Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR

 
FluidFlow
Posts: 639
Joined: Wed Apr 10, 2019 6:39 am

Re: Virgin Atlantic needs government support?

Fri May 08, 2020 1:42 pm

DobboDobbo wrote:
They are asking for government support to help his airline restructure and survive (not him personally - structuring this is the tricky bit), the airlines employees (not Branson), the airlines supply chain (not Branson) which has had to stop flying for reasons beyond anyone’s control.

You are correct - Branson will be fine whatever happens. His employees, their families, and those of VS’s supply chain may not be fine - and that is what this is about. The industry will have to retreat in the short term - there is no getting away from that - it is about damage limitation and I think the UK taxpayers on the whole would rather pay higher taxes over a 10-20 year period to mitigate the present economic disaster than see abject suffering over the next 2/3 years.

The same applies to BA, LH Group, AF/KL, DL, AA,UA (pretty much any airline you care to mention) who are all in receipt of government support.


The thing is, will your taxes be higher if VS becomes a black hole (what is entirely possible, as the company could not make consistently profit during high times: 2015-2019), or will your taxes be less high by just having the employees on the dole.

Giving Money to BA, LH, DL, AA and UA has a relatively high chance for the government to get a return, I fail to see VS ever being able to return any money. So I think throwing 500m£ at them just pushes the inevitable into the future. VS is unfortunately in the high risk group and was so before the pandemic, now it is time to terminate life support and let it rest in peace while funding temporary measures for the staff that will lose their jobs.

GB does not need a ghost airline just for the sake of jobs, thats why we have unemployment schemes in Europe, we do not need artificial airlines or companies.
 
goosebayguy
Posts: 705
Joined: Fri Sep 25, 2009 1:12 pm

Re: Virgin Atlantic needs government support?

Fri May 08, 2020 2:13 pm

I'm interested in what now happens to the Gatwick slots. If they were mortgaged which bank now owns them and will they ever manage to sell them? Basically they are now worthless.
 
DobboDobbo
Posts: 1105
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Fri May 08, 2020 2:37 pm

FluidFlow wrote:
The thing is, will your taxes be higher if VS becomes a black hole (what is entirely possible, as the company could not make consistently profit during high times: 2015-2019), or will your taxes be less high by just having the employees on the dole.

Giving Money to BA, LH, DL, AA and UA has a relatively high chance for the government to get a return, I fail to see VS ever being able to return any money. So I think throwing 500m£ at them just pushes the inevitable into the future. VS is unfortunately in the high risk group and was so before the pandemic, now it is time to terminate life support and let it rest in peace while funding temporary measures for the staff that will lose their jobs.

GB does not need a ghost airline just for the sake of jobs, thats why we have unemployment schemes in Europe, we do not need artificial airlines or companies.


The question about VS’s profitability not telling the whole story (Specifically how it has historically returned value to shareholders via royalty payments) has been addressed in this thread.

With regard to the period 2015-19, this has not been a boom time for the UK economy. It has had the uncertainty of brexit hanging over it and the significant devaluation of the pound has had a significant impact on UK airlines.

BA has been okay (it’s 2020 Q1 financials are a clear concern) chiefly because of a monopoly position at a slot constrained airport. That IAG are willing to accept state aid in Spain but have been vigorously opposed to it in the UK (at least whilst VS is around) suggests that VS plays a key competitive role in the market.

There was no fundamental issue with VS’s business model, it needs to downsize to get used to the new normal, and the government support is to give it that room to restructure in exactly the same way as DL, UA, AA, IB, LH, AF, KL (and many others so far) have done and many more will continue to do.
 
BA777FO
Posts: 554
Joined: Sun Apr 22, 2018 2:58 pm

Re: Virgin Atlantic needs government support?

Fri May 08, 2020 5:15 pm

Westerwaelder wrote:
[url][/url]
BA777FO wrote:
Dmoney wrote:
It's revolting behavior. You want poor Deliveroo workers and care workers and everyone else in the country who pays their taxes to give free money to bailout a billionaire.

Well no, that's wrong and immoral and immoral for you to suggest. Branson doesn't get free money when he's a tax exile. The equity value of VS is zero by any reasonable definition without a bailout.


Point of order: Deliveroo drivers are not earning enough to be net contributors to The Treasury - they take more in benefits and services than they pay. Before this shutdown around half of all UK adults were net recipients of the state through benefits and services. The UK has narrowed its tax base so much that it is practically duty-bound to help protect the employment of those that are net contributors or face fiscal ruin.

Second point - none of this would be "free" money - it would be a loan that has to be repaid and the government could/should structure it to ensure that it actually raises revenue at the end. Plus, £500m when the UK government is going to have a deficit upwards of £300bn this year is virtually statistically insignificant to ensure that Virgin employees - some of whom are among the highest paid PAYE employees in the country contributing towards housing benefit, child tax credit, child benefit, the NHS etc that the Deliveroo driver depends upon - stay employed and don't become an ongoing burden on the state.


Fact: around half of the UK population receive some kind of benefit.
False: half of the UK population are net recipients of benefits as you claim.

Included in the numbers of those receiving benefits are pensioners and child benefit recipients. Child benefits don't mean you are a net recipient. It's simply a tax credit.

https://www.ethnicity-facts-figures.ser ... ort/latest

This kind of populist mixing of facts and myths to argue your point is nothing but shameful.

And as for the £500 million being nothing in the greater scheme of things: as it stands it would save around 7,000 jobs at VS and VHolidays (there has to be cuts to the overall number as demand is not expected to bounce back to the same level for years to come) at £71k per job. If every restaurant, pub, services company, manufacturer argues the same way, that would be £71 billion per million jobs saved. Some of these jobs will be at the low end, some at the high end of income brackets. Do you get it now? There is nothing special about jobs at VS.


Actually it was half of all UK households are net recipients from The Treasury. The Telegraph used a 2014 study from The ONS.

https://www.google.co.uk/url?sa=t&sourc ... Jm7T-e9OUl

The UK JRS scheme is costing about £40+bn over 3 months to save jobs of many people who don't even earn enough to pay any income tax! So £70k per job at Virgin when many Virgin skippers pay more than that in income tax alone each year is a good investment in the long-term.
 
Westerwaelder
Posts: 204
Joined: Fri Apr 03, 2020 12:27 pm

Re: Virgin Atlantic needs government support?

Fri May 08, 2020 5:22 pm

DobboDobbo wrote:
Westerwaelder wrote:
Before signing up to the CARES Act they could have offered an unsecured loan. That would have not increased their 49%. Feels like a lame excuse for not wanting to sink more money into this adventure.


If DL did something shortly before signing up to the CARES act that was obviously designed to circumvent the purpose of the CARES act (i.e. offer a loan or some other support to VS) do you suppose the “America first” trump administration would have permitted DL to continue to participate in it?

Your point is embarrassingly unrealistic.


If they loaned money to VS to protect their investment they would have been fine. Remind me, did they not very recently invest in a Latam? Did that prevent them from participating in CARES?
 
BA777FO
Posts: 554
Joined: Sun Apr 22, 2018 2:58 pm

Re: Virgin Atlantic needs government support?

Fri May 08, 2020 5:23 pm

airhansa wrote:
The British Isles already has several major airlines:
- Easy Jet
- Ryanair
- Jet2
- British Airways
- Air Lingus
- TUI Airways
- Loganair

Not to mention that there are plenty of superior airlines from overseas that British people can fly on (KLM, Lufthansa etc...)

Why does Virgin Atlantic need to be saved? If push comes to shove, just force through a competition ruling and expand Air Lingus into British domestic flights - and transatlantic routes can include a pre-check service in Ireland.

If anything, there needs to be less airlines in the UK, such as getting rid of Jet2 and merging it with TUI Airways.

Compare the situation in the UK with the rest of Europe. The UK market is over saturated with airline companies.


British people can fly Lufthansa, KLM or Delta etc. but from the UK government point of view that provides jobs for people who pay tax in Germany, The Netherlands or USA, not the UK. That's why it's a strategic issue for the UK government. There does need to be some consolidation, but that's perhaps more likely when some carriers have downsized and become an attractive target for the likes of IAG or Lufthansa.
 
Westerwaelder
Posts: 204
Joined: Fri Apr 03, 2020 12:27 pm

Re: Virgin Atlantic needs government support?

Fri May 08, 2020 5:26 pm

BA777FO wrote:
Westerwaelder wrote:
[url][/url]
BA777FO wrote:

Point of order: Deliveroo drivers are not earning enough to be net contributors to The Treasury - they take more in benefits and services than they pay. Before this shutdown around half of all UK adults were net recipients of the state through benefits and services. The UK has narrowed its tax base so much that it is practically duty-bound to help protect the employment of those that are net contributors or face fiscal ruin.

Second point - none of this would be "free" money - it would be a loan that has to be repaid and the government could/should structure it to ensure that it actually raises revenue at the end. Plus, £500m when the UK government is going to have a deficit upwards of £300bn this year is virtually statistically insignificant to ensure that Virgin employees - some of whom are among the highest paid PAYE employees in the country contributing towards housing benefit, child tax credit, child benefit, the NHS etc that the Deliveroo driver depends upon - stay employed and don't become an ongoing burden on the state.


Fact: around half of the UK population receive some kind of benefit.
False: half of the UK population are net recipients of benefits as you claim.

Included in the numbers of those receiving benefits are pensioners and child benefit recipients. Child benefits don't mean you are a net recipient. It's simply a tax credit.

https://www.ethnicity-facts-figures.ser ... ort/latest

This kind of populist mixing of facts and myths to argue your point is nothing but shameful.

And as for the £500 million being nothing in the greater scheme of things: as it stands it would save around 7,000 jobs at VS and VHolidays (there has to be cuts to the overall number as demand is not expected to bounce back to the same level for years to come) at £71k per job. If every restaurant, pub, services company, manufacturer argues the same way, that would be £71 billion per million jobs saved. Some of these jobs will be at the low end, some at the high end of income brackets. Do you get it now? There is nothing special about jobs at VS.


Actually it was half of all UK households are net recipients from The Treasury. The Telegraph used a 2014 study from The ONS.

https://www.google.co.uk/url?sa=t&sourc ... Jm7T-e9OUl

The UK JRS scheme is costing about £40+bn over 3 months to save jobs of many people who don't even earn enough to pay any income tax! So £70k per job at Virgin when many Virgin skippers pay more than that in income tax alone each year is a good investment in the long-term.


You are quoting the Telegraph. I quote official government statistics. Believe who you want.

So jobs of people who earn less than the threshold are not worth saving in your view? That tells me all I need to know...
 
DobboDobbo
Posts: 1105
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Fri May 08, 2020 5:28 pm

Westerwaelder wrote:
DobboDobbo wrote:
Westerwaelder wrote:
Before signing up to the CARES Act they could have offered an unsecured loan. That would have not increased their 49%. Feels like a lame excuse for not wanting to sink more money into this adventure.


If DL did something shortly before signing up to the CARES act that was obviously designed to circumvent the purpose of the CARES act (i.e. offer a loan or some other support to VS) do you suppose the “America first” trump administration would have permitted DL to continue to participate in it?

Your point is embarrassingly unrealistic.


If they loaned money to VS to protect their investment they would have been fine. Remind me, did they not very recently invest in a Latam? Did that prevent them from participating in CARES?


I think you have misunderstood the rather significant difference between a loan made in normal times (which VS presumably didn’t require) before CARES could even have been contemplated and one made in the current unprecedented times.

It remains an embarrassingly unrealistic point.
 
BA777FO
Posts: 554
Joined: Sun Apr 22, 2018 2:58 pm

Re: Virgin Atlantic needs government support?

Fri May 08, 2020 5:57 pm

Westerwaelder wrote:
BA777FO wrote:
Westerwaelder wrote:
[url][/url]

Fact: around half of the UK population receive some kind of benefit.
False: half of the UK population are net recipients of benefits as you claim.

Included in the numbers of those receiving benefits are pensioners and child benefit recipients. Child benefits don't mean you are a net recipient. It's simply a tax credit.

https://www.ethnicity-facts-figures.ser ... ort/latest

This kind of populist mixing of facts and myths to argue your point is nothing but shameful.

And as for the £500 million being nothing in the greater scheme of things: as it stands it would save around 7,000 jobs at VS and VHolidays (there has to be cuts to the overall number as demand is not expected to bounce back to the same level for years to come) at £71k per job. If every restaurant, pub, services company, manufacturer argues the same way, that would be £71 billion per million jobs saved. Some of these jobs will be at the low end, some at the high end of income brackets. Do you get it now? There is nothing special about jobs at VS.


Actually it was half of all UK households are net recipients from The Treasury. The Telegraph used a 2014 study from The ONS.

https://www.google.co.uk/url?sa=t&sourc ... Jm7T-e9OUl

The UK JRS scheme is costing about £40+bn over 3 months to save jobs of many people who don't even earn enough to pay any income tax! So £70k per job at Virgin when many Virgin skippers pay more than that in income tax alone each year is a good investment in the long-term.


You are quoting the Telegraph. I quote official government statistics. Believe who you want.

So jobs of people who earn less than the threshold are not worth saving in your view? That tells me all I need to know...


No, did you even read anything I wrote? The Telegraph quoted The ONS! The ONS - doesn't get more official than that. Here's your ONS link:

https://www.ons.gov.uk/peoplepopulation ... d-in-taxes

The point I'm making is that it's worth saving as many jobs as we can - unlike you who seem to be arguing that forgoing 8,500 jobs at Virgin is fine because you don't know if the government will get their £500m back or that £71k per job is too much. £500m is small fry to this government, especially if it ends up doing the trick and Virgin emerge out this mess with a sustainable airline going forwards.
 
bennett123
Posts: 9479
Joined: Sun Aug 15, 2004 12:49 am

Re: Virgin Atlantic needs government support?

Fri May 08, 2020 7:08 pm

https://www.ft.com/content/d6ecbf8a-4b2 ... 0218fa9c41

If this money is available from Virgin Galactic, is govt money still needed?

As for £500M being small fry, that is a matter of opinion.
 
FCAA321
Posts: 44
Joined: Thu Nov 10, 2011 7:47 pm

Re: Virgin Atlantic needs government support?

Fri May 08, 2020 9:22 pm

airhansa wrote:
The British Isles already has several major airlines:
- Easy Jet
- Ryanair
- Jet2
- British Airways
- Air Lingus
- TUI Airways
- Loganair

Not to mention that there are plenty of superior airlines from overseas that British people can fly on (KLM, Lufthansa etc...)

Why does Virgin Atlantic need to be saved? If push comes to shove, just force through a competition ruling and expand Air Lingus into British domestic flights - and transatlantic routes can include a pre-check service in Ireland.

If anything, there needs to be less airlines in the UK, such as getting rid of Jet2 and merging it with TUI Airways.

Compare the situation in the UK with the rest of Europe. The UK market is over saturated with airline companies.


I don’t know what’s worse? The fact you can’t get the airline name correct or the negativity that wreaks in your post..

It’s easyJet not Easy Jet
It’s Aer Lingus not Air Lingus

Why would Jet2 and TUI merge? TUI is the worlds only major Holiday airline with a sole purpose of taking people on holiday. Jet2 cater for a whole array of different markets only known as a U.K brand..

There may be a number of UK airlines but healthy competition is good. What will be will be.. Only those that are meant to survive will.

The point of this post is Virgin and we need to get back on track...
 
User avatar
Aisak
Posts: 922
Joined: Thu Aug 11, 2005 10:56 pm

Re: Virgin Atlantic needs government support?

Fri May 08, 2020 10:44 pm

Virgin Atlantic does not need to post any profit or give dividends to its 2 shareholders to make them rich, while keeping the entity poor. It’s just like the way viruses parasite cells, stopping its normal functions to post a profit... errr sorry, code proteins, while still producing copies of the virus.

Virgin Atlantic is a legal entity owned by just two other entities.
The Virgin Group gets money from it, through billing a royalties fee on sales revenue for the use of the Virgin name. We all know this is totally, completely and absolutely needed for an airline to fly... or to be successful... mmmm or maybe not.
And then there is the other shareholder, who gets half of the business between the UK and the US. And Delta gets it regardless of the results of the legal entity. It’s just billed from Delta to Virgin Atlantic and that money is due and should fly out of the company to Delta. It is reported that VS already owes Delta 200 millions on overdue payments under this concept.

What the UK Goverment might fear, is not the tax domicile of the shareholders... or where the money ends up... it might fear that the enterprise is just set up to give money to its two shareholders BEFORE AND REGARDLESS of their status as shareholders. They have agreed to part the booty before getting to it...
 
Dmoney
Posts: 135
Joined: Tue Mar 17, 2020 9:53 am

Re: Virgin Atlantic needs government support?

Fri May 08, 2020 11:29 pm

Junglejames wrote:
Dmoney wrote:
BA777FO wrote:

Point of order: Deliveroo drivers are not earning enough to be net contributors to The Treasury - they take more in benefits and services than they pay. Before this shutdown around half of all UK adults were net recipients of the state through benefits and services. The UK has narrowed its tax base so much that it is practically duty-bound to help protect the employment of those that are net contributors or face fiscal ruin.

Second point - none of this would be "free" money - it would be a loan that has to be repaid and the government could/should structure it to ensure that it actually raises revenue at the end. Plus, £500m when the UK government is going to have a deficit upwards of £300bn this year is virtually statistically insignificant to ensure that Virgin employees - some of whom are among the highest paid PAYE employees in the country contributing towards housing benefit, child tax credit, child benefit, the NHS etc that the Deliveroo driver depends upon - stay employed and don't become an ongoing burden on the state.




Can I have 500m please? I'll bailout VS then and nobody loses their job!.

You don't seem to understand the point of equity or how the capital stack works. It's outrageous and immoral to give hundreds of millions in free money to Tax exile Branson while he gets to keep his equity stake.

Why not buy the company for a pound? Everyone gets to keep their job but the states gets a valuable asset (well theoretically, hard to see VS ever making money).

But it's not about keeping jobs. It's you WANT to give our money to rich people.
Oh for heaven's sake. Every time you use the term tax exile, or even mention the guys name, you make yourself look silly, and don't help your argument.

Sent from my SM-G930F using Tapatalk



Tax exile, tax exile, tax exile. I've met a bunch, most are the same as anyone else just without any social conscience. Very few keep a high profile and ask for bailouts, generally their self image wouldn't allow it.

Sorry for using accurate language to describe Branson (noted tax exile).
 
Dmoney
Posts: 135
Joined: Tue Mar 17, 2020 9:53 am

Re: Virgin Atlantic needs government support?

Fri May 08, 2020 11:37 pm

Westerwaelder wrote:
Dmoney wrote:
BA777FO wrote:

Point of order: Deliveroo drivers are not earning enough to be net contributors to The Treasury - they take more in benefits and services than they pay. Before this shutdown around half of all UK adults were net recipients of the state through benefits and services. The UK has narrowed its tax base so much that it is practically duty-bound to help protect the employment of those that are net contributors or face fiscal ruin.

Second point - none of this would be "free" money - it would be a loan that has to be repaid and the government could/should structure it to ensure that it actually raises revenue at the end. Plus, £500m when the UK government is going to have a deficit upwards of £300bn this year is virtually statistically insignificant to ensure that Virgin employees - some of whom are among the highest paid PAYE employees in the country contributing towards housing benefit, child tax credit, child benefit, the NHS etc that the Deliveroo driver depends upon - stay employed and don't become an ongoing burden on the state.



Also point of order (lol), it was a choice to make the UK economy a low wage economy through terrible productivity and low investment. You could be like Germany or Denmark or France but instead your Portugal with shit weather. But while there is no money for productivity enhancing investment there is always money to bailout tax exiles.

You're the people who claim to believe in a market economy but then want a bailout for rich people. The state will take an equity stake, £1 for 40% of the company while the lenders can have the rest in a debt/equity swap.


The Portugal with shit weather made me laugh. It's so true. Though the weather is quite good right now...
This almost religious belief in free markets as the ultimate nirvana results in social injustice of epic proportions. In the US, the UK, now Brazil...

You can't have it both ways. You either believe in free markets and then the weak fail or you gravitate towards a social (not socialist but that fine point will be lost on many who see red after the letters 'soci') economy and ensure people can make a living from 40 hours of work a week...



Most rich people are full of shit but I've met a few who genuinely believe im free markets, private charity and a limited state. Really look after the employees but hate the government and actually stick to their beliefs. Wouldn't be my belief but I can respect their honestly held belief which is consistent and they are often happy to argue and happy for me to hold a differing view. Don't need to convince me.

People who say they believe in free markets, run a company with someone else's money and then come crying for a bailout are immoral. It's just wrong. VS doesn't have any equity value anymore. If the company can be saved it should be, but Branson shouldn't be bailed out.

The economically illiterate and ass backwards arguments for free cash for billionaires would make US sports team owners blush.
 
Cedar
Posts: 65
Joined: Mon Dec 25, 2017 1:07 am

Re: Virgin Atlantic needs government support?

Fri May 08, 2020 11:39 pm

DobboDobbo wrote:
Westerwaelder wrote:
DobboDobbo wrote:

If DL did something shortly before signing up to the CARES act that was obviously designed to circumvent the purpose of the CARES act (i.e. offer a loan or some other support to VS) do you suppose the “America first” trump administration would have permitted DL to continue to participate in it?

Your point is embarrassingly unrealistic.


If they loaned money to VS to protect their investment they would have been fine. Remind me, did they not very recently invest in a Latam? Did that prevent them from participating in CARES?


I think you have misunderstood the rather significant difference between a loan made in normal times (which VS presumably didn’t require) before CARES could even have been contemplated and one made in the current unprecedented times.

It remains an embarrassingly unrealistic point.


:thumbsup:

Not sure what how you think this works - firstly, DL investing in LATAM all occurred before this COVID-19 situation or any discussion of anything even similar to the CARS act. And at the time VS did not need money.

Secondly - whether it be a loan or free money, DL cannot willingly have money leaving the organization at the same time while they are requesting government assistance because of cash flow problems. How would that look for a company to then turn around and ask for Gov't money.

Even VS understands this.

It's just ridiculous.

Cedar
 
Dmoney
Posts: 135
Joined: Tue Mar 17, 2020 9:53 am

Re: Virgin Atlantic needs government support?

Fri May 08, 2020 11:39 pm

flee wrote:
Sometimes a.netters are an impossible lot. If an airline's shareholders are a national government, it is a no no. Similarly, if an airline's shareholder is a billionaire, its also a no no. I guess that is why we have these forums! Good for letting out gas! ;)



Who has a problem with billionaire owners? Just free money for the rich from the poor is an issue.
 
jomur
Posts: 334
Joined: Sun Jun 19, 2016 6:36 pm

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 6:48 am

DobboDobbo wrote:
Westerwaelder wrote:

Delta hasn't begged for money. They are seeing things as they are. They don't want to put their hands in their own pockets and so far accept that no one comes running to do it for them.


Delta hasn’t begged for money because it has already received several billion USD in state aid. They are not permitted to put their hands in their pockets because of the said state aid. I don’t see that this point goes to anything whatsoever.

Westerwaelder wrote:

Stop casting Richard Branson into some sort of victim role. He'll be fine whatever happens.


No one is asking for a handout for Branson.

They are asking for government support to help his airline restructure and survive (not him personally - structuring this is the tricky bit), the airlines employees (not Branson), the airlines supply chain (not Branson) which has had to stop flying for reasons beyond anyone’s control.

You are correct - Branson will be fine whatever happens. His employees, their families, and those of VS’s supply chain may not be fine - and that is what this is about. The industry will have to retreat in the short term - there is no getting away from that - it is about damage limitation and I think the UK taxpayers on the whole would rather pay higher taxes over a 10-20 year period to mitigate the present economic disaster than see abject suffering over the next 2/3 years.

The same applies to BA, LH Group, AF/KL, DL, AA,UA (pretty much any airline you care to mention) who are all in receipt of government support.


Actually the UK tacpayer would resent paying higher taxes, they always have and will do in the future especially if the tax money went to an airline. The perception of the vast majority of UK taxpayers and voters is that SRB should lend some of his own money to help out. It does give the impression that he does not think he would get his money back if he does so, so why should the Government lend it money then?

As to saving jobs, now with the job cuts the Government would only be saving 5000-6000 jobs at one company when there are hundreds of thousands of jobs at risk in thousands of companies which could be saved by giving the £500 milton to them rather than Virgin and stand a higher chance of getting its money back.

It does not matter what we all personally think, the UK Government currently does not think it is worth the risk lending Virgin the money.
So if it was your money would you lend it to Virgin in the current situation with a high risk of not getting it back but you still had to repay the money to someone else?
 
Westerwaelder
Posts: 204
Joined: Fri Apr 03, 2020 12:27 pm

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 7:01 am

DobboDobbo wrote:
Westerwaelder wrote:
DobboDobbo wrote:

If DL did something shortly before signing up to the CARES act that was obviously designed to circumvent the purpose of the CARES act (i.e. offer a loan or some other support to VS) do you suppose the “America first” trump administration would have permitted DL to continue to participate in it?

Your point is embarrassingly unrealistic.


If they loaned money to VS to protect their investment they would have been fine. Remind me, did they not very recently invest in a Latam? Did that prevent them from participating in CARES?


I think you have misunderstood the rather significant difference between a loan made in normal times (which VS presumably didn’t require) before CARES could even have been contemplated and one made in the current unprecedented times.

It remains an embarrassingly unrealistic point.


Apologies. I remembered the Latam stake as a more recent event.
 
Westerwaelder
Posts: 204
Joined: Fri Apr 03, 2020 12:27 pm

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 7:24 am

BA777FO wrote:
Westerwaelder wrote:
BA777FO wrote:

Actually it was half of all UK households are net recipients from The Treasury. The Telegraph used a 2014 study from The ONS.

https://www.google.co.uk/url?sa=t&sourc ... Jm7T-e9OUl

The UK JRS scheme is costing about £40+bn over 3 months to save jobs of many people who don't even earn enough to pay any income tax! So £70k per job at Virgin when many Virgin skippers pay more than that in income tax alone each year is a good investment in the long-term.


You are quoting the Telegraph. I quote official government statistics. Believe who you want.

So jobs of people who earn less than the threshold are not worth saving in your view? That tells me all I need to know...


No, did you even read anything I wrote? The Telegraph quoted The ONS! The ONS - doesn't get more official than that. Here's your ONS link:

https://www.ons.gov.uk/peoplepopulation ... d-in-taxes

The point I'm making is that it's worth saving as many jobs as we can - unlike you who seem to be arguing that forgoing 8,500 jobs at Virgin is fine because you don't know if the government will get their £500m back or that £71k per job is too much. £500m is small fry to this government, especially if it ends up doing the trick and Virgin emerge out this mess with a sustainable airline going forwards.


Save as many jobs is exactly what we need to do. But we need to do away with the notion that just because you are getting paid more, you are more important to the economy. We also need to take leave of the notion that we can save everyone's job. Sad but true. The economy is expected to go into the worst recession in memory. The jobs you are saving at VS at £71k per job will be lost at another airline as demand is not expected to come back to the same level for years.

Today's announcement of a 14 day self-isolation for everyone entering the UK should make you think...
 
Westerwaelder
Posts: 204
Joined: Fri Apr 03, 2020 12:27 pm

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 7:25 am

jomur wrote:
DobboDobbo wrote:
Westerwaelder wrote:

Delta hasn't begged for money. They are seeing things as they are. They don't want to put their hands in their own pockets and so far accept that no one comes running to do it for them.


Delta hasn’t begged for money because it has already received several billion USD in state aid. They are not permitted to put their hands in their pockets because of the said state aid. I don’t see that this point goes to anything whatsoever.

Westerwaelder wrote:

Stop casting Richard Branson into some sort of victim role. He'll be fine whatever happens.


No one is asking for a handout for Branson.

They are asking for government support to help his airline restructure and survive (not him personally - structuring this is the tricky bit), the airlines employees (not Branson), the airlines supply chain (not Branson) which has had to stop flying for reasons beyond anyone’s control.

You are correct - Branson will be fine whatever happens. His employees, their families, and those of VS’s supply chain may not be fine - and that is what this is about. The industry will have to retreat in the short term - there is no getting away from that - it is about damage limitation and I think the UK taxpayers on the whole would rather pay higher taxes over a 10-20 year period to mitigate the present economic disaster than see abject suffering over the next 2/3 years.

The same applies to BA, LH Group, AF/KL, DL, AA,UA (pretty much any airline you care to mention) who are all in receipt of government support.


Actually the UK tacpayer would resent paying higher taxes, they always have and will do in the future especially if the tax money went to an airline. The perception of the vast majority of UK taxpayers and voters is that SRB should lend some of his own money to help out. It does give the impression that he does not think he would get his money back if he does so, so why should the Government lend it money then?

As to saving jobs, now with the job cuts the Government would only be saving 5000-6000 jobs at one company when there are hundreds of thousands of jobs at risk in thousands of companies which could be saved by giving the £500 milton to them rather than Virgin and stand a higher chance of getting its money back.

It does not matter what we all personally think, the UK Government currently does not think it is worth the risk lending Virgin the money.
So if it was your money would you lend it to Virgin in the current situation with a high risk of not getting it back but you still had to repay the money to someone else?


Good point!
 
DobboDobbo
Posts: 1105
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 9:48 am

jomur wrote:
Actually the UK tacpayer would resent paying higher taxes, they always have and will do in the future especially if the tax money went to an airline. The perception of the vast majority of UK taxpayers and voters is that SRB should lend some of his own money to help out. It does give the impression that he does not think he would get his money back if he does so, so why should the Government lend it money then?

As to saving jobs, now with the job cuts the Government would only be saving 5000-6000 jobs at one company when there are hundreds of thousands of jobs at risk in thousands of companies which could be saved by giving the £500 milton to them rather than Virgin and stand a higher chance of getting its money back.

It does not matter what we all personally think, the UK Government currently does not think it is worth the risk lending Virgin the money.
So if it was your money would you lend it to Virgin in the current situation with a high risk of not getting it back but you still had to repay the money to someone else?


I accept that as a rule in normal times the UK taxpayers resent paying higher taxes. However, there are not normal times and I think it has been accepted that higher taxes are going to be needed over the coming years for the current spending. Therefore what taxpayers preference is largely irrelevant, because the position on what has to happen is clear whether we like it or not.

That aside, I don’t think your points have much merit.

First, the government are in the process of gathering evidence on the aviation industry and developing policy to understand its importance and what can be done to preserve it as far as possible. We do not yet know the outcome of this process. We also know that any bespoke support from the U.K. government is to be a last resort. In the last few weeks we have seen BA and VS commence restructures which will be ongoing for about 8 weeks. Therefore, on the issue of whether the U.K. government is prepared to support VS, your point is at best premature.

Second, the comparison between what I (Or any other private individual or company) would/should do with their money and what the government would/should do with it is a bad one. The governments job is very different to that of a private person. The comparison is simply not relevant.

Third, it’s not just the 6,000+ jobs at VS at stake (this assumes a cut of 25% of their workforce). It’s their suppliers, from the staff at the airport, to the travel agents, to the engine and aircraft manufacturers. You could give handouts to all of them, but it would be more economical to support the anchor of that supply chain to continue trading. Many of the thousands of smaller businesses you feel could be saved for less money may themselves be reliant upon a VS or a BA - meaning that “saving” them would be largely pointless if their chief customer fails.

Fourth, whether you like him or not Branson has already put hundreds of millions of dollars of his own money into supporting the Virgin group (of which something like $100m has gone to VS). I’d imagine (but obviously don’t know) he would be willing to do more if he could. Whether he has the cash or the ability to access cash (e.g. borrowing, sale of assets) I don’t know either. Either way, he clearly has given (not lent) money to VS so therefore your inference that he is unwilling to put his money where his mouth is plainly wrong, and following through the logic of your argument wouldn’t you agree the government should be sympathetic in principle to supporting VS given he has already done so?

Finally, the nature of the various stimuli announced have or are costing the treasury an absolute fortune. The sums VS are seeking are a drop in the ocean. There is little point stimulating the economy if there is nothing left to stimulate as we come out of the other side of this.

As a general point, the airlines that have already received significant bespoke financial support from governments (including AF, KL, UA, AA, DL, IB, LH) will invariably be owned to some degree by the state or billionaires. So if you are arguing against bespoke financial support for VS because of Branson, you should also be arguing against financial support for all airlines for the same reason. If you are not, it is safe to say that your position is guided more by a dislike of Branson (which is fair enough but obviously not a valid argument) than any rational argument.
 
BA777FO
Posts: 554
Joined: Sun Apr 22, 2018 2:58 pm

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 10:42 am

Westerwaelder wrote:
BA777FO wrote:
Westerwaelder wrote:

You are quoting the Telegraph. I quote official government statistics. Believe who you want.

So jobs of people who earn less than the threshold are not worth saving in your view? That tells me all I need to know...


No, did you even read anything I wrote? The Telegraph quoted The ONS! The ONS - doesn't get more official than that. Here's your ONS link:

https://www.ons.gov.uk/peoplepopulation ... d-in-taxes

The point I'm making is that it's worth saving as many jobs as we can - unlike you who seem to be arguing that forgoing 8,500 jobs at Virgin is fine because you don't know if the government will get their £500m back or that £71k per job is too much. £500m is small fry to this government, especially if it ends up doing the trick and Virgin emerge out this mess with a sustainable airline going forwards.


Save as many jobs is exactly what we need to do. But we need to do away with the notion that just because you are getting paid more, you are more important to the economy. We also need to take leave of the notion that we can save everyone's job. Sad but true. The economy is expected to go into the worst recession in memory. The jobs you are saving at VS at £71k per job will be lost at another airline as demand is not expected to come back to the same level for years.

Today's announcement of a 14 day self-isolation for everyone entering the UK should make you think...


You've made a lot of unfounded assumptions there. But that'll end up taking us off topic and I think the evil billionaire, handout thing has been overdone already.

The 14 day self-isolation has made me think - made me think we're closing the stable door after the horse has bolted. Utterly pointless and yet another in a succession of anti-aviation moves by this government.

I know a lot has been said about bailouts being linked to equity and collateral and in normal times that'd be entirely appropriate. But the state-aid laws have been halted and comprehensively destroyed in Europe and elsewhere - why should Virgin not get a £500m bailout to preserve 3,500 jobs but Lufthansa gets billions, Norwegian and others get hundreds of millions to preserve jobs in their country but not the UK and Virgin. It's an uneven playing field, it was before with levels of APD but now it's becoming farcical.
 
airhansa
Posts: 347
Joined: Wed Jan 08, 2020 3:18 pm

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 11:04 am

BA777FO wrote:
Westerwaelder wrote:
BA777FO wrote:

No, did you even read anything I wrote? The Telegraph quoted The ONS! The ONS - doesn't get more official than that. Here's your ONS link:

https://www.ons.gov.uk/peoplepopulation ... d-in-taxes

The point I'm making is that it's worth saving as many jobs as we can - unlike you who seem to be arguing that forgoing 8,500 jobs at Virgin is fine because you don't know if the government will get their £500m back or that £71k per job is too much. £500m is small fry to this government, especially if it ends up doing the trick and Virgin emerge out this mess with a sustainable airline going forwards.


Save as many jobs is exactly what we need to do. But we need to do away with the notion that just because you are getting paid more, you are more important to the economy. We also need to take leave of the notion that we can save everyone's job. Sad but true. The economy is expected to go into the worst recession in memory. The jobs you are saving at VS at £71k per job will be lost at another airline as demand is not expected to come back to the same level for years.

Today's announcement of a 14 day self-isolation for everyone entering the UK should make you think...


You've made a lot of unfounded assumptions there. But that'll end up taking us off topic and I think the evil billionaire, handout thing has been overdone already.

The 14 day self-isolation has made me think - made me think we're closing the stable door after the horse has bolted. Utterly pointless and yet another in a succession of anti-aviation moves by this government.

I know a lot has been said about bailouts being linked to equity and collateral and in normal times that'd be entirely appropriate. But the state-aid laws have been halted and comprehensively destroyed in Europe and elsewhere - why should Virgin not get a £500m bailout to preserve 3,500 jobs but Lufthansa gets billions, Norwegian and others get hundreds of millions to preserve jobs in their country but not the UK and Virgin. It's an uneven playing field, it was before with levels of APD but now it's becoming farcical.


Virgin Atlantic isn't a critical piece of infrastructure in the UK and its demise isn't going to cause widespread hardship to citizens. Lufthansa is basically the national airline of Germany and a critical piece of infrastructure for the EU, whereas Norwegian is a major low cost airline that is relied upon by much of Norway in a country where air travel is a necessity.

Finally, structurally, there are a lot of problems with Virgin Atlantic even before the pandemic hit.

The UK doesn't need so many airlines. If anything, what it needs is an airline entrant such as Loganair/Wideroe/KLM that services niche remote areas of the north-eastern Atlantic Ocean.
 
MIflyer12
Posts: 7587
Joined: Mon Feb 18, 2013 11:58 pm

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 11:16 am

Bricktop wrote:
But back to VS: The minority shareholder may have to take a haircut on its investment. Tough. Poop happens. The majority shareholder needs to cough up some of his own money to keep it going, either getting debt or more equity from his investment, or make the hard decision to let it go bye-bye. There is no UK taxpayer interest in propping up VS. Sorry.


That seems unrealistic, as well as discriminatory (equity holders treated differently), as well as unlawful - one of the points of creating subsidiaries is to shelter parent companies. You can't force Branson (or Delta) to invest more.

It seems what could happen is a debt-to-equity conversion. As part of a UK government-led equity injection, direct lenders could get equity -- perhaps such that the combined Virgin Group/Delta stake is diluted below 50%. Then the government and banks can run it as they want.

https://www.ft.com/content/95a72aac-e88 ... 144feab49a

As for VS becoming a drag on taxpayers, think about costs of unemployment, and think about BA losing its biggest long-haul competitor. Over a five-ten year period UK consumers and taxpayers will spend a lot more in benefit and higher fares than the GBP 2 Billion they might sink into VS.
 
DobboDobbo
Posts: 1105
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 11:33 am

airhansa wrote:
Virgin Atlantic isn't a critical piece of infrastructure in the UK and its demise isn't going to cause widespread hardship to citizens. Lufthansa is basically the national airline of Germany and a critical piece of infrastructure for the EU, whereas Norwegian is a major low cost airline that is relied upon by much of Norway in a country where air travel is a necessity.

Finally, structurally, there are a lot of problems with Virgin Atlantic even before the pandemic hit.

The UK doesn't need so many airlines. If anything, what it needs is an airline entrant such as Loganair/Wideroe/KLM that services niche remote areas of the north-eastern Atlantic Ocean.


Leaving aside the factual inaccuracies, in the UK (and throughout the west) governments cannot pick favourites.

Your points are of nil value.
 
airhansa
Posts: 347
Joined: Wed Jan 08, 2020 3:18 pm

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 11:49 am

DobboDobbo wrote:
airhansa wrote:
Virgin Atlantic isn't a critical piece of infrastructure in the UK and its demise isn't going to cause widespread hardship to citizens. Lufthansa is basically the national airline of Germany and a critical piece of infrastructure for the EU, whereas Norwegian is a major low cost airline that is relied upon by much of Norway in a country where air travel is a necessity.

Finally, structurally, there are a lot of problems with Virgin Atlantic even before the pandemic hit.

The UK doesn't need so many airlines. If anything, what it needs is an airline entrant such as Loganair/Wideroe/KLM that services niche remote areas of the north-eastern Atlantic Ocean.


Leaving aside the factual inaccuracies, in the UK (and throughout the west) governments cannot pick favourites.

Your points are of nil value.


On the contrary, state aid is usually given to companies that are considered too important to fail. Virgin Atlantic has a competitor for everything it does - Lufthansa and Norwegian doesn't, and hence why Easyjet got state aid but Virgin didn't. Virgin can fail without causing infrastructure disruption to the UK, but BA and Loganair cannot (unless one mops up the other), and Easyjet is very important as a low cost airline (though obviously Ryanair exists as well). I'm not quite sure what the factual inaccuracies are. Virgin Atlantic wasn't a strong airline before the pandemic hit and was in the midst of selling to Air France KLM. It had losses in 2019 and 2018.
 
User avatar
readytotaxi
Posts: 7269
Joined: Mon Dec 11, 2006 2:09 am

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 11:54 am

goosebayguy wrote:
I'm interested in what now happens to the Gatwick slots. If they were mortgaged which bank now owns them and will they ever manage to sell them? Basically they are now worthless.

Which probably makes them a really good deal if you have DEEP pockets and take the long view 3-5 yrs :bouncy:
you don't get a second chance to make a first impression!
Growing older, but not up.
 
Opus99
Posts: 712
Joined: Thu May 30, 2019 10:51 pm

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 12:29 pm

VS has put administrators on stand by. Not because it’s inevitable but because the board are obliged to do so in a time like this. IF necessary it will see virgin go to into administration and come out a different airline. However shareholders will be wiped out

https://news.sky.com/story/coronavirus- ... s-11985678
 
sevenheavy
Posts: 961
Joined: Tue Mar 23, 2004 3:30 am

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 12:32 pm

DobboDobbo wrote:
jomur wrote:
Actually the UK tacpayer would resent paying higher taxes, they always have and will do in the future especially if the tax money went to an airline. The perception of the vast majority of UK taxpayers and voters is that SRB should lend some of his own money to help out. It does give the impression that he does not think he would get his money back if he does so, so why should the Government lend it money then?

As to saving jobs, now with the job cuts the Government would only be saving 5000-6000 jobs at one company when there are hundreds of thousands of jobs at risk in thousands of companies which could be saved by giving the £500 milton to them rather than Virgin and stand a higher chance of getting its money back.

It does not matter what we all personally think, the UK Government currently does not think it is worth the risk lending Virgin the money.
So if it was your money would you lend it to Virgin in the current situation with a high risk of not getting it back but you still had to repay the money to someone else?


I accept that as a rule in normal times the UK taxpayers resent paying higher taxes. However, there are not normal times and I think it has been accepted that higher taxes are going to be needed over the coming years for the current spending. Therefore what taxpayers preference is largely irrelevant, because the position on what has to happen is clear whether we like it or not.

That aside, I don’t think your points have much merit.

First, the government are in the process of gathering evidence on the aviation industry and developing policy to understand its importance and what can be done to preserve it as far as possible. We do not yet know the outcome of this process. We also know that any bespoke support from the U.K. government is to be a last resort. In the last few weeks we have seen BA and VS commence restructures which will be ongoing for about 8 weeks. Therefore, on the issue of whether the U.K. government is prepared to support VS, your point is at best premature.

Second, the comparison between what I (Or any other private individual or company) would/should do with their money and what the government would/should do with it is a bad one. The governments job is very different to that of a private person. The comparison is simply not relevant.

Third, it’s not just the 6,000+ jobs at VS at stake (this assumes a cut of 25% of their workforce). It’s their suppliers, from the staff at the airport, to the travel agents, to the engine and aircraft manufacturers. You could give handouts to all of them, but it would be more economical to support the anchor of that supply chain to continue trading. Many of the thousands of smaller businesses you feel could be saved for less money may themselves be reliant upon a VS or a BA - meaning that “saving” them would be largely pointless if their chief customer fails.

Fourth, whether you like him or not Branson has already put hundreds of millions of dollars of his own money into supporting the Virgin group (of which something like $100m has gone to VS). I’d imagine (but obviously don’t know) he would be willing to do more if he could. Whether he has the cash or the ability to access cash (e.g. borrowing, sale of assets) I don’t know either. Either way, he clearly has given (not lent) money to VS so therefore your inference that he is unwilling to put his money where his mouth is plainly wrong, and following through the logic of your argument wouldn’t you agree the government should be sympathetic in principle to supporting VS given he has already done so?

Finally, the nature of the various stimuli announced have or are costing the treasury an absolute fortune. The sums VS are seeking are a drop in the ocean. There is little point stimulating the economy if there is nothing left to stimulate as we come out of the other side of this.

As a general point, the airlines that have already received significant bespoke financial support from governments (including AF, KL, UA, AA, DL, IB, LH) will invariably be owned to some degree by the state or billionaires. So if you are arguing against bespoke financial support for VS because of Branson, you should also be arguing against financial support for all airlines for the same reason. If you are not, it is safe to say that your position is guided more by a dislike of Branson (which is fair enough but obviously not a valid argument) than any rational argument.


Excellent post and the most balanced summary I’ve read. We’re in an unprecedented situation. Like it or not, governments all over the world are bailing airlines out because they’ve been put in perilous situations (to varying degrees) because of something that’s entirely outside of their control.

The inability of many on here to separate their opinion of SRB based on what they’ve read is irrelevant and in some cases downright nasty. The overwhelming majority of it is easily debunked through a basic google search. He’s a lazy target. There are billionaires all across the world with significant stock in vulnerable companies yet no one has an issue with any of them. Until recently, certainly after the start of this thread, Warren Buffets company owned a significant amount of stock in many US carriers. No one demanded he stump up any cash (and nor should he) despite the fact that he could probably buy the whole lot outright!

If VS, or any other carrier were asking for help (again, in the form of loans, not a bailout) under normal trading conditions I would absolutely agree that they’re on their own. Even known financial shocks such as a ‘normal’ recession should leave an airline able to survive (VS has after all survived 9-11, SARS, 2008 without any outside help) and recover, and if necessary raise additional investment.

The fact that VS are still very much still in business 2 months into this proves that they were well prepared for any established downturn scenario. Today for example, they’re operating almost 20 cargo sectors which is almost a third of their usual schedule. A pretty good effort compared to most.

I wish everyone, in any industry affected by this terrible pandemic, a safe passage through this. Stay positive and stay safe.
So long 701, it was nice knowing you.
 
Bricktop
Posts: 1468
Joined: Fri Jan 22, 2016 11:04 am

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 12:37 pm

MIflyer12 wrote:
Bricktop wrote:
But back to VS: The minority shareholder may have to take a haircut on its investment. Tough. Poop happens. The majority shareholder needs to cough up some of his own money to keep it going, either getting debt or more equity from his investment, or make the hard decision to let it go bye-bye. There is no UK taxpayer interest in propping up VS. Sorry.


MIflyer12 wrote:
That seems unrealistic, as well as discriminatory (equity holders treated differently), as well as unlawful - one of the points of creating subsidiaries is to shelter parent companies. You can't force Branson (or Delta) to invest more.

Of course not. But let's face it, the money is going to have to come from the equity partners or the UK taxpayers. I am pretty sure that it can't come from Delta as they have taken US taxpayer money. If it did come from Branson, then that would involve either going in as equity, which would dilute DL, (which they would have to and probably would agree to otherwise what's the result?) or debt which may pay a high interest rate to cover some risk, but would be well down the pecking order of creditors, and may have to be agreed to by other VS lenders. OR it can come from the UK taxpayers. If I was a UK taxpayer, I think there are many better ways to spend that money.

MIflyer12 wrote:
It seems what could happen is a debt-to-equity conversion. As part of a UK government-led equity injection, direct lenders could get equity -- perhaps such that the combined Virgin Group/Delta stake is diluted below 50%. Then the government and banks can run it as they want.

https://www.ft.com/content/95a72aac-e88 ... 144feab49a

Agreed as I said above. Unlikely though, I suspect.

MIflyer12 wrote:
As for VS becoming a drag on taxpayers, think about costs of unemployment, and think about BA losing its biggest long-haul competitor. Over a five-ten year period UK consumers and taxpayers will spend a lot more in benefit and higher fares than the GBP 2 Billion they might sink into VS.

"Will" is pretty absolute. I think I would rather pay the unemployment now and let the future airline market take care of itself. VS is pretty much a leisure airline as I see it and that market is going to be crap for the near and maybe not so near future anyway, so they would be propping up a weak business model for quite a while. It's a shame but I think VS is toast.
Last edited by Bricktop on Sat May 09, 2020 12:38 pm, edited 1 time in total.
 
tphuang
Posts: 4873
Joined: Tue Mar 14, 2017 2:04 pm

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 12:38 pm

Again picking favorite is not a valid argument since it's govt role to ensure that it's money is well spent. Throwing money at non viable business is the definition of money badly spent.
 
DobboDobbo
Posts: 1105
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 12:55 pm

airhansa wrote:
On the contrary, state aid is usually given to companies that are considered too important to fail. Virgin Atlantic has a competitor for everything it does - Lufthansa and Norwegian doesn't, and hence why Easyjet got state aid but Virgin didn't. Virgin can fail without causing infrastructure disruption to the UK, but BA and Loganair cannot (unless one mops up the other), and Easyjet is very important as a low cost airline (though obviously Ryanair exists as well). I'm not quite sure what the factual inaccuracies are. Virgin Atlantic wasn't a strong airline before the pandemic hit and was in the midst of selling to Air France KLM. It had losses in 2019 and 2018.


Once again. That is not how it works in the UK or in the West.

I'll give you a factual inaccuracy in your post above. Virgin Atlantic was not in the midst of selling to Air France KLM. It was cancelled by Branson.

Please check your facts, and please try to understand what is and isn't realistic in the UK before making unrealistic assertions.
 
JibberJim
Posts: 142
Joined: Tue Nov 08, 2016 1:33 pm

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 1:09 pm

airhansa wrote:
whereas Norwegian is a major low cost airline that is relied upon by much of Norway in a country where air travel is a necessity.


The real difference with Norwegian is the equity. The main tenant for any modern bail out is that you do not bail out equity, it's absolutely the worst thing to do, it provides all the worst incentives to owners as it out sources risk. Norwegian's equity owners took a 95% hit or so to enable their assistance.

The loans for EasyJet, BA are based on collateral, there's some subsidy obviously as the interest rates on the loans are lower than the actual risk profile would demand, and the assets are probably even a bit over-valued at todays market price - but not if it was a more normal time for aviation.

So far there has been no suggestion that the equity owners of VA want to do anything to reduce their ownership - or the debts they are owed by the business - without that, and with no collateral any loan would be bailing out equity, that is not going to happen, even if the owners were pension funds rather than the current ones.
 
DobboDobbo
Posts: 1105
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 1:11 pm

Bricktop wrote:
I think I would rather pay the unemployment now and let the future airline market take care of itself.


Based on the government's belated quarantine policy I think you'll be paying unemployment benefits for 100k+ in the aviation sector before long. The sector has to be protected so that the knowledge isn't lost as skilled staff dissipate into other industries. Letting the market "take care of itself" in this scenario is quite possibly going to be the same as letting VS then BA and the rest fail. I don't think that is a credible or acceptable policy whatsoever.

Bricktop wrote:
VS is pretty much a leisure airline as I see it and that market is going to be crap for the near and maybe not so near future anyway, so they would be propping up a weak business model for quite a while. It's a shame but I think VS is toast.


The global airline market is overwhelmingly for leisure. Even 70% of LHR's market is leisure, despite LHR styling itself as being "for business". What you are actually arguing for is to not prop up any airline. Is that the case?
 
GDB
Posts: 13615
Joined: Wed May 23, 2001 6:25 pm

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 1:30 pm

BA777FO wrote:
Westerwaelder wrote:
BA777FO wrote:

No, did you even read anything I wrote? The Telegraph quoted The ONS! The ONS - doesn't get more official than that. Here's your ONS link:

https://www.ons.gov.uk/peoplepopulation ... d-in-taxes

The point I'm making is that it's worth saving as many jobs as we can - unlike you who seem to be arguing that forgoing 8,500 jobs at Virgin is fine because you don't know if the government will get their £500m back or that £71k per job is too much. £500m is small fry to this government, especially if it ends up doing the trick and Virgin emerge out this mess with a sustainable airline going forwards.


Save as many jobs is exactly what we need to do. But we need to do away with the notion that just because you are getting paid more, you are more important to the economy. We also need to take leave of the notion that we can save everyone's job. Sad but true. The economy is expected to go into the worst recession in memory. The jobs you are saving at VS at £71k per job will be lost at another airline as demand is not expected to come back to the same level for years.

Today's announcement of a 14 day self-isolation for everyone entering the UK should make you think...


You've made a lot of unfounded assumptions there. But that'll end up taking us off topic and I think the evil billionaire, handout thing has been overdone already.

The 14 day self-isolation has made me think - made me think we're closing the stable door after the horse has bolted. Utterly pointless and yet another in a succession of anti-aviation moves by this government.

I know a lot has been said about bailouts being linked to equity and collateral and in normal times that'd be entirely appropriate. But the state-aid laws have been halted and comprehensively destroyed in Europe and elsewhere - why should Virgin not get a £500m bailout to preserve 3,500 jobs but Lufthansa gets billions, Norwegian and others get hundreds of millions to preserve jobs in their country but not the UK and Virgin. It's an uneven playing field, it was before with levels of APD but now it's becoming farcical.


While I take the general point about the government being anti aviation, though I don't see a moderate, credible opposition not imposing some kind of environment levy, it's more fundamental right now.
We are being led, not by a Churchill tribute act, rather a Captain Mainwaring one, with quite a few 'stupid boys' (and girls with Patel), too but no quietly competent Sgt. Wilson's sorting out the messes.

What's even more galling is that we are in this state due in part to the malign influence, over a decade, in the main opposition party, by the head of UNITE, a man so clueless he is actually proud of his part in the 1979 Winter Of Discontent which led to a government who ended the power of the unions!
This is the man representing many airline staff, not me though, for a decade I have urged colleagues in UNITE to move unions.
 
User avatar
zkojq
Posts: 4275
Joined: Fri Sep 02, 2011 12:42 am

Re: Virgin Atlantic facing collapse

Sat May 09, 2020 2:30 pm

FluidFlow wrote:
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.

Boeing74741R wrote:
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.


Boeing74741R wrote:
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.

Boeing74741R wrote:
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.


Boeing74741R wrote:
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. :roll:


:checkmark:


BA777FO wrote:
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. :lol:


seansasLCY wrote:
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....


seansasLCY wrote:
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. :roll: Qantas is playing the same game in Australia. It's a smart play.

avek00 wrote:
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.


lee757 wrote:
zkojq wrote:
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.


Point taken. :lol:

BealineV953 wrote:
Virgin does not compete on price. Virgin fares are typically the same as BA's.

Opus99 wrote:
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.


https://www.investopedia.com/terms/m/market-price.asp


destere wrote:
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.


:checkmark:

Bongodog49 wrote:
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.


chonetsao wrote:
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.

vhtje wrote:
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.

anstar wrote:
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.

chonetsao wrote:
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 airlines businesses stop doing this? Would be great for the taxpayer.

Detroit313 wrote:
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.

VS11 wrote:
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.

:checkmark: Which is basically the premise of this thread.

vhtje wrote:
It devalues Sterling for one thing, which would have a devastating effect on the long term economy.


How's that been working out? ;)

tphuang wrote:
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.

vhtje wrote:
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’.


How dare he inject capital into the airline as you yourself said he should do less than ten posts previously! :roll: Seems like you've got a serious axe to grind against SRB.

vhtje wrote:
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.
First to fly the 787-9
 
User avatar
zkojq
Posts: 4275
Joined: Fri Sep 02, 2011 12:42 am

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 3:02 pm

jomur wrote:
The UK Government is offering loans to all business but they have to pass certain criteria. As long as the same criteria is applied to both VS and BA then VS will not succeed in taking the UK Government to court if they failed to qualify.


Any court action is pointless if the business has already stopped operating. A successful lawsuit is hardly going to restart an airline.

Galwayman wrote:
O’Leary just slaughtered Branson in a Sky news interview , he was spot on ... let the tax dodger put his money where his mouth is


Ironic comment given O’Leary's love for local government subsidies. and his methods of treating employees as contractors to fleece the taxman of payroll taxes and to skirt various social security contributions and labor laws. MOL has no business pretending that he is somehow standing on some moral high ground here.

PepeTheFrog wrote:
So why is MOL doing this, does he like to be a troll??


Mate, that's been MOL's media strategy for the last twenty years. :lol:

Dutchy wrote:
So Mol sees his competitors getting subsidies/government aid and he does not want these companies to survive. One. way of pulling the rug underneath these airlines is playing on the emotions and thus persuading the general public not to give support. If he succeeds, he will have a lot less competitors in Europe, thus more profit for Ryanair. He is playing the long game, and this will go on for a while, so the next round of government support will be near.


:checkmark: He's doing exactly the same thing as WW and IAG in this regard. Only difference is that Ryanair won't get state aid, unlike the IAG subsidiaries.


Dmoney wrote:
Why should Deliveroo workers on bikes risking their lives everyday without any kind of insurance pay tax to bailout a billionaire.


No insurance pay? So just like Ryanair employees contractors?

NWADTWE16 wrote:
Ill never understand this group here. Always rooting for failure, always supporting huge, monopolistic companies that provide shite service , many times at high fares as well. Certainly if the wishes of the mob here come true, youll be paying 5x normal fare for the privilege of a torturous BA opportunity. Anyone want RyanAir to take over the world??? come on, get your heads out of ***********


:checkmark: I suspect that a lot of the critics here are employees of rival airlines and, seeing an imminent economic catastrophe, would rather see VS collapse than their own employer. Same with the Norwegian threads. Understandable I guess.

BA777FO wrote:
This is not a bailout of a billionaire (whose fortune is tied up in largely illiquid shares of the Virgin group - he's not sitting on a pile of cash) but a bailout of 8,500 ordinary workers all paying their taxes like your deliveroo driver. Some of those people will never be able to gain employment at the same salary again in their careers. The government will miss the tax revenue of those 8,500 Virgin staff and the hundreds of millions of APD from Virgin passengers. When does it become a zero-sum game?


Good point.

a350lover wrote:
Virgin is the second legacy player in the UK, they are milles away from BA in terms of connectivity and I'd say the same when it comes to compare the number of Virgin employees or passengers. Before coronavirus, it was already a very challenging time for those "second players" in Europe. Now it's almost impossible to remain competitive with the current scenario, and I'd say all Governments are going to provide the industry with some indirect benefits but they won't help all airlines in the same level. I can't think of any EU country with more than just one "legacy" carrier. Is there any other example nearby?

I can think of Air Europa in Spain, which isn't exactly a legacy carrier, but still offers full-service so competes pretty much in the same league as Iberia. If IAG hand't shown interest for them before this crisis, they would be now in pretty much the same situation Virgin is.


I take your point on how challenging it is for secondary "legacy" carriers and fully agree with it - definitely something that governments need to address - but Air Europa was profitable before the current crisis.

BA777FO wrote:
I was making a very specific response to the Deliveroo driver contribution to the Treasury.

As for the cost to the Treasury - £500m. BA alone pays ~£700m each year in employer related taxes alone. I appreciate BA has 4 times the number UK based employees but if you add the income tax and VAT those employees would pay and subtract the cost of universal credit from those 8,500 even if virgin went bust after 12 months the government would recoup its money.


Interesting. I'm surprised it's not longer than 12 months.

seansasLCY wrote:
“ Those interested in rescuing Virgin Atlantic are understood to include Lansdowne Partners, the hedge fund founded by George Osborne’s best man Peter Davies, Singapore sovereign wealth fund Temasek and Northill Capital, the fund that is backed by Italian-born Swiss Ernesto Bertarelli.”


The irony will not be lost on me if Temasek invests in VS. :lol:
First to fly the 787-9
 
mattyfitzg
Posts: 254
Joined: Sun Sep 04, 2016 4:50 pm

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 3:26 pm

G-VSXY and G-VGBR just positioned LHR-DSA, I thought the 330s would stick around to fit their whole “twin engine” idea.
Last edited by mattyfitzg on Sat May 09, 2020 3:27 pm, edited 1 time in total.
 
Bricktop
Posts: 1468
Joined: Fri Jan 22, 2016 11:04 am

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 3:27 pm

DobboDobbo wrote:
Bricktop wrote:
I think I would rather pay the unemployment now and let the future airline market take care of itself.


Based on the government's belated quarantine policy I think you'll be paying unemployment benefits for 100k+ in the aviation sector before long. The sector has to be protected so that the knowledge isn't lost as skilled staff dissipate into other industries. Letting the market "take care of itself" in this scenario is quite possibly going to be the same as letting VS then BA and the rest fail. I don't think that is a credible or acceptable policy whatsoever.

Bricktop wrote:
VS is pretty much a leisure airline as I see it and that market is going to be crap for the near and maybe not so near future anyway, so they would be propping up a weak business model for quite a while. It's a shame but I think VS is toast.


The global airline market is overwhelmingly for leisure. Even 70% of LHR's market is leisure, despite LHR styling itself as being "for business". What you are actually arguing for is to not prop up any airline. Is that the case?

Perhaps it is. It will be crap for my favorite hobby, but every service industry looks like it is heading for structural change. Why should aviation be any different? Only partially a devil's advocate question, and maybe beyond the scope of this discussion.
 
BA777FO
Posts: 554
Joined: Sun Apr 22, 2018 2:58 pm

Re: Virgin Atlantic facing collapse

Sat May 09, 2020 3:43 pm

zkojq wrote:
BA777FO wrote:
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. :lol:


Didn't read that very well, did you?! It's the employer's tax cost for employing them. Not sure if you're British but in the UK an employer has to pay National Insurance tax to the government for employing someone based upon their salary. Both the employee and employer pay separate taxes. So it is credited to the employer because the employer pays it. The employees pay another, different set of taxes.

This thread has really run its course and is descending into the farcical...
 
User avatar
F737NG
Posts: 59
Joined: Thu Aug 30, 2018 7:12 pm

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 4:00 pm

FluidFlow wrote:
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.


That's a major misunderstanding of how company law works.
You don't lose shares nor are they taken over for free - that is tantamount to stealing.

What you do is dilute the holding of the current shareholders by issuing so many new shares for the incoming new owner (UK government in this instance) as to completely marginalise the incumbents.
Alternatively, the UK government purchases convertible loan stock from VS.


FluidFlow wrote:
The thing is, will your taxes be higher if VS becomes a black hole (what is entirely possible, as the company could not make consistently profit during high times: 2015-2019), or will your taxes be less high by just having the employees on the dole.
[...]
GB does not need a ghost airline just for the sake of jobs, thats why we have unemployment schemes in Europe, we do not need artificial airlines or companies.


Precisely.
Sad as it is, job-creation schemes don't help anyone in the mid- to long-term. Why should low-paid taxpayers subsidise air passengers?


zkojq wrote:
Right but it is the government's job to ensure the effective functioning of competitive markets.


Yes, but doesn't have to be in the short-term.
Who's to say that in the future another entrant cannot take over the competitor mantle that VS currently has, but actually do it better.

flyBE went under, yet there were positive moves by the other regional airlines to expand and fill-in the gaps left by flyBE's demise (until Coronavirus hit Europe).


DobboDobbo wrote:
With regard to the period 2015-19, this has not been a boom time for the UK economy. It has had the uncertainty of brexit hanging over it and the significant devaluation of the pound has had a significant impact on UK airlines.
[...]
There was no fundamental issue with VS’s business model


Doesn't seem to have affected other UK airlines that are actually well-run.

VS operating profit (e.g. before disposals and exceptional items) in £m
2014: 2.6
2015: 22.5
2016: 39.8
2017: (32.7)
2018: (11.5)

Off fairly static revenues of at least £2,600m in each of those years, they averaged an operating profit margin of just 0.14%.
Other UK airlines, who also had relatively static revenues in the 2014 - 2018 period, have had much higher profit margins.

jet2 averaged 5.43%, Eastern Airways averaged 2.77%, Loganair averaged 2.78% and easyJet averaged 9.2%
Out of these UK 4 airlines, only Loganair in 2018 recorded an operating loss.

VS is not well-run and should be left to go under.
 
User avatar
vhtje
Posts: 1164
Joined: Sat Jan 10, 2009 12:40 pm

Re: Virgin Atlantic facing collapse

Sat May 09, 2020 4:04 pm

zkojq wrote:


vhtje wrote:
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’.


How dare he inject capital into the airline as you yourself said he should do less than ten posts previously! :roll: Seems like you've got a serious axe to grind against SRB.

vhtje wrote:
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.


I have nothing of the kind. I think he is a self-serving businessperson, out for all he can get. Like most successful business people - like Willie Walsh, for example. What makes SRB different is he is the master at spin, and at making the public believe he is some sort of visionary revolutionist. But my opinion of him matters not one jot.

But I am struggling to understand your point. I AM advocating for SRB to put money into VS, and I have in every post I have made in this topic. SRB - the Virgin Group - is solvent and has good access to serious money. I mean, the man is worth some £5 billion. The $100 million he put in thus far is a mere pittance compared to what VS needs. I mean, the ask VS made to Government was for £500 million.

He needs to get off his arse, talk to some lenders, and use some of his other assets to save his airline. Not cry poor to the Government. The Government should only look at helping VS (or any other business) when the current owners cannot. SRB, with his £5 billion, can help. That is the difference here.
I only turn left when boarding aircraft. Well, mostly. All right, sometimes. OH OKAY - rarely.
 
Bhoy
Posts: 524
Joined: Tue Apr 18, 2006 1:50 pm

Re: Virgin Atlantic facing collapse

Sat May 09, 2020 4:29 pm

zkojq wrote:
seansasLCY wrote:
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.

I hope there's a garden on it, at least. An absolute snip at the price.

:duck:
 
DobboDobbo
Posts: 1105
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 4:51 pm

F737NG wrote:
Doesn't seem to have affected other UK airlines that are actually well-run.

VS operating profit (e.g. before disposals and exceptional items) in £m
2014: 2.6
2015: 22.5
2016: 39.8
2017: (32.7)
2018: (11.5)

Off fairly static revenues of at least £2,600m in each of those years, they averaged an operating profit margin of just 0.14%.
Other UK airlines, who also had relatively static revenues in the 2014 - 2018 period, have had much higher profit margins.

jet2 averaged 5.43%, Eastern Airways averaged 2.77%, Loganair averaged 2.78% and easyJet averaged 9.2%
Out of these UK 4 airlines, only Loganair in 2018 recorded an operating loss.

VS is not well-run and should be left to go under.


This is all very interesting, but as with many other posters you’ve overlooked the reality of how VS returns value to its shareholders (hint: it’s not via distributable profits).

This undermines your point.
 
Boeing74741R
Posts: 1376
Joined: Tue Apr 17, 2007 5:44 am

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 6:25 pm

mattyfitzg wrote:
G-VSXY and G-VGBR just positioned LHR-DSA, I thought the 330s would stick around to fit their whole “twin engine” idea.


They’re only operating cargo flights this month and A330’s aren’t being used for this. I assume parking fees are cheaper at DSA than LHR, so it makes sense to move them out of LHR in the interim. G-VWAG flew to MAN the other day.
 
McG1967
Posts: 555
Joined: Wed Apr 05, 2006 2:36 am

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 6:27 pm

A posting elsewhere suggests the LHR parking charges that had been waived or reduced are due to be increased next week.
 
Dmoney
Posts: 135
Joined: Tue Mar 17, 2020 9:53 am

Re: Virgin Atlantic facing collapse

Sat May 09, 2020 7:38 pm

vhtje wrote:
zkojq wrote:


vhtje wrote:
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’.


How dare he inject capital into the airline as you yourself said he should do less than ten posts previously! :roll: Seems like you've got a serious axe to grind against SRB.

vhtje wrote:
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.


I have nothing of the kind. I think he is a self-serving businessperson, out for all he can get. Like most successful business people - like Willie Walsh, for example. What makes SRB different is he is the master at spin, and at making the public believe he is some sort of visionary revolutionist. But my opinion of him matters not one jot.

But I am struggling to understand your point. I AM advocating for SRB to put money into VS, and I have in every post I have made in this topic. SRB - the Virgin Group - is solvent and has good access to serious money. I mean, the man is worth some £5 billion. The $100 million he put in thus far is a mere pittance compared to what VS needs. I mean, the ask VS made to Government was for £500 million.

He needs to get off his arse, talk to some lenders, and use some of his other assets to save his airline. Not cry poor to the Government. The Government should only look at helping VS (or any other business) when the current owners cannot. SRB, with his £5 billion, can help. That is the difference here.



The man isn't worth 5 billion. Have a look at the FT article today. That's a old valuation on some very Shakey businesses. He's quite leveraged.
 
bennett123
Posts: 9479
Joined: Sun Aug 15, 2004 12:49 am

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 7:48 pm

DobboDobbo

As you say, the reported profits do not present the real benefit to the shareholders, which are the Virgin Group/SRB and DL

Not clear how you then conclude at they should get taxpayer support.

As for your point about not being able to pick favourites, that is nonsense. If one airline is viable and the other is not, then do you think that both should be supported.
 
User avatar
F737NG
Posts: 59
Joined: Thu Aug 30, 2018 7:12 pm

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 9:19 pm

DobboDobbo wrote:
F737NG wrote:
Doesn't seem to have affected other UK airlines that are actually well-run.

VS operating profit (e.g. before disposals and exceptional items) in £m
2014: 2.6
2015: 22.5
2016: 39.8
2017: (32.7)
2018: (11.5)

Off fairly static revenues of at least £2,600m in each of those years, they averaged an operating profit margin of just 0.14%.
Other UK airlines, who also had relatively static revenues in the 2014 - 2018 period, have had much higher profit margins.

jet2 averaged 5.43%, Eastern Airways averaged 2.77%, Loganair averaged 2.78% and easyJet averaged 9.2%
Out of these UK 4 airlines, only Loganair in 2018 recorded an operating loss.

VS is not well-run and should be left to go under.


This is all very interesting, but as with many other posters you’ve overlooked the reality of how VS returns value to its shareholders (hint: it’s not via distributable profits).

This undermines your point.



I've gone back and added 'Other operating and overhead costs' to the operating profit figure, since this is the only line item in the statement of comprehensive income where owners can extract value before finance and tax charges are applied.

If, and I do mean a very generous if, all of these costs can be directly apportioned to owners taking 'excess' revenue to reduce the tax liability, then VS' 5-year average operating margin rises to 8.46%.

That's still lower than FR at an average of 19.9% margin, BA at 12.1% and even Aegean at 10.4%

With just 5.4m passengers/year and ~35 aircraft, VS is barely in the top 30 European airlines. It's small-fry.


FlyBE was double the size in both passengers carried and fleet size, yet despite being more important to UK travellers (connectivity between the regions) was allowed to fold.

VS does nothing special. TUI, jet2, or another airline similar to Norwegian could easily replace them.
 
DobboDobbo
Posts: 1105
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Sat May 09, 2020 9:28 pm

bennett123 wrote:
DobboDobbo

As you say, the reported profits do not present the real benefit to the shareholders, which are the Virgin Group/SRB and DL

Not clear how you then conclude at they should get taxpayer support.

As for your point about not being able to pick favourites, that is nonsense. If one airline is viable and the other is not, then do you think that both should be supported.


I’d love to know the basis upon which you think the UK government is able to pick favourites (assuming the industry is not in the verge of collapse in which event I agree all bets are off).

As to viability, the simple point is that VS was on any rational assessment a viable business before Covid-19. Now Covid-19 is here, it is almost certainly not. Pre Covid-19, BA was a very profitable. Now Covid-19 is here, it is almost certainly not viable.

If you are saying viability in the present environment is the criteria for state aid, you are saying that the entire industry in this country needs to start again. If you are saying viability absent Covid-19 is the criteria I don’t think your point goes anywhere.

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos