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325i
Posts: 128
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Re: Virgin Atlantic facing collapse

Thu Apr 02, 2020 4:02 am

Greetings Folks,
Virgin are on the "verge" here on Australia not looking good for the name!
Perhaps at the end of the day a name change (through a "takeover" would not be such a bad thing.
Then who and why would this scenario suit?
Thought I'd throw in a curve ball to stimulate the discussion.
Cheers and take care of yourselves in these trying times. 325i
 
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seahawk
Posts: 9750
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Re: Virgin Atlantic facing collapse

Thu Apr 02, 2020 4:59 am

It will be costly to have BA survive, all others can not be kept. In the end we will back to the 1970ies with state owned national carriers.
 
anstar
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Re: Virgin Atlantic facing collapse

Thu Apr 02, 2020 6:10 am

Byrdluvs747 wrote:
anstar wrote:

Not that important. Delta could essentially just replace all the USA-LHR with their flights and take the slots. Not much left of VS after that.


What makes you think Branson (51% owner) would just let DL strip VS of its slot portfolio? Sorry but DL becomes a small player in LHR if VS collapses.


What would he prefer? DL to get them or to let VS go bust and BA get their hands on them?
 
SCQ83
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Re: Virgin Atlantic facing collapse

Thu Apr 02, 2020 6:28 am

Caymanair wrote:
The situation today is much different. Unemployment is soaring and the prospects for the newly unemployed aren't good... that's a significant cost to government. We can't reasonably expect any company to grow in the short to medium term to fill voids that don't yet exist, and the likelihood of 8,500 airline workers finding new jobs in the next 2 years is slim. One can argue this isn't the time to let market economics dictate things exclusively. I'm not saying VS should or shouldn't be bailed out and I'm not even making a judgement as to how that should be done, but the lay of the land today means that governments have to re-evaluate how involved they are in the economy and whether it is, on balance, more beneficial to spend money bailing out the economy for 12-24 months or dealing with the economic fallout for 5+ years.


This logic makes 0 sense. If the aviation market is going to contract and lose millions of passengers gained in the last few years, there are clearly many carriers out there. So what is the point of bailing out Virgin Atlantic? To fly empty planes because there is no demand?

Also 8,500 people in the grand scheme of things is very few people. It will be more cost-efficiently than the UK government pays them some money to stay at home (like they are doing now with furloughed workers) while they find a job in another industry.
 
FluidFlow
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Re: Virgin Atlantic facing collapse

Thu Apr 02, 2020 6:36 am

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.

Win win for the government as they do only lose the money to pay salaries and other expenses but get an airline for free. The government can bleed cash way better and has the chance to make a lot of money out of it if done right.

Just look at how Switzerland and UBS did it. Even tho it was no nationalisation, the Swiss government earned a lot of money with the bailout but it was done right. Here with airlines, as the core business is dead for a good 12 months, every bailout will just be followed by another one. Just take it over and let the shareholders bite the bullet.
 
Scotron12
Posts: 496
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Re: Virgin Atlantic facing collapse

Thu Apr 02, 2020 7:29 am

BA just suspended 36000 staff. They will continue getting 80% their salary. No redundancies yet.

https://www.bbc.co.uk/news/business-52130021
 
Caymanair
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Re: Virgin Atlantic facing collapse

Thu Apr 02, 2020 7:49 am

SCQ83 wrote:
Caymanair wrote:
The situation today is much different. Unemployment is soaring and the prospects for the newly unemployed aren't good... that's a significant cost to government. We can't reasonably expect any company to grow in the short to medium term to fill voids that don't yet exist, and the likelihood of 8,500 airline workers finding new jobs in the next 2 years is slim. One can argue this isn't the time to let market economics dictate things exclusively. I'm not saying VS should or shouldn't be bailed out and I'm not even making a judgement as to how that should be done, but the lay of the land today means that governments have to re-evaluate how involved they are in the economy and whether it is, on balance, more beneficial to spend money bailing out the economy for 12-24 months or dealing with the economic fallout for 5+ years.


This logic makes 0 sense. If the aviation market is going to contract and lose millions of passengers gained in the last few years, there are clearly many carriers out there. So what is the point of bailing out Virgin Atlantic? To fly empty planes because there is no demand?

Also 8,500 people in the grand scheme of things is very few people. It will be more cost-efficiently than the UK government pays them some money to stay at home (like they are doing now with furloughed workers) while they find a job in another industry.


I think you missed the part where I indicated that I don't have an opinion either way on whether VS should be bailed out or not. What I did try to demonstrate is that there are concerns a government would have today that they didn't have in September when Thomas Cook collapsed, for example. It may very well be cheaper for them to simply pay wages for 8500 employees until demand recovers. But is that going to be the case for millions of workers? This is an environment where protecting jobs and maintaining economic activity is much more concerning than saving one company, and so decisions will be made with that perspective that didn't exist with Thomas Cook or Flybe. That might mean a lifeline for VS that they wouldn't have gotten 6 months ago.
 
Boeing74741R
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Re: Virgin Atlantic facing collapse

Thu Apr 02, 2020 8:24 am

zkojq wrote:
Caymanair wrote:
The idea that VS shouldn't be supported in this crisis because a major shareholder is wealthy and lives overseas is ridiculous. Get over it.

:checkmark: Anyone else feeling a theme here that people's opinion on whether or not VS recieves government help depends on how much they like/dislike SRB (and inturn how angry they are with him for opposing a certain recent UK political event). Would be interesting to map support/opposition for that event with support/opposition to government help for VS actually. :scratchchin:


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.

In terms of SRB being based in the British Virgin Islands, it's worth remembering that Virgin Group Limited (the company that SRB uses to own 51% of VS) is HQ'd in the UK along with VS itself. It's the overall parent company Virgin Group Holdings Limited that's BVI-based. Therefore, I fully expect VS and Virgin Group Limited to have to pay any taxes that are due in the UK, otherwise I'm sure somebody would have picked up on it now like they regularly do with Amazon, Starbucks etc. if they don't.

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.

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.
 
Boeing74741R
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Re: Virgin Atlantic facing collapse

Thu Apr 02, 2020 8:34 am

Byrdluvs747 wrote:
anstar wrote:

Not that important. Delta could essentially just replace all the USA-LHR with their flights and take the slots. Not much left of VS after that.


What makes you think Branson (51% owner) would just let DL strip VS of its slot portfolio? Sorry but DL becomes a small player in LHR if VS collapses.


If VS did collapse (which I hope doesn't happen) and if there were slots at LHR at that point, I expect they would just go back into the pool of slots available for other carriers to acquire. The only thing I would expect to pass back to DL are any slots they currently lease to VS, though on the same token DL would probably lose any slots they lease from VS. All that said, I don't really understand how it works in reality.
 
Boeing74741R
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Re: Virgin Atlantic facing collapse

Thu Apr 02, 2020 8:39 am

Scotron12 wrote:
BA just suspended 36000 staff. They will continue getting 80% their salary. No redundancies yet.

https://www.bbc.co.uk/news/business-52130021


Thoughts are with those affected.

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:
 
Rampvan
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Re: Virgin Atlantic facing collapse

Thu Apr 02, 2020 8:44 am

    Nicknuzzii wrote:
    If they were trying to preserve cash they shouldn’t have been running 4x daily JFK-LHR last week. Their EWR cut was a little premature too.


    Most of the JFK flights are paying their way with cargo both ways
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    BA777FO
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    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 8:47 am

    Boeing74741R wrote:
    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?


    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.
     
    seansasLCY
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    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 8:56 am

    zkojq wrote:
    VS11 wrote:
    skipness1E wrote:
    As for SRB, well he burned his bridges on Brexit.


    This is the real reason why VS won't be assisted.


    :checkmark: Ding ding ding ding ding we have a winner.


    It’s really not. SRB has a history of failing the UK. He’s a good PR man but that’s it. He lost the rail franchise, he is seen in part as responsible for the collapse of Flybe and there have always been questions around his tax affairs. The economy is grinding to a halt. There will be endless businesses requesting help. VS will join that queue. According to news reports, the UK Gov has asked EY to look into any requests so just like when Flybe was denied help it was because external recommendations that it wasn’t sensible to put taxpayers money into it.

    What does Virgin offer that nobody else does that means the taxpayer should offer it more help than others? London is one of the most competitive markets around. Other than the Caribbean routes, a lot of the network has other options even to the US if direct flights with a non-BA airline aren’t available, there are a wealth of flights with one stop.
    Boeing74741R wrote:
    Scotron12 wrote:
    BA just suspended 36000 staff. They will continue getting 80% their salary. No redundancies yet.

    https://www.bbc.co.uk/news/business-52130021


    Thoughts are with those affected.

    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:

    BA and IAG are not asking for a bailout. They publicly said so. They want to see weak airlines collapse and not be propped up by the state. However, the Gov has offered to pay 80% of wages so most businesses are going to take that offer. But it’s fair, it’s available to everyone. If the Gov give VS £500m, what then happens when EasyJet, Eastern, Loganair, Blue Islands want the same?
     
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    vhtje
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    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 9:03 am

    delimit wrote:
    vhtje wrote:
    VS is being supported by the UK taxpayer, like any other business in the UK: furloughed staff are eligible to have their salary covered at 80% of up to £30,000 pa.

    Other area of support from Government are available to businesses, but, rightly, only as a last resort and only after all avenues of other conventional commercial arrangements have been exhausted. What is not clear to me is why VS cannot raise funds it may need through other means. Its 49% parent is still worth some £12 billion. That suggests to me there are plenty of other commercial venues available to VS: both Branson and DL ought to still be able to raise serious amounts of cash, even in the current crisis.

    Treasury should look away, at this time.

    The same 12 billion parent who is bleeding money from the same crisis and is on it's way to the US government to ask for relief? That one? The one which has been consistently regarded as one of the best run airlines in the industry but still had its credit rating slashed to junk? Yes I can see how you would expect they should divert money from their own survival and contribute that to Virgin.


    So? DAL is currently worth $15.28B. Virgin Group, who knows? Wikipedia (yes, yes, I know) states Virgin Group's value in late 2014 was £5.5 Billion. My point is: both these entities can, as of now, raise cash commercially.

    The UK Government has been very clear: there is no cash for companies, aside from the various VAT/HMRC delay schemes and support for furloughed employees, until all other commercial avenues of support have been exhausted. If you want to see what support the UK Government has made available, see here: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

    To all of you in this thread posting that VS ought receive additional bailout from the UK government now, let me be very clear: the UK Government will not be bailing out VS, unless its parent shareholders cannot. Or, to put that another way: VS will only receive funding from the UK government (outside of the measures I linked above) only after DL and Virgin Group go bust.

    The same, of course, applies to BA: it will not receive government money until IAG can no longer support it.

    I see no reason why airlines (as opposed to businesses in other sectors) should get preferential treatment, particularly airlines with a history of poor management.
    Last edited by vhtje on Thu Apr 02, 2020 9:08 am, edited 1 time in total.
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    chonetsao
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    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 9:06 am

    vhtje wrote:
    VS is being supported by the UK taxpayer, like any other business in the UK: furloughed staff are eligible to have their salary covered at 80% of up to £30,000 pa.

    Other area of support from Government are available to businesses, but, rightly, only as a last resort and only after all avenues of other conventional commercial arrangements have been exhausted. What is not clear to me is why VS cannot raise funds it may need through other means. Its 49% parent is still worth some £12 billion. That suggests to me there are plenty of other commercial venues available to VS: both Branson and DL ought to still be able to raise serious amounts of cash, even in the current crisis.

    Treasury should look away, at this time.


    I fully agree with you. You made some great points.

    People here trying to use US airliners as example. But none of the US airlines are foreign based, nor tax heaven owner based.
     
    Opus99
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    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 9:09 am

    zkojq wrote:
    Caymanair wrote:
    The idea that VS shouldn't be supported in this crisis because a major shareholder is wealthy and lives overseas is ridiculous. Get over it.

    :checkmark: Anyone else feeling a theme here that people's opinion on whether or not VS recieves government help depends on how much they like/dislike SRB (and inturn how angry they are with him for opposing a certain recent UK political event). Would be interesting to map support/opposition for that event with support/opposition to government help for VS actually. :scratchchin:

    Opus99 wrote:
    Its not unwise to make such a statement like actually think about it. BA entering administration? BA is not virgin, the UK economy does not need virgin, the uk economy needs BA.


    The words of a fanboy. :roll:

    Opus99 wrote:
    You’re clearly very hot on Virgin Atlantic surviving.


    I'm actually fairly neutral on the matter, other than not wanting lots of people to lose their jobs and not wanting BA to have even more market power.

    Same with VA. If it collapses and QF benifits, then that benifits me, but I'm mature enough to be able to take a step back and know that QF having more market power isn't going to be good for consumers nor the economy.

    Opus99 wrote:
    Well I wish them the best.


    Yeah based on your comments here I'm finding that hard to believe.


    anstar wrote:
    They only have about 40 odd aircraft. In terms of pax carried they carry about 5m a year. Flybe carried 9m and Thomas cook uk around 8m per year and they were allowed to fail.


    Yes but that's not exactly an apple for apple comparison though, is it.

    It’s not Fanboy talk. Like it’s something that is hard to imagine as why the government would not bail BA out if there’s need. I get your argument about coronavirus times but even that is slightly weak. It’s like saying the French government skint bail out Air France? And let them die. Like in what world? Even the Italian government nationalised Alitalia. Like come on be realistic with yourself. And at your second point I hate when people bring up competition like virgin like it’s taking away United from the US3 because it’s not. Out of London you always have options wherever you want to go. VERY few routes on which BA and Virgin are the only option. Do I want to see people lose their jobs of course not Which is the only reason why I wish them the best but at the same time I’m being realistic with the what the government seems to be doing and also with the fact that they’re really not needed
     
    jomur
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    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 9:09 am

    It will be cheaper for the UK Government to pay unemployment benefit to 8500 ex-staff for a few years than to bail out Virgin....
     
    BrianDromey
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    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 9:55 am

    vhtje wrote:
    To all of you in this thread posting that VS ought receive additional bailout from the UK government now, let me be very clear: the UK Government will not be bailing out VS, unless its parent shareholders cannot. Or, to put that another way: VS will only receive funding from the UK government (outside of the measures I linked above) only after DL and Virgin Group go bust.

    The same, of course, applies to BA: it will not receive government money until IAG can no longer support it.

    I see no reason why airlines (as opposed to businesses in other sectors) should get preferential treatment, particularly airlines with a history of poor management.


    If the Government didn't bail out flyBe, who provided PSO and connectivity to remote regions of the UK, I can't see them bailing out VS. Of course VS will try to use the Virgin PR machine to encourage public option for a bail-out. The reason why Government might choose to bail out airlines is that Aviation is a truly global industry. If the US3 are bailed out, in one form or another, LH and AF/KL it does look unfair for IAG and VS. That said IAG and VS could, indirectly, benefit from any bail-out of their JV partners.

    The question remains wither or not VA remains a viable entity long-term. VS did seem to have turned itself around and creating a good O&D network from LHR, LGW and MAN. The flyBe MAN/LHR hub was piffle and unlikely to work out, but VS did seem to have been putting itself on a long-term sustainable footing.
     
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    cv990Coronado
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    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 10:50 am

    I don't think things will get back to 'normal' very quickly due to the amount of damage done to the world economy. Therefore there will be spare aircraft, slots and willing trained crews needing employment, The owners of the aircraft (perhaps the owners of the repossessed aircraft) will be desperate for someone to lease them. This will be an opportunity for new leaner carriers.
    For the UK government, it would be cheaper and more efficient to pay the workers unemployment. Virgin and its shareholders lose out but eventually, the aircraft find new homes as will the staff.
    Virgin is in no way a key business, new competitors probably better ones, will emerge to take on the likes of BA and LH.
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    chonetsao
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    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 10:55 am

    BrianDromey wrote:
    If the Government didn't bail out flyBe, who provided PSO and connectivity to remote regions of the UK, I can't see them bailing out VS. Of course VS will try to use the Virgin PR machine to encourage public option for a bail-out. The reason why Government might choose to bail out airlines is that Aviation is a truly global industry. If the US3 are bailed out, in one form or another, LH and AF/KL it does look unfair for IAG and VS. That said IAG and VS could, indirectly, benefit from any bail-out of their JV partners.

    The question remains wither or not VA remains a viable entity long-term. VS did seem to have turned itself around and creating a good O&D network from LHR, LGW and MAN. The flyBe MAN/LHR hub was piffle and unlikely to work out, but VS did seem to have been putting itself on a long-term sustainable footing.


    Exactly!

    If VS has money to employee big lobby groups to lobby for government hand out. Why not spend those millions of fees to shore up its own finance or pay their staff better? Or set up a fund to help those 8500 employees some of whom might face redundancy any way?
     
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    garpd
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    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 11:05 am

    Personally, I feel now is the time for all shareholders to band together and inject funds into the business to help keep it ticking over. If they really care about the airline, they will do this.

    Virgin has a bad reputation in the UK due to Branson's tax dodging, attempts to sue the NHS and other things that make the public perceive him as a greedy, rich, a-hole. Now, I'm not for an instant saying that is true or even that I support this perception, but that IS how he is perceived and hardly anyone wants his or his friends profits to be propped up by public money. The perception is that the public would see absolutely no benefit from it. They will only see fat cats getting fatter. That is in a sense correct.

    The board at VS should suspend their wages, and those of anyone earning 6 figures or more for the time being. People with that sort of cash coming in should have enough in the bank to weather this storm. If they don't, well that's just tough luck. There are millions of people who live pay cheque to pay cheque and cannot save up the sort of money needed to last out this pandemic. They are steadily getting help from the UK government. Stand in line!
    If the shareholders and board do the right thing, VS has a chance to survive, and do so off their own back and come out of this a prouder airline.

    Should the government actually help? Well, probably yes. The economy will need help to survive. But the cash injections should not be a freebie. They MUST come with caveats. For instance: Accounting from thereon must be entirely transparent and Taxes MUST be paid regularly after this is all over. The Board MUST accept substantial pay cuts to help stem the bleed of cash. (I think top execs gets grotesquely over inflated salaries anyway!). And all staff must be retained and paid normally, right down to the cleaners. No cuts to protect the board's money.
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    avek00
    Posts: 3254
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    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 11:42 am

    MIflyer12 wrote:
    chonetsao wrote:

    VS is the largest single competitor to BA long-haul, is it not? Do you think passengers will be happy paying BA prices in an environment with less competition?


    The British have, IMHO, the wackiest aviation setup of the world's Top 7 economies:

    1. The most important airport in the country (LHR) has been unable to add a new runway for 40 years;

    2. Which leaves BA undersized in market share and growth opportunities relative to its key continental rivals;

    3. While the #2 LHR slot holder (VS) is and will remain too small to build a critical mass of operations for a comprehensive network.

    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.
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    Boeing74741R
    Posts: 1439
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    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 11:48 am

    BA777FO wrote:
    Boeing74741R wrote:
    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?


    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.


    Thanks for confirming. For clarity, I didn't infer that IAG didn't pay UK tax, I was genuinely curious to know how it worked given their structure and given the current climate of singling out SRB due to where he lives.

    jomur wrote:
    It will be cheaper for the UK Government to pay unemployment benefit to 8500 ex-staff for a few years than to bail out Virgin....


    Plus all those in the supply chain and airports etc. (some of whom are probably still reeling from Flybe and Thomas Cook disappearing) and those staff employed abroad (admittedly not a UK government problem as they won't be signing on at the Job Centre). It's not just those who are directly employed that stand to lose.

    I'm also not sure if the government wants to be seen as responsible for adding to the dole queue when many others have been furloughed or permanently let go. That's not an endorsement for all distressed businesses to be rescued, but it's not as simple as what is the cheaper option for the government.

    garpd wrote:
    The board at VS should suspend their wages, and those of anyone earning 6 figures or more for the time being.


    Shai Weiss has taken a 20% pay cut until the year end and the rest of the senior leadership team have taken a 15% cut for the same period.
     
    Turnhouse1
    Posts: 195
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    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 12:09 pm

    Boeing74741R wrote:

    Shai Weiss has taken a 20% pay cut until the year end and the rest of the senior leadership team have taken a 15% cut for the same period.


    Hardly that generous when they will be on significant salaries, furloughed cabin crew and ground staff are getting 80%, i.e. a 20% cut on much lower salaries. If everyone in the business went to £2,500/month max that would be a better gesture. I accept only a gesture as with the government funding scheme, salaries aren't what will bankrupt them. Aircraft leasing or other ongoing finance costs are, suddenly BAs ageing but paid for fleet of 747s and 777s looks much better business.
     
    lee757
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    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 12:34 pm

    zkojq wrote:
    lee757 wrote:
    But how does the uk gov explain and position itself having to back a corporate entity which sued the NHS, the larger group headed up by a billionaire non dom.


    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.
     
    KingB123
    Posts: 191
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    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 12:47 pm

    avek00 wrote:
    MIflyer12 wrote:
    chonetsao wrote:

    VS is the largest single competitor to BA long-haul, is it not? Do you think passengers will be happy paying BA prices in an environment with less competition?


    The British have, IMHO, the wackiest aviation setup of the world's Top 7 economies:

    1. The most important airport in the country (LHR) has been unable to add a new runway for 40 years;

    2. Which leaves BA undersized in market share and growth opportunities relative to its key continental rivals;

    3. While the #2 LHR slot holder (VS) is and will remain too small to build a critical mass of operations for a comprehensive network.

    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.


    Things in aviation are changing, we've a climate emergency and we've now had the dynamics change further due to the virus.

    1) No need for a new runway now. Its about time we work with the aviation industry and cut down on those emissions.
    2)BA will still compete with many airlines on a lot of markets. VS have become irrelevant in competing.
    3) See point 2.

    I would only agree with your last point with the tax payers get some benefit with bailing out any "british" airline as other members have suggested above.
    King B
     
    Geoff1947
    Posts: 648
    Joined: Thu Jun 16, 2016 11:28 pm

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 12:54 pm

    Sorry if these points have already been covered in what has become a long thread very quickly.

    Government support is available to V Atlantic as it is to all UK businesses.

    BA and easyJet are taking this support.

    VA are seeking special treatment which the government has rejected.

    Do they have problems with their shareholders or banks not supporting them ?

    Geoff
     
    jomur
    Posts: 367
    Joined: Sun Jun 19, 2016 6:36 pm

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 1:09 pm

    The UK Government will only help airlines on a case by case basis but first the airline has to try and get cash from other means.. In other word show you still have the support of the markets. and investors. You cannot go straight to the Government like what Virgin appear to be doing.
     
    DobboDobbo
    Posts: 1157
    Joined: Thu Mar 03, 2016 1:02 am

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 1:46 pm

    jomur wrote:
    The UK Government will only help airlines on a case by case basis but first the airline has to try and get cash from other means.. In other word show you still have the support of the markets. and investors. You cannot go straight to the Government like what Virgin appear to be doing.


    Indeed.

    I expect VS will have to show it has tried every avenue to ride the storm. Using the government scheme to furlough employees to save costs, deferring tax payments where it can, leadership taking pay cuts, shareholders putting cash in, seeking commercial lending, deferring lease payments (possibly disputing them), deferring rental payments, seeking agreements with other suppliers.

    If VS can demonstrate all of this, I suspect the government is likely to assist VS. The other option is that it is liquidated, but that wouldn’t prevent a Phoenix VS emerging from the ashes in some way shape or form - and this might stiff the employees worse than the investors (and outcome I think the government wants to avoid).

    I don’t think you can legitimately criticise any airline for failing to plan or hold reserves for an unprecedented event like this. I think the UK government (and probably all others) hold that view and that is why they are offering the economic support they are.
     
    lukeyboy95
    Posts: 1063
    Joined: Tue Apr 29, 2008 7:07 pm

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 2:12 pm

    Aceskywalker wrote:
    lukeyboy95 wrote:
    Just my personal feelings, but I don't think it's right for all airlines to come out of this crisis unscathed.

    Could VS transition to a charter only operation? It is no longer appropriate for it so serve legacy routes with the highest costs.


    With VS's new shiny, but very expensive fleet, unlikely to be sustainable.

    As other people have echoed, if the UK is keen to inject money, then it should come at a cost to VS and its owners Sir RB and DL. Maybe the sale of shares that the UK government can sell for a profit if and when VS comes out of the crisis.

    That's a positive idea and worked well with Lloyds bank, but I don't see VS's return to profitability as being as bankable as ... well... the banks.
    Breaking down the stereotypes - one by one
     
    BealineV953
    Posts: 222
    Joined: Fri Jul 26, 2019 10:00 am

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 2:57 pm

    MIflyer12 wrote:
    chonetsao wrote:
    VS is not critical to UK economy as its routes are covered by other airlines. It should be rescued by its shareholder, not the UK government.


    VS is the largest single competitor to BA long-haul, is it not?
    Do you think passengers will be happy paying BA prices in an environment with less competition?


    Virgin does not compete on price. Virgin fares are typically the same as BA's.
    Ever since childhood, when I lived within sight of London Airport, I have seldom seen a plane go by and not wished I was on it.”
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    destere
    Posts: 20
    Joined: Thu Sep 20, 2018 11:40 pm

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 3:06 pm

    BealineV953 wrote:
    MIflyer12 wrote:
    chonetsao wrote:
    VS is not critical to UK economy as its routes are covered by other airlines. It should be rescued by its shareholder, not the UK government.


    VS is the largest single competitor to BA long-haul, is it not?
    Do you think passengers will be happy paying BA prices in an environment with less competition?


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


    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.
     
    Bongodog49
    Posts: 182
    Joined: Fri Feb 08, 2019 11:35 am

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 3:07 pm

    delimit wrote:
    IAG and Virgin are both private companies. Why is one's request for money more valid than the others? SRB may be loathsome, but do you really want the government picking favorites?

    I would expect you would see governments looking to preserve the jobs and the service.


    Virgin Atlantic is a private company, its shares are not listed on any stock exchange.

    IAG whilst not having any state ownership has its shares listed on both the London and Madrid stockmarkets, anyone can buy and sell their shares whenever they wish

    It is easy to see the market value of IAG, look at the share price, find out how many shares are in circulation, do the sums and there's the answer. For Virgin Atlantic there is no way to calculate its present value, as no trading has taken place since Singapore airlines sold its stake to DL. I suspect the true value is minimal as thye have struggled to be profitable in the good times. 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.

    There are two ways the UK Govt could support airlines, a cash loan, or taking a shareholding, As VS is entirely offshore owned (51% BVI 49% USA) it is difficult to see how a loan could be guaranteed, if the Govt took a shareholding, it would be nigh on impossible to dispose of as there is no market to trade them through. With IAG however if the Govt took a shareholding they could gradually sell it through the stock market as they have done with banks shares taken after the 2008 crash.
     
    MIflyer12
    Posts: 8498
    Joined: Mon Feb 18, 2013 11:58 pm

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 3:23 pm

    seahawk wrote:
    It will be costly to have BA survive, all others can not be kept. In the end we will back to the 1970ies with state owned national carriers.


    If you're happy with the government regulating ticket prices, routes, frequencies, new entrants, and wages, that's fine. You can't have an unregulated monopoly.
     
    Breathe
    Posts: 699
    Joined: Sat Mar 18, 2017 8:06 pm

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 3:25 pm

    Would it be possible to put the company into Administration and for SRB and/or Delta to pick up the assets they want to restart the airline in a new shell company?

    I would imagine that screw their existing staff/pensions and creditors. So perhaps morally maybe not the best thing to do. But then, I don't think morality and the aviation business have sat in the same sentence for many years.
     
    MIflyer12
    Posts: 8498
    Joined: Mon Feb 18, 2013 11:58 pm

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 3:27 pm

    vhtje wrote:
    To all of you in this thread posting that VS ought receive additional bailout from the UK government now, let me be very clear: the UK Government will not be bailing out VS, unless its parent shareholders cannot. Or, to put that another way: VS will only receive funding from the UK government (outside of the measures I linked above) only after DL and Virgin Group go bust.


    Virgin Atlantic does not have an unlimited draw on the resources of Delta (or the Virgin Group.) DL can say 'We're done. Throw it into administration.' If the U.K. government is happy with this scale of job loss immediately and diminished competition long term it may call their bluff. I'm not sure they have the balls for that.
     
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    vhtje
    Posts: 1224
    Joined: Sat Jan 10, 2009 12:40 pm

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 3:41 pm

    MIflyer12 wrote:
    vhtje wrote:
    To all of you in this thread posting that VS ought receive additional bailout from the UK government now, let me be very clear: the UK Government will not be bailing out VS, unless its parent shareholders cannot. Or, to put that another way: VS will only receive funding from the UK government (outside of the measures I linked above) only after DL and Virgin Group go bust.


    Virgin Atlantic does not have an unlimited draw on the resources of Delta (or the Virgin Group.) DL can say 'We're done. Throw it into administration.' If the U.K. government is happy with this scale of job loss immediately and diminished competition long term it may call their bluff. I'm not sure they have the balls for that.


    If DL (and Virgin Group) decide to do that, then the decision to close down VS will be down to DL and Virgin Group. Don't create posts using language like "if the UK Government is happy" to make it sound like the UK Government is the bad guy here. If DL/Virgin Group withdrawals support for VS, whilst DL is still operating and Virgin Group is solvent, then they, the current owners, are the bad guys.

    As I stated above, the UK government has already made very generous arrangements for businesses but will not help businesses beyond this if there are still commercial avenues available to the business. As of now, 2nd April, there are commercial avenues for VS, through its sharedholders. VS should stop moaning to the media, and take steps to use some of the resources the Government has already made available (like BA has done), and get looking at what other commercial alternatives are available.

    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.
    I only turn left when boarding aircraft. Well, mostly. All right, sometimes. OH OKAY - rarely.
     
    wv399
    Posts: 88
    Joined: Tue Apr 24, 2007 12:32 pm

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 3:59 pm

    TTailedTiger wrote:
    Irishbean wrote:
    I think the best solution here for any governments would be to look at a shareholding, they can then sell on at a later date. dilute or remove SRB shareholding/ or Delta. Cash injection is bad use tax payer money and a loan has to be repaid


    I agree. If the UK bails them out then both SRB and Delta should be removed from VS. It was especially foolish for DL to go around investing in other airlines instead of their own but that's another subject.


    But it wasn’t foolish. Prior to the investment in VS, DL only had 28 LHR slots. For the sum of $360m, it gained access to Virgin’s 304 slots. SQ had previously paid $995m.

    https://qz.com/35543/why-delta-air-line ... -heathrow/

    Plus, while Delta was investing in other airlines, it most certainly was investing in itself. Witness the substantial terminal improvements at ATL, LAX,
    LGA, JFK, and SLC. It has also bought new aircraft, refurbished others, as well as purchased additional LHR slots. Plus Delta has finally upgraded its ancient payroll system to SAP, refreshed the ATL HQ, renovated the Delta Museum, and of course paid out record profit sharing to employees.
     
    User avatar
    seahawk
    Posts: 9750
    Joined: Fri May 27, 2005 1:29 am

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 4:23 pm

    MIflyer12 wrote:
    seahawk wrote:
    It will be costly to have BA survive, all others can not be kept. In the end we will back to the 1970ies with state owned national carriers.


    If you're happy with the government regulating ticket prices, routes, frequencies, new entrants, and wages, that's fine. You can't have an unregulated monopoly.


    Nobody will care about what makes me happy. The core idea will be to preserve an airline in the country and have it serve relevant routes after the crisis.
     
    JibberJim
    Posts: 157
    Joined: Tue Nov 08, 2016 1:33 pm

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 4:25 pm

    vhtje wrote:
    MIflyer12 wrote:
    Virgin Atlantic does not have an unlimited draw on the resources of Delta (or the Virgin Group.) DL can say 'We're done. Throw it into administration.' If the U.K. government is happy with this scale of job loss immediately and diminished competition long term it may call their bluff. I'm not sure they have the balls for that.


    If DL (and Virgin Group) decide to do that, then the decision to close down VS will be down to DL and Virgin Group. Don't create posts using language like "if the UK Government is happy" to make it sound like the UK Government is the bad guy here. If DL/Virgin Group withdrawals support for VS, whilst DL is still operating and Virgin Group is solvent, then they, the current owners, are the bad guys.


    And the UK Government could buy it as a whole from administrators either by themselves or via support in another airline, making DL and Virgin Group completely wiped out and the airline employees in exactly the same state.
     
    Turnhouse1
    Posts: 195
    Joined: Tue Jun 16, 2015 5:57 pm

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 5:35 pm

    Breathe wrote:
    Would it be possible to put the company into Administration and for SRB and/or Delta to pick up the assets they want to restart the airline in a new shell company?

    I would imagine that screw their existing staff/pensions and creditors. So perhaps morally maybe not the best thing to do. But then, I don't think morality and the aviation business have sat in the same sentence for many years.


    Pensions in the UK are quite highly regulated. Staff with Defined Benefit (previously final salary) pensions get I think 90% of what they would have from the Pension Protection Fund, which is essentially a giant fund where all assets of defined benefit schemes belonging to companies which go bankrupt are merged and pay out subject to the terms. Staff with Defined Contribution pensions have a separate fund which is unaffected by the company going bust, though not by the general situation in the world economy.

    The main difference would be having to reapply for a job either with Virgin mark 2, or another airline in a market where many airlines might be reducing staffing levels. Would this airline offer the same T&Cs?
     
    User avatar
    cv990Coronado
    Posts: 383
    Joined: Thu Nov 08, 2007 4:38 pm

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 5:36 pm

    Turnhouse1 wrote:
    Boeing74741R wrote:

    Shai Weiss has taken a 20% pay cut until the year end and the rest of the senior leadership team have taken a 15% cut for the same period.


    Hardly that generous when they will be on significant salaries, furloughed cabin crew and ground staff are getting 80%, i.e. a 20% cut on much lower salaries. If everyone in the business went to £2,500/month max that would be a better gesture. I accept only a gesture as with the government funding scheme, salaries aren't what will bankrupt them. Aircraft leasing or other ongoing finance costs are, suddenly BAs ageing but paid for fleet of 747s and 777s looks much better business.


    Especially at $20 a barrel Oil.
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    ltbewr
    Posts: 15340
    Joined: Thu Jan 29, 2004 1:24 pm

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 6:22 pm

    Like many, I don't want to see any airline die, including VS, I took VS EWR-LGW when they had only 1 plane, but right now and for the next year or so, there is going to be triage done by governments as to save who can best survive and recover. VS is a relative small player among international airlines, they don't offer connecting flights, they likely don't have the connections with UK's politicians like BA does, their fares are often equal or more USA-UK than BA,so they may be left to die to protect BA and other airlines.
     
    Opus99
    Posts: 1154
    Joined: Thu May 30, 2019 10:51 pm

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 6:43 pm

    just a side note. Virgin Australia also due to collapse as the australian government has refused to bail them out
     
    tphuang
    Posts: 5462
    Joined: Tue Mar 14, 2017 2:04 pm

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 6:47 pm

    wv399 wrote:
    TTailedTiger wrote:
    Irishbean wrote:
    I think the best solution here for any governments would be to look at a shareholding, they can then sell on at a later date. dilute or remove SRB shareholding/ or Delta. Cash injection is bad use tax payer money and a loan has to be repaid


    I agree. If the UK bails them out then both SRB and Delta should be removed from VS. It was especially foolish for DL to go around investing in other airlines instead of their own but that's another subject.


    But it wasn’t foolish. Prior to the investment in VS, DL only had 28 LHR slots. For the sum of $360m, it gained access to Virgin’s 304 slots. SQ had previously paid $995m.

    https://qz.com/35543/why-delta-air-line ... -heathrow/

    Plus, while Delta was investing in other airlines, it most certainly was investing in itself. Witness the substantial terminal improvements at ATL, LAX,
    LGA, JFK, and SLC. It has also bought new aircraft, refurbished others, as well as purchased additional LHR slots. Plus Delta has finally upgraded its ancient payroll system to SAP, refreshed the ATL HQ, renovated the Delta Museum, and of course paid out record profit sharing to employees.


    Well, if VS still has all these LHR slots that are worth money, they can sell them to raise funds to keep themselves going. Even in this climate, they might be able to raise $500 million from those sales. There will be plenty of interested parties.
     
    KingB123
    Posts: 191
    Joined: Mon Feb 19, 2018 10:30 pm

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 6:49 pm

    vhtje wrote:
    MIflyer12 wrote:
    vhtje wrote:
    To all of you in this thread posting that VS ought receive additional bailout from the UK government now, let me be very clear: the UK Government will not be bailing out VS, unless its parent shareholders cannot. Or, to put that another way: VS will only receive funding from the UK government (outside of the measures I linked above) only after DL and Virgin Group go bust.


    Virgin Atlantic does not have an unlimited draw on the resources of Delta (or the Virgin Group.) DL can say 'We're done. Throw it into administration.' If the U.K. government is happy with this scale of job loss immediately and diminished competition long term it may call their bluff. I'm not sure they have the balls for that.


    If DL (and Virgin Group) decide to do that, then the decision to close down VS will be down to DL and Virgin Group. Don't create posts using language like "if the UK Government is happy" to make it sound like the UK Government is the bad guy here. If DL/Virgin Group withdrawals support for VS, whilst DL is still operating and Virgin Group is solvent, then they, the current owners, are the bad guys.

    As I stated above, the UK government has already made very generous arrangements for businesses but will not help businesses beyond this if there are still commercial avenues available to the business. As of now, 2nd April, there are commercial avenues for VS, through its sharedholders. VS should stop moaning to the media, and take steps to use some of the resources the Government has already made available (like BA has done), and get looking at what other commercial alternatives are available.

    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.



    I couldn't agree more with your post and you are posting very sensible points, i dont get why the government has to be responsible for the mess of private companies, the ones are to blame here are the airline management.
    King B
     
    FSDan
    Posts: 3340
    Joined: Mon Jan 03, 2011 5:27 pm

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 8:31 pm

    tphuang wrote:
    Well, if VS still has all these LHR slots that are worth money, they can sell them to raise funds to keep themselves going. Even in this climate, they might be able to raise $500 million from those sales. There will be plenty of interested parties.


    If they don't have the LHR slots, though, is there a point to keeping themselves going? They are already at a severe competitive disadvantage to BA, and would only make life harder for themselves in the long run by selling some of their most valuable assets.
    This is my signature until I think of a better one.
     
    tphuang
    Posts: 5462
    Joined: Tue Mar 14, 2017 2:04 pm

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 8:43 pm

    FSDan wrote:
    tphuang wrote:
    Well, if VS still has all these LHR slots that are worth money, they can sell them to raise funds to keep themselves going. Even in this climate, they might be able to raise $500 million from those sales. There will be plenty of interested parties.


    If they don't have the LHR slots, though, is there a point to keeping themselves going? They are already at a severe competitive disadvantage to BA, and would only make life harder for themselves in the long run by selling some of their most valuable assets.

    Their LHR slots so far haven't allowed them to be profitable even during the good times. I'm not sure what the rationale is to keep something like that around other than to service DL. They can try a long haul strategy from LGW or MAN. Either way, it shouldn't be up to British people to prop them up when they still have assets they can sell.
     
    anstar
    Posts: 3299
    Joined: Sun Nov 23, 2003 3:49 am

    Re: Virgin Atlantic facing collapse

    Thu Apr 02, 2020 9:55 pm

    Rampvan wrote:
      Nicknuzzii wrote:
      If they were trying to preserve cash they shouldn’t have been running 4x daily JFK-LHR last week. Their EWR cut was a little premature too.


      Most of the JFK flights are paying their way with cargo both ways


      So if cargo is making money why dont they just shut down their loss making passenger operations and fly cargo.
       
      sandyb123
      Posts: 969
      Joined: Mon Oct 15, 2007 9:29 pm

      Re: Virgin Atlantic facing collapse

      Thu Apr 02, 2020 10:21 pm

      anstar wrote:
      Rampvan wrote:
        Nicknuzzii wrote:
        If they were trying to preserve cash they shouldn’t have been running 4x daily JFK-LHR last week. Their EWR cut was a little premature too.


        Most of the JFK flights are paying their way with cargo both ways


        So if cargo is making money why dont they just shut down their loss making passenger operations and fly cargo.


        Because the entire DNA of Virgin is about service and people. If they're going to lug boxes around then they might aswell get rid of the Virgin brand.

        Realistically VS fleet isn't really ideal to be converted to freighters. So you'd have to start again with the fleet. So you'd be as well to start with a new airline. Don't forget that VS is basically an operating brand of DL, time will tell what Delta does with its stake in the airline, especially after the BE collapse a month back.

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