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DobboDobbo
Posts: 1127
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Mon Apr 13, 2020 8:36 pm

Opus99 wrote:
DobboDobbo wrote:
IWMBH wrote:
The UK never saved airlines that where bound to fail, why start now?


I think your points are valid, but this is where I think the “do not save” VS side of the debate falls over.

The chancellor is on record stating that the government would not let viable businesses fail, and there was no indication that VS was doing anything other than returning to growth and profitability before the pandemic struck.

There is obviously more to it than this, but in a nutshell this is the issue the government has to deal with.

And that’s the thing. It now stretches far beyond viability. How many businesses are asking for 500 million pounds in state aid and little collateral and then little viability in a time like this or the near future


The nature of state aid (generally, but in this case for sure) is that it is a last resort. Very few of the items an airline might have to offer a collateral will be of any value at this point - perhaps not ever.

There is clearly the need for the UK to have a major airline - and if the government is going to back one horse to survive the best horse is clearly BA - the difficulty is knowing and predicting just how deep this is going to cut the industry and for how long. When that is known, I think the picture of who, or what can be saved (and how) should become clearer...
 
tphuang
Posts: 5183
Joined: Tue Mar 14, 2017 2:04 pm

Re: Virgin Atlantic needs government support?

Mon Apr 13, 2020 9:45 pm

British gov't should save both BA and U2 if it comes to that because both are much larger airlines providing plenty of competition (that VS does not) and are actually quite profitable up until now. So they both have a chance to pay back British gov't after this. FR will have to wait for Irish gov't on rescuing them.

The problem is what the British gov't need to do after it gives VS $500 million. What happens 2 years later and they need more money? There is just no end to this. Do you keep pumping money into a small airline that's not really that essential to UK? The only asset left with VS that's worth any value is the equity itself. $500 million is more than what the entire airline is worth at the moment. So British gov't should essentially ask to take over all the shares from the existing shareholders in that case. Seems like that's not a great solution.
 
AAMDanny
Posts: 322
Joined: Wed Apr 30, 2008 4:06 pm

Re: Virgin Atlantic needs government support?

Tue Apr 14, 2020 8:42 am

tphuang wrote:
British gov't should save both BA and U2 if it comes to that because both are much larger airlines providing plenty of competition (that VS does not) and are actually quite profitable up until now. So they both have a chance to pay back British gov't after this.



How does VS provide competition alongside U2? The only route I can think where this statement would be relevant would be TLV.

VS have constantly raised the competition bar against the misery that is BA.
 
Opus99
Posts: 968
Joined: Thu May 30, 2019 10:51 pm

Re: Virgin Atlantic needs government support?

Tue Apr 14, 2020 8:51 am

AAMDanny wrote:
tphuang wrote:
British gov't should save both BA and U2 if it comes to that because both are much larger airlines providing plenty of competition (that VS does not) and are actually quite profitable up until now. So they both have a chance to pay back British gov't after this.



How does VS provide competition alongside U2? The only route I can think where this statement would be relevant would be TLV.

VS have constantly raised the competition bar against the misery that is BA.

In your analysis have they done a good job at that?
 
JamesCousins
Posts: 484
Joined: Fri Jul 14, 2017 1:19 pm

Re: Virgin Atlantic needs government support?

Tue Apr 14, 2020 8:57 am

vhtje wrote:
VS11 wrote:
He did, and my guess is that he won't let VS collapse.

Virgin founder Richard Branson giving $250 million to help employees
https://www.wesh.com/article/virgin-fou ... s/31905226


Actually he did not. He put $250 million into the Virgin Group. $100 million was for VS. It was not the for the employees; see the post above.

https://www.theguardian.com/business/20 ... SApp_Other

It is absolutely morally repugnant what SRB is doing, asking for a handout. It is HIS airline, it is HIS responsibility to save it, not the taxpayers’.


This. You've hit the nail on the head. Branson has the ability to raise serious levels of capital, the same levels VS are pleading the government for. He's put $100m in to Virgin Atlantic, which equates to just 2.5% of his net worth. If he has morals towards his staff, contractors and customers he will liquidate some of this assets - the man owns an island and pays no UK tax, you've got to be having a laugh if you think taxpayer money should be providing the bail out.

This is a terribly sad situation for VS staff, and the competition with BA at Heathrow is, in my view, crucial, but just as small business owners like myself have put their own money into their businesses, he should do the same to a level that equates to more than a measly 2.5%.
Q400, A320-200, A321-200, 737-500, 737-800, 747-400, 757-200, 787-9 // FCA, TOM, TUI, MON, MT, BA, VS, DL, BE, X9, OLY // Upcoming: W6 A320, W6 A321, EVA 77W, VS 787-9m AS A320, VS A35K, KLM E190, KLM 738, LS 737
 
tphuang
Posts: 5183
Joined: Tue Mar 14, 2017 2:04 pm

Re: Virgin Atlantic needs government support?

Tue Apr 14, 2020 10:59 am

AAMDanny wrote:
tphuang wrote:
British gov't should save both BA and U2 if it comes to that because both are much larger airlines providing plenty of competition (that VS does not) and are actually quite profitable up until now. So they both have a chance to pay back British gov't after this.



How does VS provide competition alongside U2? The only route I can think where this statement would be relevant would be TLV.

VS have constantly raised the competition bar against the misery that is BA.

out of LHR, which route does VS compete with BA on does not have foreign competition that either brings the price down or raise the product quality. And if these slots from VS get redistributed to other carriers which may or may not have LHR slots, which routes would see more competition resulting in better value for customers? Remember, VS going away does not decrease the number of competition due to its partnership with DL.

U2 provides a lot of competition in the intra-Europe market against BA. Do you want to compare the size of U2's operation in terms of passenger carried to VS?
 
Boeing74741R
Posts: 1398
Joined: Tue Apr 17, 2007 5:44 am

Re: Virgin Atlantic needs government support?

Tue Apr 14, 2020 11:09 am

mxaxai wrote:
AEROFAN wrote:
mxaxai wrote:
Also: less competition = higher profits = good for shareholders
And: higher prices = higher wages = good for employees
Further: higher prices = less passengers = less flights = less need for new runways, less noise, good for residents

What's not to love?

Unless the correct balance is achieved: higher price = less passengers = less profits = less employees = more unemployment = bad for the economy = bad for society.
Is that what you want to love?

Less competition means that prices can be optimised for maximum profit. They will be higher than with competition. The employees of the surviving company (BA) will enjoy higher wages.


Higher wages? Really?

I've read some absolute nonsense on this thread (and I make no apology for acting as a counterpoint to some of that), but I do not believe BA will increase the wages they pay staff in the event of a VS collapse. Think about it. A VS collapse would see a few thousand pilots and cabin crew suddenly become available, many of which are already type-rated on the same aircraft BA operate (so less time/money needs to be spent on training) and will be desperate to find alternative employment PDQ. BA are smart enough to realise they can just offer their standard T&C's that they used when recruiting pilots/CC beforehand and most will probably take it. In an employer's market, which this would be if not already given the Thomas Cook and Flybe collapses, there's little incentive to increase wages.

This is also assuming of course BA have any vacancies.

There's nothing to stop unions pushing for that and resorting to industrial action like they did with BA Mixed Fleet crew a few years ago (who are definitely on the lower end of the scale for wages and T&C's, especially compared to their colleagues on Worldwide pay/T&C) irrespective of the competition, but that always involves some sort of compromise and isn't a guaranteed route to success.

Frankly, I also don't believe vast majority of BA employees believe they can expect a pay rise either and nor do I think those on the front line in particular are hoping VS go bust.. I look on Twitter, see the feeds of pilots, cabin crew and other staff who work for BA and other airlines and I often read comments such as "we're all one big aviation family etc." whenever somebody is out of a job because their employer went bust.

BealineV953 wrote:
In the early 1980s BA absolutely did not have an ‘unreasonably high’ influence over Government policy. The situation was far more complicated than that.
The Conservative Government of 1979 onwards believed in a free market economy and positively encouraged competition.


It makes the decision by Mrs Thatcher to let Laker collapse all the more baffling despite previously heralding Laker as a champion for free enterprise. I accept she was a strict free marketer, but then they were in the process of trying to privatise BA at the time...

https://www.independent.co.uk/news/uk/t ... 28497.html

Also, if Wikipedia is right, BA ended up paying Laker a lot more than the £8m settlement...

https://en.wikipedia.org/wiki/Laker_Airways

skipness1E wrote:
jetwet1 wrote:
tphuang wrote:
If they go under, those same companies will get business from other airlines. You seriously think other airlines won't fly to lhr and pay the fees?


In the case of MAN certainly, BA has shown they have no love for the airport, where as VS is expanding there.

Because it’s a business not a courting couple.....


True. I don't think anybody is inferring in this thread that BA should replace VS out of MAN and their history is well-documented and often discussed at length on here.

However, jetwet1's point I wholeheartedly agree with. It's not just long-haul as BA also axed MAN-LGW a few years ago which survived the BA Connect sale and the cutting of MAN-JFK. I personally do not believe BA will step into the breach at MAN, not even with a token service to MCO (I'm not going to talk about the logistics of how that would work as it's not the thread for it).

GDB wrote:
It used to be common to hear younger people cite being like Richard Branson was their ambition, often now it's to be a reality TV star, or You-Tuber. Make of that what you will.
Plus his more recent actions, like suing the NHS. He ain't well liked any more.


I, for one, would much rather be successful along the lines of SRB than a reality TV star, YouTuber, influencers on social media etc. Don't get me started on the social influencers who ask for freebies in return for an Instagram post either!

As for the NHS, wasn't that down to issues they had with the procurement process? It's not the thread for it, but I do think at times the NHS is seen in some quarters as being beyond reproach. Some day it might be possible to have an honest discussion about what could be done to improve the NHS without resorting to bashing politicians or private providers (who, let's fact it, have been involved in the NHS in some form for a very long time), however I don't think that will happen any time soon.

chonetsao wrote:
I don't think people's objection to government rescue VS is based on opinion on RB solely. People are asking genuine questions.


I disagree with that. Whilst some people are looking at this objectively, there have been a number of posters on here and many more elsewhere who are making it all about the figurehead, which in this case is SRB.

When I read comments (or should it be tropes) such as "tax dodger" or "Caribbean island" or "billionaire", it's hard to see how there isn't a personal slant towards their objections.
 
BealineV953
Posts: 186
Joined: Fri Jul 26, 2019 10:00 am

Re: Virgin Atlantic needs government support?

Wed Apr 15, 2020 9:45 am

Boeing74741R wrote:

BealineV953 wrote:
In the early 1980s BA absolutely did not have an ‘unreasonably high’ influence over Government policy. The situation was far more complicated than that.
The Conservative Government of 1979 onwards believed in a free market economy and positively encouraged competition.


It makes the decision by Mrs Thatcher to let Laker collapse all the more baffling despite previously heralding Laker as a champion for free enterprise. I accept she was a strict free marketer, but then they were in the process of trying to privatise BA at the time...

https://www.independent.co.uk/news/uk/t ... 28497.html

Also, if Wikipedia is right, BA ended up paying Laker a lot more than the £8m settlement...

https://en.wikipedia.org/wiki/Laker_Airways

.


When I commented on the posts by EWRFlyer and Springbok743 I wondered if I was taking us off topic. However, there is a Russian proverb that goes something like “if you keep one eye on the past, you are blind in one eye, but if you forget the past, you are blind in both eyes."

See my posts 388 & 441 re Laker.

To clarify, to settle the US case BA did not pay £8m; BA paid a share of $8m.

Yes, in July ’85 BA did make a further payment. As well as filing an antitrust action in the US, Laker’s liquidators filed an action at the Royal Court of Jersey.

As with the US case, that claim was settled out of court. BA contributed an additional $35 million on top of its earlier out-of-court agreement with Laker.

The two out of court settlements, $8m and $49m, represented a fraction of the $1.54bn in damages Laker’s liquidators had been seeking.

The twelve defendants choose to settle out of court not because they thought there would be a judgement against them, but simply to end the considerable effort and expense of fighting the case.
As BCal said, payment to Laker ''…represents the nuisance value of a private antitrust suit. The sum is considerably less than the legal cost of defending against such spurious claims.''
For BA, the out of court settlements cleared the way for privatisation.

The UK Government did not ‘let’ Laker collapse. Laker collapsed because it was under-caplitalised, had huge debts and had been attempting to expand during a worsening recession. Laker Airways was beyond saving; when it went bankrupt it owed £260 million, the equivalent of £794m at today’s values.

Laker’s liquidators submitted the claim at the Royal Court of Jersey because Laker Airways was a subsidiary of Laker Airways (International) which was incorporated in Jersey. Jersey is not part of the UK, and has separate tax regimes and court systems. Being registered in Jersey enabled Laker to avoid UK taxes. With Laker registered in Jersey, the UK Government could not have offered financial support even if it had wanted to.

It is said that history is written by the victors. However, for failed airlines that does not appear to be the case. It seems that people quickly forget why an airline went out of business. They remember only that there was a court case, assume that the allegations, however spurious, were valid and were proven even when they were not.


PS
At the time Laker collapsed in February 1982 the airline was about to launch low cost services within Europe.
Beginning in 1971, Southwest Airlines had shown that an airline could make money by offering high frequency services using 737s with 100+ seats.
Laker was going to use A300s with 300+ seats.
Maybe Laker thought he had nothing to learn from Herb Kelleher and Rollin King about making money in the airline business.
Ever since childhood, when I lived within sight of London Airport, I have seldom seen a plane go by and not wished I was on it.”
With apologies to Paul Theroux - ‘The Great Railway Bazaar’
 
Opus99
Posts: 968
Joined: Thu May 30, 2019 10:51 pm

Re: Virgin Atlantic needs government support?

Wed Apr 15, 2020 11:07 am

https://travelweekly.co.uk/articles/367 ... -this-week

Decision is expected this week apparently. It was initially expected before the easter break but the government is still deliberating
 
Boeing74741R
Posts: 1398
Joined: Tue Apr 17, 2007 5:44 am

Re: Virgin Atlantic needs government support?

Wed Apr 15, 2020 12:33 pm

BealineV953 wrote:
Boeing74741R wrote:

BealineV953 wrote:
In the early 1980s BA absolutely did not have an ‘unreasonably high’ influence over Government policy. The situation was far more complicated than that.
The Conservative Government of 1979 onwards believed in a free market economy and positively encouraged competition.


It makes the decision by Mrs Thatcher to let Laker collapse all the more baffling despite previously heralding Laker as a champion for free enterprise. I accept she was a strict free marketer, but then they were in the process of trying to privatise BA at the time...

https://www.independent.co.uk/news/uk/t ... 28497.html

Also, if Wikipedia is right, BA ended up paying Laker a lot more than the £8m settlement...

https://en.wikipedia.org/wiki/Laker_Airways

.


When I commented on the posts by EWRFlyer and Springbok743 I wondered if I was taking us off topic. However, there is a Russian proverb that goes something like “if you keep one eye on the past, you are blind in one eye, but if you forget the past, you are blind in both eyes."

See my posts 388 & 441 re Laker.

To clarify, to settle the US case BA did not pay £8m; BA paid a share of $8m.

Yes, in July ’85 BA did make a further payment. As well as filing an antitrust action in the US, Laker’s liquidators filed an action at the Royal Court of Jersey.

As with the US case, that claim was settled out of court. BA contributed an additional $35 million on top of its earlier out-of-court agreement with Laker.

The two out of court settlements, $8m and $49m, represented a fraction of the $1.54bn in damages Laker’s liquidators had been seeking.

The twelve defendants choose to settle out of court not because they thought there would be a judgement against them, but simply to end the considerable effort and expense of fighting the case.
As BCal said, payment to Laker ''…represents the nuisance value of a private antitrust suit. The sum is considerably less than the legal cost of defending against such spurious claims.''
For BA, the out of court settlements cleared the way for privatisation.

The UK Government did not ‘let’ Laker collapse. Laker collapsed because it was under-caplitalised, had huge debts and had been attempting to expand during a worsening recession. Laker Airways was beyond saving; when it went bankrupt it owed £260 million, the equivalent of £794m at today’s values.

Laker’s liquidators submitted the claim at the Royal Court of Jersey because Laker Airways was a subsidiary of Laker Airways (International) which was incorporated in Jersey. Jersey is not part of the UK, and has separate tax regimes and court systems. Being registered in Jersey enabled Laker to avoid UK taxes. With Laker registered in Jersey, the UK Government could not have offered financial support even if it had wanted to.

It is said that history is written by the victors. However, for failed airlines that does not appear to be the case. It seems that people quickly forget why an airline went out of business. They remember only that there was a court case, assume that the allegations, however spurious, were valid and were proven even when they were not.


It was a poor choice of the word "let" on my part about the government of the day, though I suppose it's fair to say Thatcher and her government did nothing whilst Laker sank despite previously being a champion of his and she certainly played a role in intervening in the US where Laker was suing BA if the Independent article I linked to from the 90's is correct, though probably because it was hampering the privatisation process?

Anyway, what happened with Laker has happened. Though bringing it back on topic, one could make a reasonable argument that had Laker survived there wouldn't have been a Virgin Atlantic to speak of. Laker did become an adviser to SRB in the early days and a 747 was named after him - itself a break from the norm given the majority of their aircraft over years have feminine names.
 
Boeing74741R
Posts: 1398
Joined: Tue Apr 17, 2007 5:44 am

Re: Virgin Atlantic needs government support?

Thu Apr 16, 2020 8:41 am

Nothing significant to report yet, other than Morgan Stanley have now been drafted in by ministers. The government are also being advised by EY and Rothschild...

https://news.sky.com/story/coronavirus- ... s-11973599
 
DobboDobbo
Posts: 1127
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Thu Apr 16, 2020 9:33 am

Boeing74741R wrote:
Nothing significant to report yet, other than Morgan Stanley have now been drafted in by ministers. The government are also being advised by EY and Rothschild...

https://news.sky.com/story/coronavirus- ... s-11973599


Interesting - I suspect movement on the advisor side means that the government is trying to find a way to assist. Doesn’t mean that a deal can be reached or is even possible, especially as we don’t know when Covid will permit the volume of flying (especially TATL flying) we have seen in recent years as this could impact S21 also.

Perhaps the VS presence and plans at MAN and the economic impact of that holds some political sway after all...

... or perhaps not!
 
jomur
Posts: 353
Joined: Sun Jun 19, 2016 6:36 pm

Re: Virgin Atlantic needs government support?

Thu Apr 16, 2020 10:52 am

They are probably getting a market view of whether its a going concern or not so VS cannot then try and sue the UK Government when they don't bail them out.
 
BA777FO
Posts: 577
Joined: Sun Apr 22, 2018 2:58 pm

Re: Virgin Atlantic needs government support?

Thu Apr 16, 2020 5:31 pm

Virgin lost £26.1m in 2018 and £49m in 2017. Would any corporation tax even be due? Aside from APD collected on behalf of passengers and some payroll taxes (employer National Insurance) would they have contributed significantly to the Treasury? Just to point out in that period that Virgin lost over £70m BA made over £3bn in profit.

If there are no assets against which the UK government can use as collateral it's unlikely they'll provide financing. The same was true of Thomas Cook and Flybe. The government can't save every business and capitalism has to take its course sometimes.

I wish everyone at Virgin the very best, it would be sad to lose them and devastating for the 8,500 employees but I really think the government would rather sacrifice 8,500 jobs rather than flush hundreds of millions of pounds down the drain.
 
x1234
Posts: 874
Joined: Mon Nov 28, 2016 3:50 pm

Re: Virgin Atlantic needs government support?

Thu Apr 16, 2020 5:47 pm

Again Virgin is essentially DL UK in a JV. VS serves routes that are lower yielding or extra capacity needed non-stop from the US via LHR. This includes LOS, JNB & CPT in Africa, TLV in the Middle East, DEL/BOM in India and of course PVG & HKG (due to DL's board seat on MU/China Eastern in SkyTeam).
 
Opus99
Posts: 968
Joined: Thu May 30, 2019 10:51 pm

Re: Virgin Atlantic needs government support?

Thu Apr 16, 2020 6:00 pm

The government is going to assist virgin In some way, are they going to give them 500M? I doubt that but they'll help. The question now becomes will it be enough to keep them alive?
 
FSDan
Posts: 3312
Joined: Mon Jan 03, 2011 5:27 pm

Re: Virgin Atlantic needs government support?

Thu Apr 16, 2020 7:06 pm

x1234 wrote:
Again Virgin is essentially DL UK in a JV. VS serves routes that are lower yielding or extra capacity needed non-stop from the US via LHR. This includes LOS, JNB & CPT in Africa, TLV in the Middle East, DEL/BOM in India and of course PVG & HKG (due to DL's board seat on MU/China Eastern in SkyTeam).


Are LOS, JNB, and CPT even included in the JV? PVG and HKG certainly aren't, and DL's relationship with MU likely has little or nothing to do with the fact that VS serves them.
This is my signature until I think of a better one.
 
DobboDobbo
Posts: 1127
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Thu Apr 16, 2020 7:14 pm

Opus99 wrote:
The government is going to assist virgin In some way, are they going to give them 500M? I doubt that but they'll help. The question now becomes will it be enough to keep them alive?


I think that is probably correct - I suspect the government will delay whatever they do for as long as possible so that at decision time as much is known as possible about: (1) the virus, including how the governments around the world propose to control it and reopen their economies (including aviation etc.); and (2) what VS need to get to the other side of this.
 
jomur
Posts: 353
Joined: Sun Jun 19, 2016 6:36 pm

Re: Virgin Atlantic needs government support?

Thu Apr 16, 2020 9:06 pm

sevenheavy wrote:
Regardless of whether it’s VS or any other carrier, it’s sad to see so many supposed aviation enthusiasts relishing the thought of an airline, any airline, failing under such unprecedented and sad circumstances. There are Lots of airline, airport and aviation professionals reading these threads, worried about their future. I don’t want any airline to fail because factors outside of their control gave them no option but to effectively cease trading for weeks or months with little or no control as to when they can restart, almost inevitably as a smaller business


I would rather the Government give the money to companies that were profitable and would have been without covid-19. The airline I work for may need it and we employ way more than Virgin does and operate at many more UK airports.
 
strfyr51
Posts: 4975
Joined: Tue Apr 10, 2012 5:04 pm

Re: Virgin Atlantic needs government support?

Thu Apr 16, 2020 9:19 pm

nonrev wrote:
I think this deserves its own discussion away from the general thread.

Large VS suppliers such as Airbus & Tolls Royce have written to the UK government.

Will the UK Govt support VS? Or will this lead to issues with the rest of the industry? Is the solution consolidation into ‘UK Airlines’ with the government as the major shareholder?

https://news.sky.com/story/coronavirus- ... t-11966892

OK? So other thab the employees? Who benefits from the UK Govt Bailing out VS? Because right now? It's Branson and Delta Airlines. Delta can't really bail out anybody at this time and uf the UK Govt bails out VS? then who is the Beneficiary? It's not the shareholders of VS because there Are none! Were VS a publicly traded company? I would say yes. But? Since it's privately OWNED? Not so Inclined to say. But? Since Delta IS a publicly traded COMPANY? They'd be Hard Pressed to justify Bailing out VS when they're Not the controlling shareholder. Now that's from a U.S. point of view. the British might have an entirely different take on the subject.
 
Boeing74741R
Posts: 1398
Joined: Tue Apr 17, 2007 5:44 am

Re: Virgin Atlantic needs government support?

Fri Apr 17, 2020 8:01 am

FSDan wrote:
x1234 wrote:
Again Virgin is essentially DL UK in a JV. VS serves routes that are lower yielding or extra capacity needed non-stop from the US via LHR. This includes LOS, JNB & CPT in Africa, TLV in the Middle East, DEL/BOM in India and of course PVG & HKG (due to DL's board seat on MU/China Eastern in SkyTeam).


Are LOS, JNB, and CPT even included in the JV? PVG and HKG certainly aren't, and DL's relationship with MU likely has little or nothing to do with the fact that VS serves them.


In addition, all of those routes (including CPT and BOM first time round) were existing routes before DL came on board. The exception of course is TLV and admittedly I wasn't expecting that route given how VS have previously operated and retreated from short-haul routes and given the amount of competition already from various London airports. I accept there's often more to it when deciding a route besides what competition already exists and clearly they must have decided it was a worthwhile addition to the network.
 
IWMBH
Posts: 626
Joined: Tue Apr 17, 2018 5:01 pm

Re: Virgin Atlantic needs government support?

Fri Apr 17, 2020 10:08 am

AF/KL is probably happy that Branson didn't want to sell his stake in the company to them.
Dodged a bullet there, they've enough problems on their own.
 
Amsterdam
Posts: 449
Joined: Thu Mar 17, 2011 12:52 am

Re: Virgin Atlantic needs government support?

Fri Apr 17, 2020 11:16 am

Airlines, their employees and others in aviation pay a lot of taxes, many billions a year.
That tax money should be used now to help them.
These people are also tax payers.
So tax payer money is also their money.
 
DobboDobbo
Posts: 1127
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Fri Apr 17, 2020 11:46 am

jomur wrote:
sevenheavy wrote:
Regardless of whether it’s VS or any other carrier, it’s sad to see so many supposed aviation enthusiasts relishing the thought of an airline, any airline, failing under such unprecedented and sad circumstances. There are Lots of airline, airport and aviation professionals reading these threads, worried about their future. I don’t want any airline to fail because factors outside of their control gave them no option but to effectively cease trading for weeks or months with little or no control as to when they can restart, almost inevitably as a smaller business


I would rather the Government give the money to companies that were profitable and would have been without covid-19. The airline I work for may need it and we employ way more than Virgin does and operate at many more UK airports.
 
Nola
Posts: 380
Joined: Thu May 29, 2014 1:40 am

Re: Virgin Atlantic needs government support?

Fri Apr 17, 2020 3:33 pm

Boeing74741R wrote:
FSDan wrote:
x1234 wrote:
Again Virgin is essentially DL UK in a JV. VS serves routes that are lower yielding or extra capacity needed non-stop from the US via LHR. This includes LOS, JNB & CPT in Africa, TLV in the Middle East, DEL/BOM in India and of course PVG & HKG (due to DL's board seat on MU/China Eastern in SkyTeam).


Are LOS, JNB, and CPT even included in the JV? PVG and HKG certainly aren't, and DL's relationship with MU likely has little or nothing to do with the fact that VS serves them.


In addition, all of those routes (including CPT and BOM first time round) were existing routes before DL came on board. The exception of course is TLV and admittedly I wasn't expecting that route given how VS have previously operated and retreated from short-haul routes and given the amount of competition already from various London airports. I accept there's often more to it when deciding a route besides what competition already exists and clearly they must have decided it was a worthwhile addition to the network.


I've flown that route several times. VS offers something relatively unique to the market--lie flat (not a great lie flat, but lie flat nonetheless) between Europe and TLV. The flight times aren't great for connections to/from the states, but there's enough time for breakfast at the clubhouse and a quick pop into London when flying east and the clubhouse takes care of the layover when flying west. The flights (for J) are very reasonably priced.
 
Nola
Posts: 380
Joined: Thu May 29, 2014 1:40 am

Re: Virgin Atlantic needs government support?

Fri Apr 17, 2020 3:34 pm

Amsterdam wrote:
Airlines, their employees and others in aviation pay a lot of taxes, many billions a year.
That tax money should be used now to help them.
These people are also tax payers.
So tax payer money is also their money.


it's not just VS employees that one has to consider. It's the ancillary businesses that rely on VS, from suppliers and vendors to the shops and ground crews at T3. There are a lot more jobs at stake than just VS direct employees.
 
User avatar
aemoreira1981
Posts: 3572
Joined: Mon Jan 09, 2017 12:17 am

Re: Virgin Atlantic needs government support?

Fri Apr 17, 2020 3:44 pm

jomur wrote:
They are probably getting a market view of whether its a going concern or not so VS cannot then try and sue the UK Government when they don't bail them out.


This exactly! I suspect that the UK government will want to get a good look at all the books of airlines desiring a bailout. BA and LS are definites in this regard. LM and T3 will almost certainly get one as those serve vital domestic interests. VS' network is only international, and if they weren't doing good before, the UK will probably say that their finances didn't warrant a bailout.
 
Westerwaelder
Posts: 237
Joined: Fri Apr 03, 2020 12:27 pm

Re: Virgin Atlantic needs government support?

Fri Apr 17, 2020 4:02 pm

Nola wrote:
Boeing74741R wrote:
FSDan wrote:

Are LOS, JNB, and CPT even included in the JV? PVG and HKG certainly aren't, and DL's relationship with MU likely has little or nothing to do with the fact that VS serves them.


In addition, all of those routes (including CPT and BOM first time round) were existing routes before DL came on board. The exception of course is TLV and admittedly I wasn't expecting that route given how VS have previously operated and retreated from short-haul routes and given the amount of competition already from various London airports. I accept there's often more to it when deciding a route besides what competition already exists and clearly they must have decided it was a worthwhile addition to the network.


I've flown that route several times. VS offers something relatively unique to the market--lie flat (not a great lie flat, but lie flat nonetheless) between Europe and TLV. The flight times aren't great for connections to/from the states, but there's enough time for breakfast at the clubhouse and a quick pop into London when flying east and the clubhouse takes care of the layover when flying west. The flights (for J) are very reasonably priced.


Not really that unique though with BA having offered flatbeds in Club on LHR - TLV for at least 15 years, probably longer. It's also largely irrelevant to the conversation as VS have asked for £500 million in government loans with very little equity to back it up. What we should look for with this kind of price tag is uniqueness in connectivity, not flatbeds on a 5 hour flight I'm afraid
 
joeyw
Posts: 9
Joined: Tue Feb 11, 2020 8:56 pm

Re: Virgin Atlantic needs government support?

Fri Apr 17, 2020 5:00 pm

Shai has given this update to staff today:

"Virgin Atlantic has weathered many storms since 1984, but Covid-19 has proven quite different to anything we’ve experienced before. The impact on our business has been extreme: before the crisis, our Velocity plan was well on track. Our business was growing, and we’d predicted a return to profitability in 2020 – one year earlier than we set out at the start of Velocity. We had also significantly strengthened our balance sheet and remain in a stable cash position. "

An interesting part of the announcement, the ability to still return to profitability in 2021.

"Similarly, despite the impact of Covid-19 on our business, we remain committed to returning to profitability by the end of 2021. Equally, we haven’t lost sight of our ambition to serve Britain as the nation’s second flag carrier and as a sustainability leader."

And a mention re: goverment bailout

"In parallel, our discussions with HM Government are ongoing. We expect in the next few weeks to know whether we will receive support in the form of direct funding. In any case we must prove we have done everything in our power to help ourselves. Leaving no stone unturned. Any support from government is predicated on support from our shareholders. In addition to the sacrifice made by our own people, we are grateful for the additional and sizeable financial support we have received from our shareholders, Delta and the Virgin Group, over and above their earlier commitment to us."
 
jomur
Posts: 353
Joined: Sun Jun 19, 2016 6:36 pm

Re: Virgin Atlantic needs government support?

Fri Apr 17, 2020 7:21 pm

EasyJet or Jet2 are more likely to be seen as the 2nd flag carrier than Virgin. Both have more aircraft and fly far more passengers.
 
User avatar
Springbok743
Posts: 38
Joined: Thu Apr 05, 2018 3:27 pm

Re: Virgin Atlantic needs government support?

Fri Apr 17, 2020 7:44 pm

jomur wrote:
EasyJet or Jet2 are more likely to be seen as the 2nd flag carrier than Virgin. Both have more aircraft and fly far more passengers.

Seen by who? The government? The British Public? Europeans?
EZY almost certainly not, they are just a European Low Cost airline. Jet2, is perhaps a better contender, like VS it's got a very customer orientated product and is generally popular with those that use it, again like VS, but I suspect they are mostly just seen as a package holiday operator. VS has a lot more brand cache in terms of being a major British Airline, though obviously many on here seem to disagree. I find there is a perhaps negative stigma against airlines with a big emphasis on mediterranean holiday destinations, as opposed to more premium oriented long haul airlines.
Aircraft numbers is misleading when comparing two short haul operators to a long haul operator.
Last edited by Springbok743 on Fri Apr 17, 2020 7:46 pm, edited 1 time in total.
 
Cedar
Posts: 76
Joined: Mon Dec 25, 2017 1:07 am

Re: Virgin Atlantic needs government support?

Fri Apr 17, 2020 7:45 pm

joeyw wrote:
Shai has given this update to staff today:

"Virgin Atlantic has weathered many storms since 1984, but Covid-19 has proven quite different to anything we’ve experienced before. The impact on our business has been extreme: before the crisis, our Velocity plan was well on track. Our business was growing, and we’d predicted a return to profitability in 2020 – one year earlier than we set out at the start of Velocity. We had also significantly strengthened our balance sheet and remain in a stable cash position. "

An interesting part of the announcement, the ability to still return to profitability in 2021.

"Similarly, despite the impact of Covid-19 on our business, we remain committed to returning to profitability by the end of 2021. Equally, we haven’t lost sight of our ambition to serve Britain as the nation’s second flag carrier and as a sustainability leader."

And a mention re: goverment bailout

"In parallel, our discussions with HM Government are ongoing. We expect in the next few weeks to know whether we will receive support in the form of direct funding. In any case we must prove we have done everything in our power to help ourselves. Leaving no stone unturned. Any support from government is predicated on support from our shareholders. In addition to the sacrifice made by our own people, we are grateful for the additional and sizeable financial support we have received from our shareholders, Delta and the Virgin Group, over and above their earlier commitment to us."


What financil support did Delta give?

Cedar
 
Opus99
Posts: 968
Joined: Thu May 30, 2019 10:51 pm

Re: Virgin Atlantic needs government support?

Fri Apr 17, 2020 9:54 pm

https://www.ft.com/content/e2636703-ace ... 44e032db1f

well will you look at that. Govt told Virgin to submit a new request for Aid as they were unimpressed with the first one
 
Opus99
Posts: 968
Joined: Thu May 30, 2019 10:51 pm

Re: Virgin Atlantic needs government support?

Fri Apr 17, 2020 10:01 pm

Summarise the article for those who don't have access:
- govt has told VS to submit a new request as they are unimpressed with the first
- govt does not believe VS has done everything to raise new capital, i.e they have not fully explored other options
- a source associated with the talks said that the government felt like VS plans did not take into consideration the much weaker demand that will ensue after covid 19
- a source also stated that VS provided a 2 year and 5 year business plan
- a VS spokeswoman said that the talks had been constructive
- this push back by the govt is expected to push an outcome EVEN further as VS has to go back to the drawing board
- Ministers are still anxious about giving VS money because of political ramifications
- govt also stands on previous statement on how it will deal with the aviation industry i.e. no industry bailout, taxpayers interest paramount
 
User avatar
vhtje
Posts: 1198
Joined: Sat Jan 10, 2009 12:40 pm

Re: Virgin Atlantic needs government support?

Fri Apr 17, 2020 10:03 pm

Amsterdam wrote:
Airlines, their employees and others in aviation pay a lot of taxes, many billions a year.
That tax money should be used now to help them.
These people are also tax payers.
So tax payer money is also their money.


What about all the other hundreds of businesses that have been brought to their knees by this pandemic, that contribute more to the economy, employ more people, and have a much wider web of associated/dependent businesses? And have a far better history of profit generation than VS ever dreamed of? Do not they deserve Government assistance before VS?

Do their employee tax contributions not count?
I only turn left when boarding aircraft. Well, mostly. All right, sometimes. OH OKAY - rarely.
 
DobboDobbo
Posts: 1127
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Sat Apr 18, 2020 7:27 am

jomur wrote:
The airline I work for may need it and we employ way more than Virgin does and operate at many more UK airports.


Re the above, assume you work for either Easyjet or Jet2?
 
Geoff1947
Posts: 628
Joined: Thu Jun 16, 2016 11:28 pm

Re: Virgin Atlantic needs government support?

Sat Apr 18, 2020 7:39 am

The term ‘bailout’ gets used a lot on this and other threads at the moment. Would have been helpful if it could have been defined by someone.
VS will not get anything from the UK government other than what is on offer to all businesses. There is a very comprehensive package of assistance in place that attempts to save jobs and businesses so the UK economy can restart when that becomes possible. There is no special deal for VS.

Geoff
 
flyjay123
Posts: 143
Joined: Sun Oct 01, 2017 11:07 am

Re: Virgin Atlantic needs government support?

Sat Apr 18, 2020 9:46 am

Geoff1947 wrote:
There is no special deal for VS.

Geoff



Try explaining that to Tricky Dicky!
 
flyjay123
Posts: 143
Joined: Sun Oct 01, 2017 11:07 am

Re: Virgin Atlantic needs government support?

Sat Apr 18, 2020 10:01 am

How profitable has VS been over the last 10 years?
 
JibberJim
Posts: 152
Joined: Tue Nov 08, 2016 1:33 pm

Re: Virgin Atlantic needs government support?

Sat Apr 18, 2020 11:45 am

Geoff1947 wrote:
There is no special deal for VS.


But it's pretty clear that VS will not survive with that, so they are looking for more.

The government is even willing to entertain it, if VS had any assets I'm sure they would have provided the same sort of loan that in normal times would be on normal commercial terms but at the moment would be subsidised compared with what is available as they have with Easyjet. The problem is that they have no collateral for the loans, so a loan doesn't work.

The problem is any bail out of VS is not a bail out of the employees at this time, it's a bailout of the owners and those that have loaned them money, the only hope for VS is some restructuring that results in those taking a loss and then the UK gov providing a loan backed against some assets in a new more liquid company, or an equity stake if they were willing to own an airline.
 
SueD
Posts: 256
Joined: Sat Jul 27, 2019 11:35 am

Re: Virgin Atlantic needs government support?

Sat Apr 18, 2020 12:06 pm

JibberJim wrote:
Geoff1947 wrote:
There is no special deal for VS.


But it's pretty clear that VS will not survive with that, so they are looking for more.

The government is even willing to entertain it, if VS had any assets I'm sure they would have provided the same sort of loan that in normal times would be on normal commercial terms but at the moment would be subsidised compared with what is available as they have with Easyjet. The problem is that they have no collateral for the loans, so a loan doesn't work.

The problem is any bail out of VS is not a bail out of the employees at this time, it's a bailout of the owners and those that have loaned them money, the only hope for VS is some restructuring that results in those taking a loss and then the UK gov providing a loan backed against some assets in a new more liquid company, or an equity stake if they were willing to own an airline.


The perfect vehicle for that would be a Chapter 11 style defaulting process that is tragically absent in UK bankruptcy law for companies to be honest
 
Geoff1947
Posts: 628
Joined: Thu Jun 16, 2016 11:28 pm

Re: Virgin Atlantic needs government support?

Sat Apr 18, 2020 12:38 pm

I think VS should be able to survive by accessing the Government loan scheme. Sounds to me like the current process is about how much they need to borrow and what the risk is that they won’t repay. If their owners , their bankers and the UK Government’s advisers conclude that they would not be able to repay that debt in future then they are gone.

Geoff
 
BA777FO
Posts: 577
Joined: Sun Apr 22, 2018 2:58 pm

Re: Virgin Atlantic needs government support?

Sat Apr 18, 2020 12:49 pm

UK government has told Virgin to resubmit its request for state help after being unimpressed by initial proposal.

https://uk.reuters.com/article/us-healt ... KKBN21Z3D9
 
Arion640
Posts: 3060
Joined: Fri Mar 31, 2017 5:15 pm

Re: Virgin Atlantic needs government support?

Sat Apr 18, 2020 6:53 pm

BA777FO wrote:
UK government has told Virgin to resubmit its request for state help after being unimpressed by initial proposal.

https://uk.reuters.com/article/us-healt ... KKBN21Z3D9


Are you glad about this?
 
dcajet
Posts: 4682
Joined: Sun Aug 01, 2004 9:31 am

Re: Virgin Atlantic needs government support?

Sat Apr 18, 2020 7:05 pm

No surprises here: Virgin Atlantic cancels planned LHR-GRU route for good. Its first flight had been delayed until October 2020.

https://flywith.virginatlantic.com/gb/en/news.html
Keep calm and wash your hands.
 
jomur
Posts: 353
Joined: Sun Jun 19, 2016 6:36 pm

Re: Virgin Atlantic needs government support?

Sat Apr 18, 2020 9:34 pm

Geoff1947 wrote:
I think VS should be able to survive by accessing the Government loan scheme. Sounds to me like the current process is about how much they need to borrow and what the risk is that they won’t repay. If their owners , their bankers and the UK Government’s advisers conclude that they would not be able to repay that debt in future then they are gone.

Geoff


And that's the problem, they cannot get commercial loans currently so they cannot get the Government loans either which are on commercial conditions. Companies don't get unsecured loans which is what Virgin want..
 
skipness1E
Posts: 4813
Joined: Sun Aug 19, 2007 9:18 am

Re: Virgin Atlantic needs government support?

Sat Apr 18, 2020 9:38 pm

jomur wrote:
EasyJet or Jet2 are more likely to be seen as the 2nd flag carrier than Virgin. Both have more aircraft and fly far more passengers.

Rubbish on stilts. Not one human being has ever seen easyJet as a flag carrier, even less so ChanEx, both of which are excellent businesses.
Look this is politics, VS may not be in the best place but strategically they do give strength to UK PLC and HMG would be unlikely to not want to help.
Last edited by skipness1E on Sat Apr 18, 2020 9:40 pm, edited 1 time in total.
 
User avatar
vhtje
Posts: 1198
Joined: Sat Jan 10, 2009 12:40 pm

Re: Virgin Atlantic needs government support?

Sat Apr 18, 2020 9:39 pm

So, after 10 or so pages of comment, the one question we all want to know the answer to is...is the Virgin screwed?
I only turn left when boarding aircraft. Well, mostly. All right, sometimes. OH OKAY - rarely.
 
skipness1E
Posts: 4813
Joined: Sun Aug 19, 2007 9:18 am

Re: Virgin Atlantic needs government support?

Sat Apr 18, 2020 9:42 pm

vhtje wrote:
So, after 10 or so pages of comment, the one question we all want to know the answer to is...is the Virgin screwed?

Everyone is screwed, without a vaccine, social distancing is a medium term public health requirement which means aviation cannot operate on a commercial basis. Nine abreast wide body anyone for twelve hours? Er no....

BAU is not close.
 
Geoff1947
Posts: 628
Joined: Thu Jun 16, 2016 11:28 pm

Re: Virgin Atlantic needs government support?

Sat Apr 18, 2020 9:53 pm

jomur wrote:
Geoff1947 wrote:
I think VS should be able to survive by accessing the Government loan scheme. Sounds to me like the current process is about how much they need to borrow and what the risk is that they won’t repay. If their owners , their bankers and the UK Government’s advisers conclude that they would not be able to repay that debt in future then they are gone.

Geoff


And that's the problem, they cannot get commercial loans currently so they cannot get the Government loans either which are on commercial conditions. Companies don't get unsecured loans which is what Virgin want..


The loans would be secured by the UK Government, that’s the deal on offer.

Geoff

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