Virgin Atlantic launches desperate plea for government support as buyout firms circle
The chief executive of Virgin Atlantic has issued a last-ditch plea for a government bailout as a string of buyout firms circle the troubled carrier.
Sir Richard Branson’s airline has failed to impress the Treasury with its request for a £500m taxpayer-funded rescue package, with chancellor Rishi Sunak stating support would be given only as a “last resort”.
But boss Shai Weiss has insisted he can steer the company, which faces collapse if it does not secure additional cash, back into profitability to repay the debt.
“These facilities may not actually be drawn down — they’re there to ensure that the airline can operate,” he told the Sunday Times.
“But I would say that within two to five years, we would pay it back, and probably even sooner. This is not a handout. We will repay it with interest.”
Weiss said the company had held “constructive” talks with ministers, adding that while he could not rule out the state taking an equity stake in Virgin, he did not believe the government was interested in taking a boardroom role.
In addition, the aviation chief said not all of Virgin’s rescue cash would come from the government, suggesting instead a “public-private partnership” that could involve loan guarantees to help encourage investors.
“Private investors may want to know the government is there to provide some kind of assurance on the back end of that through the form of guarantees or direct funding,” Weiss said.
Houlihan Lokey, the airline’s banking adviser, is reportedly in talks with around a dozen buyout funds including Apollo Global Management and Greybull Capital about securing fresh funding.
The aviation sector has been ravaged by a collapse in demand during the Covid-19 crisis, and Virgin has been forced to cut more than 3,000 jobs and shut down its operations at Gatwick in a desperate bid to stay afloat.
The company has put advisers at restructuring specialist Alvarez & Marsal on standby as it prepares contingency plans for a potential insolvency process, Sky News reported yesterday.
The advisers will be focused on exploring options for a pre-pack administration that would enable a restructured and financially-viable airline to emerge from the crisis, according to the report.
Meanwhile the British Airline Pilots Association (Balpa) has ramped up its pressure on the government to do more to help the aviation sector, warning it was now in a “death spiral”.
Brian Strutton, Balpa general secretary, took aim at plans to introduce a 14-day quarantine period for anyone arriving in the country, as well as a £2bn package for walking and cycling.
“My concern is that once again the government has not considered the impacts on pilots and other crew facing job losses and pay cuts — there has to be a moratorium on these threats and a viable plan to support aviation,” he said.