Miles safe?

    • Harry T says:

      18 Apr18 April 12:16

      Your Virgin Australia miles look even less safe than VS ones right now 😉

  • C F Frost says:

    18 Apr18 April 12:49

    Miskito and Necker islands might be unusual surety for the government but perhaps not unreasonable. (Who said empire-building was dead?)

• Colin MacKinnon says:

  18 Apr18 April 11:58

  FT article mentions the “support” from airports and Roll-Royce and Airbus.

  Of course, if – say – transatlantic traffic only recovers to 50%, then does it really matter to Heathrow, Airbus or Rolls-Royce who owns and flies the remaining operating aircraft?

  The idea of saving British jobs by saving Virgin seems a bit bonkers if there is a massive fall in traffic medium term. Should we save Virgin so as British Airways – marginally more British than Virgin! – keeps on more of its British staff.

  That might make sense if BA returns to profit and can then pay shareholders a dividend – since some (maybe only a few!) will be British taxpayers. Virgin can never pay a British taxpayer a dividend.

  Of course, if Virgin’s traffic all goes to US carriers, or Hong Kong or Indian or Middle Eastern, then Britain would lose out on dividend income. But they still might use Rolls-Royce, Heathrow and Airbus.

  In summary what is Virgin’s unique selling point to the UK?

  • marcw says:

    18 Apr18 April 12:02

    Delta Europe

  • J says:

    18 Apr18 April 12:29

    Most of those carriers are big Boeing customers. Airbus support a lot more jobs in the UK.

    • Mr(s) Entitled says:

      18 Apr18 April 12:50

      Virgin has 18 Airbus (plus 3 on order) and 24 Boeing.

      Airbus deliver hundreds of aircraft per year. Not sure how material Virgin are as a customer.

      • insider says:

        19 Apr19 April 00:01

        if VS survive somehow, i suspect they’ll be delaying / cancelling most of their orders

  • Will says:

    18 Apr18 April 21:34

    I think the big danger of big companies failing right now is contagion of defaults.

    Personally I’ve always thought virgin were a poor airline, I know many others disagree but style over substance for me and the old upper class seats were pants.

    But that aside if virgin fails it defaults on its debts and hands its leases aircraft back to a lease company with no takers for them who in turn has its own obligations to repay what’s owed on them.

    Banks will get very twitchy if that starts to happen, lending will dry up, interest rates will rise and the economy will go into free fall.

    That all may be unavoidable in the medium term but I think the small cost of keeping things going during the epidemic is worth the risk if you can prevent widespread loss of confidence in business lending and corporate (and government) bonds.

    It seems clear to me that interest rates are going to return in the medium run either to represent risk or due to gov printing bonds to cover losses at banks leading to inflation. Probably want that after the virus is dealt with and not together with.

• Colin MacKinnon says:

  18 Apr18 April 12:01

  Sorry, paragraph three should have said: should we LOSE Virgin so BA keeps on more of its staff

• Nick_C says:

  18 Apr18 April 12:55

  If feasibility and demand for long haul passenger travel ever returns to anything like 2019 levels, then new airlines will start up to replace VS, BA, and all the other airlines that should be allowed to fail. There will be an abundance of cheap second hand aircraft (and the 737 Max), and a large pool of potential staff who won’t come with the baggage of expensive remuneration packages and pension schemes.

  The aircraft and engine manufacturers will have to adapt to supplying parts, and perhaps converting pax aircraft to freighters.

  The short term future of the air industry is freight and military.

  • J says:

    18 Apr18 April 13:03

    That’s your fantasy as some extreme right winger – not the reality. Using this crisis to wish for new airlines employing people with poor pay and working conditions, what a pleasant individual you are. It comes down to a confidence thing – letting your flag carrier, e.g. a BA or Lufthansa go bust would be disastrous, it’s not going to happen. Virgin is a little more vulnerable but I’d still bet on it surviving.

    • Tom says:

      18 Apr18 April 13:24

      Nick’s attitude sums up everything that’s wrong with capitalism.

      • Chrisasaurus says:

        18 Apr18 April 15:27

        It also sums up at least some of what appears to be wrong with Nick…

        • the_real_a says:

          18 Apr18 April 15:32

          Stay classy communists. Attack the argument not the person.

        • Andy says:

          18 Apr18 April 17:03

          I didn’t know so many Corbyn luvvies read HfP

      • Ken says:

        18 Apr18 April 17:32

        Alternatively you could describe everything wrong with capitalism as the UK taxpayer bailing out companies who are owned by people or companies not even resident in the UK , one of whom competes using tax avoidance as a core competence.
        Bailing out a company that struggles to make a profit, has made roughly nil profit over the last 10 years and faces at least 18 months losing money hand over fist.
        Grim for the employees but remember that there were more jobs lost when British Home Stores collapse.

        It’s really nothing like a car plant closing down where it will never reopen and brings down a huge supply chain.

        Nick C. is bang right. A competitor to BA will eventually likely come into play. Might not be as good as Virgin – more likely it may be closer to the Norwegian model, but with leasing companies awash with planes it won’t be that difficult for someone with the capital behind them.

        • Paul Pogba says:

          18 Apr18 April 18:17

          Perhaps the airline industry could take a leaf out of the NUJs book and suggest a revenue tax on shipping or something to stop them going out of business.

        • Erico1875 says:

          18 Apr18 April 20:57

          If RB wanted to save Virgin Atlantic, as his baby , surely he would throw everything he had in to it.
          If he isnt willing to put his balls on the chopping block, then why should the UK taxpayer.
          SHOW US THE MONEY Dick Boy

        • Will says:

          18 Apr18 April 22:53

          Why would RB put his money on the line while other airlines potentially get bail outs.

          If RB intends to bail out the airline his cheapest method of doing so is probably letting it go bust then buying up whatever remains, there won’t be many takers for a failed airline any time soon so it’s likely cheaper than honouring existing debt obligations.

        • Lady London says:

          19 Apr19 April 15:59

          @Will as another poster pointed out 2 days ago, think it was @Nick_C, and now you, actually letting it fold works best for VS owners too. And far, far cheaper for the taxpayer.

          Also means that if it the Spanish-owned IAG’s BA gets any help it is more likely to be on commercial terms which is fairer to the taxpayer.

• Charlie says:

  18 Apr18 April 13:05

  Why can’t Delta provide a loan? Surely state ownership rules only apply to the equity?

  • Rob says:

    18 Apr18 April 15:52

    That is correct. If it was a straight loan I don’t see why it wouldn’t be fine.

  • Ken says:

    18 Apr18 April 18:04

    Or the bearded tax avoider ?

• Anna says:

  18 Apr18 April 13:36

  If this is approved Necker Island should be requisitioned for free holidays for the lowest paid frontline workers.

• Kev 85 says:

  18 Apr18 April 13:44

  “ Delta received its own multi-billion dollar bailout package from the US Government last week, most of which is not repayable, despite spending over $3 billion on share buy-backs and dividends in 2019 alone”

  I thought America was the land of the free market and no government intervention?

  (Spoiler alert: I didn’t really)

• Melvin Fairfax says:

  18 Apr18 April 14:28

  Well Richard if you pay back the money that your company sued the NHS for then maybe the British people might be a little more sympathetic to your needs and maybe paid your staff ,you know the people who got you where you are today ,yes you might be Mr Virgin but your employees are the company

  • J says:

    18 Apr18 April 14:53

    Virgin Care were awarded compensation because of a flawed procurement process and if you read up about the case you’ll see it was a token sum and pretty irrelevant in the scheme of things.

    • Lady London says:

      18 Apr18 April 15:21

      Personally I’m wondering why Procurement & Supply Chain in the NHS still seems to have been unable to do its job and procure enough masks, gowns etc for NHS workers.

      What on earth are they doing?

      • Chrisasaurus says:

        18 Apr18 April 15:30

        From what I gather from contractor friends who have engaged with them in the past, they are doing exactly what they always do – the absolute bare minimum, with as much officiousness, bureaucracy and aversion to owning anything they possibly manage and without a commercial thought to share between them

        • Harry T says:

          18 Apr18 April 18:49

          Chris, you’ve pretty much just described all levels of management in the NHS right there. I miss working in Australia.

        • Lady London says:

          19 Apr19 April 16:01

          Harry you would be better off in quite a few other countries like Oz.

    • Rob says:

      18 Apr18 April 15:34

      Indeed. It is not exactly unusual for a Government body to go through the motions of inviting third parties to bid for contracts, who incur large costs, and then convieniently the existing in-house provider wins and no-one will explain why.

      • Chrisasaurus says:

        18 Apr18 April 18:19

        For the best example of this see the recent tender for the Colmbian .co domain registry, where the tender was written by the incumbent seemingly by copy & pasting from their own corporate bio….

      • Lady London says:

        18 Apr18 April 18:24

        OJEU be dam*ed

        And now NHS staff are being put at even more risk due to NHS Supply Chain’s apparent incompetence. Made worse by their alleged refusal to run a fair process to get suppliers in that could actually deliver

  • ChrisC says:

    18 Apr18 April 14:53

    Short Version = Although it is described that Virgin Care sued the NHS they just used the NHS disputes mechanism and the Clinial Gommissioning Group paid them approx £325k. It certainly wasn’t millions tht is often alledged.

    Longer Version = Virgin Care rebid for a contract and lost the tender. They asked for info on why they lost and the CCG just refused and knowing there was a dispute the CCG still signed the contact with the new provider.

    That meant Virgin Care had to use the NHS disputes mechanism and they wern’t after money just information on why they lost the contract – something they had done and got on previous tender exercises – so they could learn for the future.

    Rather than provide that inforomation the CCGs involves paid Virgin Care to basically make the dispute go away. The £325k was to cover the costs V Care incurred during the tender exercise and the dispute process.

    • the_real_a says:

      18 Apr18 April 15:29

      Don’t baffle the Twitter people with facts 🙂 The alternative provider also didn’t cover all the service points from the tendered requirements as i understood it. You cannot award a contract to supplier who offers less than your specification, without allowing the other providers to resubmit their bids with the extra bits removed for a cheaper price.

    • Lady London says:

      18 Apr18 April 18:28

      Does this have the whiff of corruption about or just monumental incompetence? I really can’t decide.

      • ChrisC says:

        18 Apr18 April 19:57

        Incompetance.

        The settlement figure was only released because someone didn’t redact it from the public board meeting papers of the CCGs

      • Erico1875 says:

        18 Apr18 April 21:12

        probably both

        • mvcvz says:

          18 Apr18 April 23:49

          At least 99% of so-called managers in the NHS I’ve encountered (and that’s a LOT over the years) are simply not smart enough to be corrupt.

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