Questions as the Bank of England publishes its pandemic bailout list
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The Bank of England has published the list of businesses which have received a taxpayer-funded bailout under the UK Government’s Coronavirus Corporate Finance Facility (CCFF).
This is the list of companies who have applied for AND DRAWN funding from CCFF. It does not include, for example, Jet2 which we know has applied and been accepted but has not yet asked for the money to be paid.
easyJet, Ireland’s Ryanair and, erm, Hungary’s Wizz Air are on the list as you can see, as is British Airways.
(Before we go on, I accept that not everyone defines taking CCFF money as a ‘bailout’. That’s up to you. It depends if you see lending up to £1 billion of taxpayers money to struggling companies, with no security, for as little as 0.2% interest as a ‘bailout’ or not.)
The reason I am looking at this is because of the inconsistencies in the Virgin Atlantic and British Airways positions.
Let’s look at Virgin Atlantic first.
Virgin Atlantic is unable to access the CCFF for technical reasons. There are rules about how your existing debt should be structured and Virgin Atlantic does not meet those requirements. This is despite the fact that the company is hampered by Government restrictions – most recently the new quarantine requirements – which stop it trading as it would like.
You may or may not feel that Virgin Atlantic should receive a virtually interest free loan from the UK Government. However, let’s look at some of the companies which HAVE been given your money via the CCFF – is Virgin Atlantic any less deserving than any of these?
BASF – German chemicals group employing just 800 people in the UK – £1 billion, which is being used to part-fund a €3 billion dividend payment to shareholders on 23rd June
Bayer – German pharmaceutical group – £600 million, which was used to part-fund a €2.6 billion dividend payment to shareholders on 4th May
Chanel – French maker of luxury goods – £600 million
CNH Industrial – an Italian / Dutch / US maker of agricultural machinery which is UK-domiciled for tax only – £600 million
Tottenham Hotspur – £175 million
The full list also includes Burberry and shopping centre owner Westfield. It’s hard not to feel sorry for Virgin Atlantic, its employees and its suppliers when you see so much taxpayer money being handed out to companies with few (in some case virtually no) UK employees or activities.
The British Airways position is confusing too ……
There is something odd, on the face of it, about the way that British Airways is included on this list.
On 7th May, when BA’s parent IAG published its 1st Quarter results, it was announced that it had taken £300 million from the Coronavirus Corporate Finance Facility.
It was vague about which group entity had taken this money. We assumed that it was IAG at the parent company level. British Airways has been constantly pushing the fact that it is refusing to take Government money and so must force through its redundancy programme, including cuts in pay and conditions for those staff who remain.
Even the Bank of England is being vague about who actually took the money. The spreadsheet released shows that £300 million was taken by:
“British Airways PLC (International Airways Group PLC)”
This is as clear as mud. Was it BA that took the £300m? Or was it International Airways Group PLC?
International Airways Group PLC doesn’t even exist. The immediate and ultimate parent company of British Airways plc is International Consolidated Airlines Group S.A, which is incorporated in Spain. On the balance of probability, it does seem that it was British Airways plc that took the £300 million.
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