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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 (August 2022)

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 Rewards Plus credit card

Virgin Atlantic Reward+ Mastercard

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

Virgin Rewards credit card

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 Amex Gold

American Express Preferred Rewards Gold

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

The Platinum Card from American Express comes with 30,000 Membership Rewards points, which convert into 30,000 Virgin Points.

EDIT: Until 25th October 2022, there is an exceptionally generous sign-up bonus on The Platinum Card. You will receive 60,000 Membership Rewards points – double the usual amount – and £200 to spend at Amex Travel. You need to spend £6,000 within six months to earn the bonus.

American Express Platinum card Amex

The Platinum Card from American Express

60,000 points, £200 travel credit and an unbeatable set of travel 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.

Amex Platinum Business American Express

American Express Business Platinum

40,000 points sign-up bonus and a long list of travel benefits 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.)

Comments (350)

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

  • Mikeact says:

    Remember this ?
    2 Years Ago Virgin America Operated Its Final Flight on April 24th, 2018.

  • Craig says:

    I have a ticket for MAN to JFK on VS in September and back from LAX to MAN on AF via CDG. Ticket issued by VS. If VS goes bust, will the ticket still be valid for the AF flights?

    • Philco says:

      No unless AF decides to honor it. The flying airline is only paid by the ticketing airline after you have flown. If VS has ceased to be before you have flown well…. Now the VS loyalty program is separate from airline but likely is not funded to survive the collapse of VS. I wouldn’t bet on AF honoring the ticket.

  • Cal says:

    I think a key point that I haven’t seen too much discussion on is Delta’s overall strategy with its joint ventures/ownership of other airlines.

    Virgin Atlantic fits in with this by integrating into Delta’s network, obviously this can be seen clearly at Delta’s hubs like Atlanta but you can also see it with Air France and KLM connections with Virgin to the US.

    I am sure that Delta will defer payment demands to assist VS. In theory they could also pull some Delta flights off shared routes with VS, but I assume the JV makes this of smaller value.

    If Branson is being genuine with this search for new investment I can see Delta selling some of their equity but in a few years returning back to 49%.

  • Mikeact says:

    Just to repeat an earlier post of last week, unable to give credit.

    UK airports moved about 290 million pax durig 2019. Virgin Atlantic is responsible for… max 6 million pax. VS network is negligible, compared to BA, Ryanair or easyJet.

    • TGLoyalty says:

      290m passengers movements between the USA and UK?

      • Mikeact says:

        The way I read it was globally…would be interesting to see the US numbers to see how Virgin compare to the overall numbers of other carriers, albeit they don’t cover every city like others.

  • David D says:

    Today’s update has led me to decide to move my miles out of VS and into HH. I only have 60k available to transfer and 90k HH points would be very useful towards a redemption somewhere else on a 5 nights for 4 or multiple thereof.

  • Hb says:

    What are peoples thoughts on transfering out their flyclub into hilton at this point? And how late in the day do you think this will remain possible?

    • philco says:

      Nobody knows on timing and it effectively may already be too late. Also remember that the VS loyalty program has to pay for the Hilton points and it is quite possible this occurs sometime after the transfers and if so there is also the possibility of clawback from Hilton in the future if they don’t get paid. Honestly we are probably at the point (it not already past it) where you need to place you bet and just go with it. Since the point transfers are anything but instant by the time the answer is obvious it will almost assuredly be too late. Once Virgin Australia entered administration redemptions of all types were frozen.

      On whether to transfer or not that has been beat to death in the comments here for the last several week and in an article on this very website and it going to come down your personal value of the different options and your risk tolerance.

    • James says:

      Where have you been for the past fortnight !!

    • Blindman says:

      Ring them tonight.

      Hang on the phone, maybe an hour or so.

      They will do the transfer then, it will take maybe 2 weeks for the points to get to Hilton.

  • Nick G says:

    I rarely check my virgin account, just checked there’s only about 7k VS miles. I assume there’s no options for me to cash out to HH or IHG until I reach 10k?

    Any other options with that few a points?

    • Baji Nahid says:

      euro star voucher? virgin voucher? im not sure the requirements, if not just donate them if possible! I’ll take em haha!

    • David Turner says:

      To be honest we used to use virgin air miles but they are not worth it at least avios points are more flexible.

  • Lee says:

    Have 60k of Virgin Miles is everyone transferring them out? If Virgin go into administration are they going to be wiped out ?

    • Mikeact says:

      Nobody knows…many wild guesses but it’s down to each individual to take a view. Don’t give up just yet though.

    • Alan says:

      Probably

    • Lady London says:

      If you can get a flight you want on a date you would be willing to fly use them for a ticket. Pay taxes on credit card. s,75 should enable replacement of ticket (refund unlikely).

      Otherwise if you were struggling to use them,either wait it out and see if those points get honoured into something nice if another airline with a ff scheme takes it over and is benevolent (not guaranteed but has happened,) or take a haircut of 50-70% depending Ng on your estimation, and transfer them urgently to another scheme. You have ihg, Hilton, Eurostar, possibly others if you look at their website

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