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

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• ChrisC says:

  18 Apr18 April 15:02

  I’m not sure this indicates much at the moment.

  VS submitted a bid for funding The Government and it’s advisors asked Virgin to clarify some aspests and that is what VS is doing. I don’t see that as it being turned down and the FT dosen’t say that – just resubmit – so not sure why you decided to say that in your first sentence.

  This is similar to issues many of us had aplying for a bank loan or a mortgage and the provider wants you to perhaps look at your income and expenses or clarify your employment history etc etc

  What is different here is the scale of the amount.

  • Rob says:

    18 Apr18 April 15:32

    It has not been accepted so de facto it has been turned down in its current format.

    I agree with your example but this is not the case here. It is not about clarifications, it is about how much Virgin Group and Delta will commit alongside.

    • A says:

      18 Apr18 April 19:11

      Better analogy: you’ve applied for an 80% LTV mortgage, but have specified you only want to pay a 10% equity contribution with your deposit. That’s not going to be accepted.

• Simon says:

  18 Apr18 April 15:10

  Presumably Delta’s 49% ownership is capped under EU ownership rules. Does the government have a policy on airline ownership restrictions once we leave the transition period? Could the Treasury offer support until 31 December on the assumption that Delta can pick up the slack – or walk away and let Virgin collapse – next year?

  • Rob says:

    18 Apr18 April 15:31

    It’s more complex than that. If Virgin ceased to be a UK airline then a lot of its flying rights may disappear. You often get countries saying ‘let’s agree that 2 x UK airlines and 2 x Japanese airlines are allowed to fly between UK and Tokyo’ for example.

    • insider says:

      19 Apr19 April 00:44

      except virgin pretty much just fly to the US so suspect they’ll be ok

• Tim says:

  18 Apr18 April 16:31

  I don’t have any problem with my tax being used to subsidies employees. Nor for it to be used to ensure vital connectivity for more remote parts of the country, but airline’s shareholders took on the risk of loosing their cash when they bought their shares and therefore that is precisely what should be allowed to happen. Once this is over, the airports will still be there, The aircraft will still be there and someone will see an opportunity to fly profitable routes again.

  • TGLoyalty says:

    18 Apr18 April 17:14

    Nonsense. This isn’t something that was in Virgins control or a normal part of business ups and downs.

    • Kev 85 says:

      18 Apr18 April 17:30

      The weren’t making a profit before corovirus were they?

    • Rob says:

      18 Apr18 April 17:37

      It makes no sense. It would take literally 10 years to recreate Virgin Atlantic, given the slots, route network, number of aircraft it has, the depth of the Virgin Holidays business etc. If you were lucky, you might (or might not) in a decade have a business capable of challenging BA on the scale as Virgin. What’s the point of wasting a decade?

      CV has unfortunately taken attention away from the costs of letting Flybe fail. When in a year we can clearly see what happens to the airports it served, the economies of those cities etc, a £100m loan to keep it going might turn out to have been a bargain.

      You can also look at the £100 billion cost of HS2 – which is money out of the door – in the context of the loan guarantees that Virgin or Flybe sought.

      • Ken says:

        18 Apr18 April 19:09

        Why would anyone want to re-create Virgin Atlantic ?

        No one would invent a transatlantic airline with a couple of random routes thrown in.

        Why not bail out Virgin cruises while we are at it.

        • Dave says:

          19 Apr19 April 00:34

          Ken, this is just getting dull.

      • Lady London says:

        19 Apr19 April 16:04

        I do wish someone would can that politicians’ vanity thing that is known as HS2.

  • Rob says:

    18 Apr18 April 17:29

    You do know that every private business in the country is getting £10,000? No employees needed, you just need to pay business rates. It’s free money for everyone. Is giving a £10,000 handout in hard cash – and this is not repayable – to everyone who runs a business, irrespective of its current financial state, more or less of a waste than a loan guarantee?

    (Annoyingly I do not get £10,000 for free. This is because WeWork pays our business rates and I pay WeWork back. There is no direct relationship so I don’t get anything. Bit like using PayPal or Curve to buy something and losing Section 75!)

    • Ken says:

      18 Apr18 April 17:46

      The £10k is only for business getting small business rate relief – so occupies a property with a rateable value of less than £15k.

      £15k doesn’t get you much (wouldn’t get you a small shop on my high street in Liverpool, although separate scheme for retailers). Would get you the offices above the shop used perhaps by a very small solicitors.

      Occupy 2 properties? You probably won’t get it.

      • Sandgrounder says:

        18 Apr18 April 22:29

        Which is your high street? Plenty in Crosby with a rateable value of less than 15k, for example.

        • Ken says:

          18 Apr18 April 23:20

          Allerton Road rateable values for shops size of a butchers is about £18k

        • Bill says:

          19 Apr19 April 08:49

          Allerton was my neck of the woods Ken when I was younger

      • Will says:

        18 Apr18 April 23:06

        Pretty much the entire industrial estate I work from is under 15k rateable value and we’re not talking 1 room offices, we have a 220sqm warehouse, 7m to eaves and it qualifies. Frighteningly arbitrary how it’s handed out. Some companies are reliant on it, others trading more heavily than normal and getting same amount.

        Personally not impressed by the way it’s been administered. £10k government backed 12 month interest free overdraft would have been far more sensible, possibility to write it off in 12 months if you can demonstrate £10k would fold your business.

        Whole gov response on this has been shambolic, it’s a Tory government trying to outdo labour on social policy. Woefully out of their depth. It’ll be interesting to look back on this in years to come.

    • Ken says:

      18 Apr18 April 18:02

      I’d also add that 95 % of those small business probably paying corporation tax, collecting VAT etc.
      The owner paying all their income & capital gains related taxes in the UK.
      The owner generally can’t furlough themselves, often have to put personal guarantees in place to borrow in normal times.
      Doesn’t structure the company to pay royalties, interest on debt, or other transfer pricing to the Cayman Islands to make sure you never pay UK corporation tax.

      • Will says:

        19 Apr19 April 01:22

        I think that’s a fair point. Many of those owners could furlough albeit at around 80% of 1k a month, but given that’ll largely be free of income tax and NI/pension contributions it might not be as different to the 2.5k employee with tax/NI/pension taken into account.

        I also suspect the government might be flexible on owners furloughing themselves on a higher monthly salary than prior to covid.

• Mikeact says:

  18 Apr18 April 16:43

  Once again , management shown up for what they are….can’t even write a proper business plan without it being picked up. Even more troubling if they had help from a major third party ,which obviously they must have. Totally disgraceful.

  • Will says:

    18 Apr18 April 21:26

    I think that’s a bit harsh on them saying they can’t write a proper business plan.

    If the government think virgins return to business is too optimistic then perhaps the government might suggest when commercial air travel might resume.

    They can’t even say when you’ll be able to sit down on a blanket in a park right now, or buy a football to kick around in said park and they are making the rules.

    Also remember they were advocating in the beginning that they were using the best scientific information to time restrictions precisely and they knew what they were doing, so why can’t they say when things can return?

  • Callum says:

    19 Apr19 April 04:23

    Once again, clueless armchair commentators shown up for what they are….

    I was going to say I can’t see how you’d draw any conclusions on this given you don’t have the slightest idea what’s in their business plan, but then I remembered we now live in a world where people genuinely don’t care about truth or facts. How utterly depressing.

  • Mikeact says:

    19 Apr19 April 08:02

    You’re absolutely right, pressed the button and then reflected that I was a bit too critical, but couldn’t pull it back of course. Apologies all round.

• Heathrow Flyer says:

  18 Apr18 April 18:40

  Looks like South African have reached the end of the line.

  • J says:

    18 Apr18 April 21:11

    I’ve had a lot of good flights with SAA and good service. Loved flying to Johannesburg with them on an A340 (wonder if there’ll be many opportunities to fly on one of those again…) Good domestic flights too on SAA and full service but competition from comair and flysafair/kulula at the budget end I don’t think SAA were competitive. Unfortunately SAA got into an awful state under the previous government with some serious mismanagement and corruption. Ramaphosa, thd current president is doing a good job but there’s more important things to do than bail out SAA (again).

    • Roger* says:

      19 Apr19 April 06:23

      Well, if you really want to use an A340, SWISS use it to Cape Town. Other things being equal …

      • Roger* says:

        19 Apr19 April 06:24

        ,,, op Edelweiss.

      • J says:

        19 Apr19 April 08:02

        True although lufthansa have scrapped all theirs, Swiss recently updated theirs.

• James B says:

  18 Apr18 April 22:12

  At what point do we need to start thinking about strategies to protect Flying Club miles in the event that a collapse of VS is looking likely? Any suggestions?

  • Sean says:

    18 Apr18 April 22:28

    About 3 weeks ago for a lot of people on here

  • Eman says:

    18 Apr18 April 23:21

    Seems like you can redeem miles for Virgin Wines vouchers again (that was suspended a couple weeks back) although they are poor value obviously, better than nothing I guess!

  • Ian M says:

    19 Apr19 April 08:57

    Yeah that point was 3-4 weeks ago. A lot of people have transferred out of FC. Most seem to be picking Hilton, which is what I did.

• Tom says:

  19 Apr19 April 07:14

  You might have noticed that the newspaper industry is in crisis too with no option for government support (newspapers can’t/shouldn’t receive govt money for reasons of editorial independence). The FT is no exception.

  If you value journalism like this then consider paying for it rather than promoting ways of circumventing the paywall.

• Natalie says:

  19 Apr19 April 08:02

  Should I be transferring my Virgin Atlantic miles?

  • Rob says:

    19 Apr19 April 09:35

    Try this: https://headforpoints.com/2020/03/17/will-avios-and-virgin-flying-club-go-bankrupt/

    • Natalie says:

      19 Apr19 April 14:55

      Thanks!

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