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Virgin Atlantic abandons plan for Government bailout, has five weeks to find a buyer (Telegraph)

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The Sunday Telegraph reports that Sir Richard Branson has abandoned plans for a Government bailout of Virgin Atlantic and is now desperately seeking a trade buyer.

The airline will be put into administration at the end of May if this cannot be achieved.  Accountancy firm EY is reportedly already lined up to act as administrator.

The airline is reported to have hired investment bank Houlihan Lokey, which specialises in distressed debt situations, to approach potential investors.  50 parties are believed to have asked for financial information.

Interestingly, none appear to be trade buyers.  Names quoted included hedge fund Lansdowne Partners, Singapore’s sovereign wealth fund, US private equity group Centerbridge Partners and distressed debt investor Cerberus.

Potential bidders are expected to form consortia to submit bids.  It is important to remember that a 51% shareholding must remain with UK or European Union entities under EU aviation law.  Only Lansdowne Partners, of the names listed above, has a qualifying domicile.

Delta Air Lines, currently a 49% shareholder, has already said that it will not commit further funds to the airline as it deals with its own financial crisis.  Delta is keener to take money out of Virgin Atlantic, with the airline currently owed $200m which was due as a transition payment to reflect the addition of Air France and KLM into the Delta / Virgin transatlantic joint venture.

Delta’s CEO Ed Bastian is quoted as telling MSNBC that it supported administration, believing that there would be bidders for the assets.  Any solution is likely to see Delta’s shareholding wiped out, but this is unlikely to be a major problem as the real value for the airline is in the joint venture agreement.  Virgin Group may be reduced to a minority stake unless there is an issue over hitting the 51% EU quota.

Is this really the last throw of the dice?

Not necessarily.

It is possible that the airline will return to the Government with a request for aid before putting the airline into administration.  As we covered, the original bail-out request was rejected because the airline was not believed to have exhausted all other potential options.  This new process may be a way of proving to the Government that no other alternative is possible.

The Sunday Telegraph article is here.

How to earn Virgin Points from UK credit cards

How to earn Virgin Points from UK credit cards (April 2024)

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, the Reward+ card has a bonus of 15,000 Virgin Points):

Virgin Atlantic Reward+ Mastercard

15,000 bonus points and 1.5 points for every £1 you spend Read our full review

Virgin Atlantic Reward Mastercard

A generous earning rate for a free card at 0.75 points per £1 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 20,000 Membership Rewards points, which convert into 20,000 Virgin Points.

American Express Preferred Rewards Gold

Your best beginner’s card – 20,000 points, FREE for a year & four airport lounge passes Read our full review

The Platinum Card from American Express comes with 40,000 Membership Rewards points, which convert into 40,000 Virgin Points.

The Platinum Card from American Express

40,000 bonus points and a huge range of valuable benefits – for a fee Read our full review

Small business owners should consider the two American Express Business cards. Points convert at 1:1 into Virgin Points.

American Express Business Platinum

40,000 points sign-up bonus and an annual £200 Amex Travel credit Read our full review

American Express Business Gold

20,000 points sign-up bonus and FREE for a year 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.)

Category

Virgin Atlantic and Flying Club

Comments (349)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Anne says:
    26 Apr26 April 08:08

    Slightly different spin on this from Reuters overnight https://uk.reuters.com/article/us-health-coronavirus-virgin-atlantic/virgin-atlantic-says-still-talking-with-uk-government-on-coronavirus-funds-idUKKCN22801J

  • AJA says:
    26 Apr26 April 08:13

    The trouble is that bailing out airlines does not fit well with any green agenda. Imagine the backlash from XR and the anti-flying lobby who are also against airport expansion. If the government lets Virgin go to the wall that’s fewer aircraft up in the sky which some may see as a good thing. The other point is that Virgin only flies internationally so while it is great for customers who fly on its routes it’s not generating tax revenues for the UK, apart from APD and employee NI and PAYE. Delta publicly stating it won’t support Virgin financially isn’t helping. Finally SRB has not done his companies any favours with the govt, his tax domicile and suing the NHS and the failure of Virgin Trains are coming home to roost. SRB talks about 70,000 employees but thats across all his companies. The airline has less than 9,000 (still a big number). I do wonder if this really is the end of the line.

    • Marcw says:
      26 Apr26 April 08:21

      It’s not even an internationally focused airlines. It’s an US heavy focused airline (we could call it Delta UK).
      Unfortunately, it’s the end for the airline. It wasn’t profitable for the last 10 years… so how can we expect them to be profitable in the near future? Zero chances.

    • Tariq says:
      26 Apr26 April 08:31

      “ The other point is that Virgin only flies internationally so while it is great for customers who fly on its routes it’s not generating tax revenues for the UK, apart from APD and employee NI and PAYE. ”

      What about tourists and business travellers that VS flies into the UK?

      • TGLoyalty says:
        26 Apr26 April 08:38

        What’s that even mean anyway? It generates a significant amount of APD, NI and Income tax.

        • AJA says:
          26 Apr26 April 12:01

          @ TGLoyalty What I mean is that apart from APD and NI/PAYE on employee salaries Virgin doesn’t generate that much revenue for the UK treasury. I am not sure how much Corporation Tax Virgin Atlantic has paid, if indeed it has paid anything as I suspect group tax reliefs may have wiped out any liability anyway and current tax losses may wipe out future liabilities .

          As far as the value of APD and NI/PAYE generated I suspect that it is insignificant when compared to the likes of EasyJet which has significantly more employees, operates a lot more flights to many more routes and does actually make a profit and pay UK CT which is why they were able to get a £600m government loan and Virgin so far hasn’t. I know which airline I would lend to and I suspect the government does too.

      • Nick_C says:
        26 Apr26 April 09:14

        Although you will no doubt find some Yanks on VS flights, my experience is that people generally fly with airlines from their own countries. Hence the number of people on here who seem to think BA is essential.

        Most of my long haul flights have been on foreign airlines.

        So VS bringing overseas tourists to the UK? Not significant. If Americans want to visit the UK, there will be airlines that will bring them here.

      • AJA says:
        26 Apr26 April 09:52

        According to wikipedia Virgin only flies to 27 destinations and, while there will indeed be some business travellers and tourists coming to the UK from some of the cities it serves, the majority of passengers are UK residents. And yes there is APD it’s only charged on departing UK. The amount that raises for the UK treasury is minimal in the scheme of things. A bailout will cost significantly more than the APD it raises. Sometimes it is better for a company to be liquidated. I think it’s a shame if Virgin goes to the wall but really how much would we all be disadvantaged if it stopped flying?

    • J says:
      26 Apr26 April 08:55

      A competitive aviation sector bring wider economic benefits – better for domestic consumers as well as tourists, business travel etc. A lot of people don’t like Branson but they should be careful what they wish for. Germany is a bigger and richer market but only has Lufthansa – service is bad and prices are high: they’re even worse than BA! They’re also refusing to refund at the moment. I’m slowly getting BA refunds – LH relying on charge backs as they are refusing to process or even discuss refunds.

      • Novice says:
        26 Apr26 April 09:48

        I’m not a business traveller, only a very frequent tourist and I don’t see the hype. I don’t travel with any UK airlines if I can help it. ME3 are cheaper and better product for east… Most Virgin routes are from London so if I have to bother with a connection I might as well go AMS and use klm.

        There’s no need to get patriotic over airlines. If they had a lot of routes from outside London which didn’t specialise in USA they might have been better off.

        They pretend to be a leisure carrier but are operating like a business carrier. They put all their eggs in one basket. Everyone acts as though ppl from outside London don’t travel frequently and to different destinations.

        • J says:
          26 Apr26 April 10:56

          So because VS is of no use to you personally it’s of no value?

          • Novice says:
            26 Apr26 April 11:06

            You’re not getting what I’m saying. I’m not only talking about personal use as I was using it also as an analogy.

            Virgin is only a choice for biz travellers headed to NYC from London and they are not the only choice. That’s what I’m saying. They add nothing for travellers outside London and even inside London who want to go to other places. There are 6 other continents in the world. USA isn’t the world despite what some may think.

      • AJA says:
        26 Apr26 April 12:32

        @J But you don’t just allow an airline to survive because of a handful of routes. Even the South African government have finally let their own flag carrier go to the wall. And BA really doesn’t have the monopoly on those routes you’ve listed. It may be the only carrier left flying directly between London and those cities but there are at least 5 other airlines that you can travel on to get there.

    • Matt says:
      26 Apr26 April 10:34

      >Imagine the backlash from XR and the anti-flying lobby who are also against airport expansion.

      XR are the goon show who thought it appropriate behaviour to prevent cancer patients getting their cancer treatment.

      Beneath contempt.

      If another 1000 of them want criminal records, let’s get it over with.

      • AJA says:
        26 Apr26 April 12:21

        Matt, I agree with you I have no time for XR and I think the anti-flying lobby are misguided at best. I am not in awe of ms Thunberg either. But just because I am not a fan of any of them does not mean that their views outrank mine nor mine theirs. It would be foolish to ignore them however and this government needs to avoid anything that might be seen to be a negative step against the green lobby. It’s made enough mistakes already so I suspect they will think long and hard before actually allowing Virgin to fail. Unfortunately in addition SRB has rather nailed his political colours to the mast and they’re not the right colour. If they had been a different hue and he hadn’t been quite so publicly a tax-exile Virgin might have been given a loan.

        • Novice says:
          26 Apr26 April 13:32

          Greta is a legend 😂 the only person who has ever made me feel guilty for flying as much as I do… she’s a kid, give her some credit… she talks more sense than a lot of ppl and doesn’t change her msg for money 💰

  • Patrick says:
    26 Apr26 April 08:18

    the only reason why BA is still standing is a higher cash balance and abusing customers, i.e. doing everything they can not to pay out refunds…

    • Kev 85 says:
      26 Apr26 April 08:34

      “ the only reason why BA is still standing is a higher cash balance”

      That’s a pretty important reason…..

    • crux says:
      26 Apr26 April 09:31

      i have got 2 refunds from BA, processed within 5 days

    • Doug M says:
      26 Apr26 April 10:16

      BA are actually one of the better EU carriers from a refund point of view. Sure they’ve put obstacles on the path, but call them and you get the refund. As to having a higher cash balance, duh! You mean they were a better managed business?

      • Harry T says:
        26 Apr26 April 11:06

        Yeah, aside from blocking any kind of means of acquiring your refund online, BA have been saints compared to LH group, KLM/AF, Ryanair, EasyJet…

  • 7478 says:
    26 Apr26 April 08:26

    Is this just a pointless exercise? Isn’t it in Beardys best interest to do a rubbish job in trying to find a new buyer because he knows the bailout backstop exists?

    • Johnny Tabasco says:
      26 Apr26 April 08:29

      this seems abundantly obvious to me

    • Mike P says:
      26 Apr26 April 08:29

      Ah but that assumes the ‘bailout backstop’ does exist, I wouldn’t be so sure of that.

    • Rob says:
      26 Apr26 April 13:12

      Doubt it. A £500m equity investment is clearly a better result than a £500m loan, even a soft Government loan.

  • Jonathan says:
    26 Apr26 April 08:36

    It’s important that Virgin Atlantic keeps going, since if they were gone, BA would have a monopoly over most UK aviation

    • Marcw says:
      26 Apr26 April 08:42

      BS. easyjet or Ryanair are way more important for competitive reasons than VS. also, check which routes VS operate and whether there are more airlines flying that route. You’ll be shocked once you realise how little VS ads to the the competitive panorama

    • Andrew says:
      26 Apr26 April 08:51

      They really wouldn’t. 6 different airlines fly from London to New York for example. Losing Virgin would barely register.

      • J says:
        26 Apr26 April 10:28

        Bad example as London New York is the busiest route in the world. What about important routes like South Africa, Nigeria and India? BA already have a monopoly on Cape Town.

        • Novice says:
          26 Apr26 April 10:43

          I repeat outside London this is not helping any traveller. I would rather hop over AMS (better airport, service, airlines routes) so Virgin is not important for any competition as being a traveller for years, travelling to 6 continents, I have never used them and I’m a person who has even sat on premier air (I think it was called in Africa)

          • Novice says:
            26 Apr26 April 11:48

            Another point I wanna make is Opportunity… I have flown a lot of different domestic and international airlines over the years and have always tried to experience all the different airlines I can and in my touring I have never had the opportunity to try Virgin. Which is evidence enough in itself that they have no network and are not hub airline.

        • AJA says:
          26 Apr26 April 12:30

          @J But you don’t just allow an airline to survive because of a handful of routes. Even the South African government have finally let their own flag carrier go to the wall. And BA really doesn’t have the monopoly on those routes you’ve listed. It may be the only carrier left flying directly between London and those cities but there are at least 5 other airlines that you can travel on to get there.

          • Novice says:
            26 Apr26 April 12:52

            😂 @AJA did you copy and paste… I should have done same saves me trouble of having to explain myself million different ways. But still I think the point is not getting across imho.

          • AJA says:
            26 Apr26 April 13:44

            @ Novice. 😊 Yes, I did as I inadvertently posted my reply to J in the wrong place so posted again. I type all my posts in Word (unless I am on my mobile) and then paste here as that way I also get to edit them easily and spellcheck as well and can see the original post I am responding to. Unfortunately, I agree the message does seem to be falling on deaf ears.

        • Lady London says:
          26 Apr26 April 16:31

          No they don’t. There’s a lot more airlines flying to CPT than BA. For UK citizens not direct, but we are not the centre of the world.

    • Mr(s) Entitled says:
      26 Apr26 April 08:55

      How many routes does Virgin compete directly with BA and on those routes, for example New York, what percentage of the overall capacity are they?

      Direct flights to the Caribbean at Christmas might get more expensive. There is lots of competition elsewhere.

      • Opus says:
        26 Apr26 April 12:51

        BA serves 100 long haul destinations VS competes at about 40 long haul destinations so there are 60 destinations that VS does not compete at all. And then of course zero short haul destinations. But it’s only fair to make the long haul comparison since they don’t exist In the short haul market AT ALL.

    • BlueThroughCrimp says:
      26 Apr26 April 09:09

      The same whistleblowing Virgin who agreed fuel surcharges with BA?

      Flybe were better for UK connectivity, and they didn’t get bailed out, Monarch and Thomas Cook’s demise consolidated TUIs position.

      A few flights to NYC and the Caribbean are a drop in the ocean. JVs are much more anticompetitive.

      Thoughts are with the staff at this time.

      • Doug M says:
        26 Apr26 April 10:20

        Good one. No honour amongst thieves in the airline industry, if you can’t trust your cartel partners who can you trust.
        I too feel for the staff, they generally seemed happy working for VS. Whilst there’s always (perhaps rightly) a big focus on earnings, having a job you like and are happy at is really important in the long term.

    • Doug M says:
      26 Apr26 April 10:17

      Nonsense. Virgin compete with BA on a handful of routes. VS is not BAs competition.

    • Novice says:
      26 Apr26 April 10:34

      But would they?

      I don’t believe that. Especially in London ppl have a lot of choices for airlines. And outside London, all us frequent travellers need connections anyway so why not hop over to AMS or paris and take a cheaper better product.

      Virgin was never big enough to make a proper dent in competition. Yes they gave yet another choice to business travellers going to US but we are a nation of 60+ million people and Virgin made a mistake to believe only US matters as a destination.

      • J says:
        26 Apr26 April 11:00

        I wouldn’t call AF/KLM a better cheaper product vs Virgin or even BA. I find KLM pretty equal to BA, AF is worse than BA and Virgin better than all three.

  • Ralph says:
    26 Apr26 April 08:42

    It seems likely that some way of preserving the airline will be found even if in a different form and possibly under different ownership. Going into administration (and re-emerging) is difficult if not impossible for airlines specifically, so a solution needs to be found quickly while it is alive. If it continues to operate, keeping key customers which must include Flying Club passengers will be critical, so wiping out miles would be a fiasco for the airline as much as it would be for the individuals, quite apart from the loss of profits/fees from running the schemes. Most of the US airlines have been bust in recent years, some more than once, but by and large their loyalty schemes have remained. Of course, that doesn’t mean there might not be changes and devaluations later but a wholesale wipeout is unlikely except in the case of bankruptcy and the airline not flying again in any form.

    • Mikeact says:
      26 Apr26 April 14:07

      Why does it have to come back as Virgin ? …..with possible royalties still having to be made to use the name. And as for the FC miles, perhaps it should have been set up like Virgin Australia Velocity points…at least they had/have a trustee in place to safeguard all members. He/she has already stated that members could be financially reimbursed for their points, but at what cost ….. nobody knows….enough to surmise that nothing like they were worth.

  • Jake says:
    26 Apr26 April 09:00

    So where does this leave out FC points?

    I’ve got 5 PE seats booked to Vegas for July, which obviously isn’t going ahead. Plus about another 150k points. Should i cancel the whole lot and transfer to HH or IHG? Are there any flight redemptions that will be honoured? DL maybe?

    • TGLoyalty says:
      26 Apr26 April 09:16

      Perhaps worthless or as Delta owns part of it still useful for redemptions with them?

      They aren’t reliant on all their revenue from VS as they get some from KLM/AF and Delta, run an affiliate commission business (shops a way) and it was meant to move to Virgin groups loyalty scheme and they are still around (for now)

      If VS fall into administration and is bought out they’ll probably still want to use the scheme and keep the Virgin name etc.

      • Mikeact says:
        26 Apr26 April 09:43

        I don’t see Delta picking up any Virgin rewards whatsoever, why would they…particularly if their 49% is likely to be wiped out. And again, if I read it right….retain the scheme with the Virgin name behind it ? I think not.

        • TGLoyalty says:
          26 Apr26 April 10:00

          Y comment around Delta was if it was wound up…no idea why but they have done it before.

          RE if it’s purchased then no idea what will happen but it’s unlikely they’d drop the virgin name straight away and a loyalty scheme would still be required for any serious airline.

          • Mikeact says:
            26 Apr26 April 10:23

            But and assuming, they would have to join the Flying Blue alliance if they still wanted some sort of Delta connection, and that would definitely not happen overnight, if at all. They could go it alone with a new scheme from scratch, but again, that I don’t see.

  • Dezbez says:
    26 Apr26 April 09:13

    Has anyone closed a Virgin Atlantic credit card recently? And did they make any retention offers like Amex is currently doing, if so?

    • AspirationalFlyer says:
      26 Apr26 April 09:21

      I cancelled it yesterday and no they did not offer me any retention promotions or offers. They also said my account would have to be closed manually and was ‘queued for the back office’.

      • JPa says:
        26 Apr26 April 09:27

        Anyone had any luck getting a refund on the remaining annual fee for the plus card?

        • Alan says:
          26 Apr26 April 09:39

          I thought it was a sunk cost, unlike Amex fees?

        • Peter K says:
          26 Apr26 April 09:50

          @JPa I tried to close and get a partial yearly fee refund based upon a change in t&c they had made and basically the web message service was awful. When it went to someone who can resolve disputes (I never made a dispute btw, that was their support staff failing to read my messages in any normal way) they dismissed it out of hand.
          This was last month.

          • JPa says:
            26 Apr26 April 10:44

            Dismissed it, as in would not refund it?

            There have been some cases of people getting refunded in the past. I was going to cancel before my second year, but they would not let me because my balance was not cleared. He said I could get a refund on it, but we not individual CS can make things up.

        • Alex W says:
          26 Apr26 April 14:07

          @ JPa I tried in November, denied.

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