In my oppinion, the condition for any bailout should be, that DL and RBS lose their shares and the government takes them over for free. Then offer the same for all other UK carriers that want help.
Shareholders know the risks of having shares and if they lose, they lose but the workers should not lose their jobs. Nationalize the carriers that want help, and then run them until someone is interested to buy them again.
Agreed. Whether you completely wipe out the other owners' shareholdings or whether you make the devaluation of existing shares proportional to ownership/amount invested is another matter. I'm fine with airlines being nationalised in a time of crisis so long as they are run by independent directors, not politicians. Air New Zealand is a very successful example of this.
Yep. There does seem to be a clear agenda, primarily driven by who the figurehead is. Time will tell whether his stance on Brexit bites him on the backside over this, but he wasn't alone in the business community being opposed to Brexit.
Indeed. Willie Walsh came out fairly strongly against it to didn't he? The outrage is certainly selective.
On the subject of ownership, it's also worth remembering the following when you look at most major UK airlines...
BA - Owned by IAG who are an Anglo-Spanish company. Does anybody know how much IAG's taxes are split between the UK and Spain or if it's paid in one jurisdiction or the other?
TUI Airways - Owned by TUI Group who are an Anglo-German company HQ'd in Germany
Ryanair UK - Dormant up until recently when Ryanair used it to acquire a UK AOC in light of Brexit and currently has a sole 737 on the UK register, HQ'd in UK but owned by Ryanair Holdings who are based in Ireland
Norwegian UK - Owned by Norwegian Air Shuttle HQ'd in Norway, and we often see outrage on here over its global subsidiaries and "flag of convenience" model
easyJet - All under easyJet plc registered in the UK, but ownership re-structuring in light of Brexit has seen this become more EU-owned than UK-owned. The single biggest shareholder is Sir Stelios, who IMO (and I'm not particularly left-leaning) has a lot to answer for after this week telling easyJet to cancel orders with Airbus whilst refusing to hand back approx. £60m in share dividends recently received, yet nobody seems to be raging about that. easyJet also had to furlough employees: https://www.dailymail.co.uk/news/articl ... demic.html
Besides the smaller airlines such as Loganair, the only true British airline in terms of HQ and ownership is Jet2 with the parent company Dart Group being HQ'd in the UK. I don't know what the share split is of Dart Group.
Good compilation and again, I agree with your point here. Although it's relatively vital for regional connectivity I suspect that a bailout of Loganair wouldn't happen just for it's symbol as Scotland's airlines.
My point is most major UK airlines have some sort of foreign ownership or non-UK-based owners when you dig into it. I guess it's easy for some to target SRB given he makes no secret of living on his own island in the Caribbean and the perception of some British Overseas Territories and British Crown Dependencies to be tax havens.
Well crown dependencies being tax havens is a fact, not a perception, but that's beside the point.
By the logic of some Branson bashers, IAG should have be using its profits to cover their wages. I guess Willie Walsh and Alex Cruz aren't big enough bogeymen in the eyes of some.
I don't think IAG report the actual amount of tax paid in each jurisdiction, just the marginal rate (19% for the UK, 25% for Spain and 12.5% for Ireland in 2019). However, they did pay over £1.5bn in payroll taxes and APD to the UK Treasury. That's without VAT charges too.
So despite some people using the misguided claim that IAG is Spanish and pays no UK tax, that's far from true. The tax contribution is significant.
How feudalistic to suggest that the employee's tax contributions should somehow be credited to the company.
BA and IAG are not asking for a bailout. They publicly said so.
And the moment that VS does collapse they will start crying that the economic situation is far worse than anybody could possibly have imagined and will start begging the government for a bailout....
They want to see weak airlines collapse and not be propped up by the state.
...if anybody here is naive enough to think that this is about anything other than IAG trying to get rid of a big competitor before taking as much no-strings-attached government money as possible, then I've got a bridge in London to sell them.
Qantas is playing the same game in Australia. It's a smart play.
If the Brits want to modernize their air market, put together a deal for BA to buy VS for 1 GBP, with the Government funding the integration and allowing all VS slots to pass to BA without restrictions. Short term pain, long term sanity and savings.
No, that's a terrible idea. Letting BA become even larger relative to other competition and have more market power is bad for the consumer, raises profits and prices for BA, makes it much, much harder for a viable competitor to build a hub at LHR and it's only benefit is to save jobs (like with BD being sold BA). Short term gain, long term pain. If
this crisis does get really bad then I'm hoping that enough slots get sent back to the controller for somebody else (maybe Easyjet) to build a viable hub at LHR and become a more effective competitor to BA.
You're suggesting that the government doesn't like billionaire non-Doms? And they could explain their position by making existing equity holders take a haircut.
No, I'm telling you the British taxpayer doesn't. Huge difference.
Virgin does not compete on price. Virgin fares are typically the same as BA's.
I wouldn’t necessarily see VS as an airline that has made air travel more affordable if they’re charging the same price as the main brand or sometimes more? Maybe at the beginning but not anymore
That's how competition works. If the prices are the same then that's a good sign that the market is working and keeping both suppliers/producers "honest".
The economic theory contends that the market price converges at a point where the forces of supply and demand meet.
That's not what is being said. Price-wise, the two carriers can help keep eachother in check, thus lowering the overall pricing. If BA has less competition it has more room to put prices up.
It also has to be noted that SRB takes a significant payment from all Virgin branded companies for use of the brand. A Virgin branded company can make an annual loss every year, but he still gets his use of brand fee.
How about stop VS paying Richard Branson the royalty fees in millions of pounds per year for using the name of Virgin as the first step?
What is the actual brand fee? In the Australian Aviation Threads VA detractors were rabbiting on for months about the brand fee being ~50 million dollars, but it turned out that the actual fee was less than 5 million and that SRB had offered to wave the fee for a certain number of years if it were to take public money as part of a bailout. Thus it would be great to know if the VS detractors could provide some numbers for how much it costs per year currently and how much it would cost per year going forwards if they are going to use this as a rallying cry to oppose government support for VS.
It's not the Government's job to save businesses just because the current owners can't be bothered, particularly if the current owners are still solvent.
Right but it is the government's job to ensure the effective functioning of competitive markets.
So if cargo is making money why dont they just shut down their loss making passenger operations and fly cargo.
Because cargo yields are only high due to the significant loss of belly capacity following passenger flight cancellations. This is a short term trend.
And then stop VS paying the lobby fees that is in millions of pounds to try to influence key government figures as a second measure?
How about all
businesses stop doing this? Would be great for the taxpayer.
Same way Air France controls Paris, KLM Amsterdam and Lufthansa Frankfurt and Munich.
What a load of nonsense. LH controls Frankfurt because Lufthansa chooses to hub at Frankfurt. Frankfurt the city is only the fourth or fifth largest in Germany and the catchment area of Frankfurt/Hesse is much smaller than that of say Cologne/North Rhine-Westphalia or Berlin.
Frankfurt itself is a city about the size of Leeds - how many airlines have built a long haul mega-hub at Leeds? Unlike LHR, FRA doesn't have ridiculously high barriers to entry, preventing competitors from competing. Last time I was there I noticed that Ryanair has based quite a few aircraft there and built somewhat of a hub. Hopefully easyjet will do the same over time, though talking about growth in the current climate doesn't seem right.
You think VS is not investment worthy? None of the airlines currently are. All traffic is 95% down. Very few businesses are an attractive investment opportunity right now, anywhere around the world.
Which is basically the premise of this thread.
It devalues Sterling for one thing, which would have a devastating effect on the long term economy.
How's that been working out?
1) VS doesn't serve anywhere out of London non-stop that's not covered by other airlines. Now, if it wants to transform itself to be the lifeblood of northern england economy and build up Manchester and new castle, it should make that pitch now.
Which is a pointless argument because it's providing competition on routes that it does fly. VS detractors have mentioned multiple times that VS prices are often the same as BA's thus inadvertently proving the point that it is providing competition. In the recovery, rivals, as well as VS itself will be cutting back on a capacity aggressively which makes competition even more important.
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_OtherIt 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’.
How dare he inject capital into the airline as you yourself said he should do less than ten posts previously!
Seems like you've got a serious axe to grind against SRB.
You clearly are a VS fan who wants VS to survive, and I applaud that. But what I do not understand is why you are not advocating for SRB to get off his arse and do something? Why does this have to be a UK Government responsibility? He does own 51% of the airline, is solvent, and has assets.