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n9801f
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New Delta loan to Virgin Atlantic?

Sun Mar 14, 2021 4:08 pm

BBC is reporting that Delta and Virgin Group are jointly loaning Virgin Atlantic £160M ($223M USD)

It's easy to imagine why Delta would want to salvage Virgin and its previous investments.

But it seems surprising they're doing this while they're also taking taxpayer support and quickly burning up shareholder cash. You could also imagine employees, whose work hours have been cut, having questions about this move.

If this proceeds, will Delta try to do the same with LATAM and Aeromexico?

Reporting on loan appears in second half of this article.

https://www.bbc.com/news/business-56392570
 
ah414211
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Re: New Delta loan to Virgin Atlantic?

Sun Mar 14, 2021 7:17 pm

If true, Delta should be required to pay back all of the tax payer funded bailout dollars immediately!
 
n9801f
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Re: New Delta loan to Virgin Atlantic?

Sun Mar 14, 2021 7:41 pm

ah414211 wrote:
If true, Delta should be required to pay back all of the tax payer funded bailout dollars immediately!


According to the US Treasury website, under the CARES Act, Total Anticipated Payroll Support for Delta is $5,593,698,668.

https://home.treasury.gov/policy-issues ... m-payments
 
jayunited
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Re: New Delta loan to Virgin Atlantic?

Sun Mar 14, 2021 7:52 pm

ah414211 wrote:
If true, Delta should be required to pay back all of the tax payer funded bailout dollars immediately!


I don't know if Delta should be required to pay back the cares act funds, if we were to all up all three cares acts Delta or any legacy Us carrier has received it could easily total $12 billion dollars if not more. There is no way Delta or any other carrier could pay that back right now its not realistic.

I understand why Delta is going down this road of helping out Virgin Atlantic, but the optics of it looks bad. With Delta is still loosing billions of dollars and slated to receive over $5 billion dollars in this latest round of care act funds just approved by Congress I think it might have been better if they would have waited a few weeks or months before helping out Virgin Atlantic.
Last edited by jayunited on Sun Mar 14, 2021 7:58 pm, edited 1 time in total.
 
DaveMetroD
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Re: New Delta loan to Virgin Atlantic?

Sun Mar 14, 2021 7:55 pm

It helps protect the Virgin Atlantic Heathrow slots which are important to Delta as a partner..
 
Caymanair
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Re: New Delta loan to Virgin Atlantic?

Sun Mar 14, 2021 7:57 pm

ah414211 wrote:
If true, Delta should be required to pay back all of the tax payer funded bailout dollars immediately!


Why? I can see arguments either way.
 
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Rajahdhani
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Re: New Delta loan to Virgin Atlantic?

Sun Mar 14, 2021 9:06 pm

If proven to be true - it also does not play well with the many gracious and caring DL employees, that accepted early departures from their careers - to save the carrier, to see it done this way, and now.

Of December, 2020:
https://www.usatoday.com/story/travel/airline-news/2020/12/10/delta-air-lines-asks-employees-take-furloughs-amid-new-travel-slump/3876429001/
CEO Ed Bastian said Wednesday that Delta will need takers for its unpaid-leave program “for the foreseeable future.”
“I ask everyone to consider whether a voluntary leave makes sense for you and your family,” he said in a memo to employees.
With revenue down sharply, Delta expects to lose up to $12 million a day on average during the fourth quarter.


I would also argue - that it is not a prudent business move, either.

Anything that can be used to help 'save' VS, could just as easily have been used to purchase assets, if the carrier failed.

Looking at VS, perhaps the time is now - to finally stand on their own. Their endless cycles of foreign 'saviors' rightly should be ended, and now. Instead of a loan, perhaps VS should perform and work, well enough - to provide DL with a return on their initial investment?

Per Mr. Bastian, in April of 2020:

https://www.forbes.com/sites/willhorton1/2020/04/23/virgin-atlantic-owes-delta-200-million-wont-receive-cash-from-us-shareholder/?sh=7c588c9230d2
“We are not in a position to invest any more money into Virgin. We’re already at the ownership cap of 49%,” Bastian said. Delta could directly invest in Virgin Atlantic only if Branson’s Virgin Group invested a comparable amount in order to ensure Virgin Atlantic maintains majority U.K. ownership."


Of note though - is that the major focus of the article, was that - VS owes DL a lot of money to being with...

https://www.forbes.com/sites/willhorton1/2020/04/23/virgin-atlantic-owes-delta-200-million-wont-receive-cash-from-us-shareholder/?sh=7c588c9230d2
"But Delta will not be providing Virgin Atlantic any financial assistance. It is Delta expecting cash: Virgin has to pay Delta $200 million related to their joint-venture, the airlines agreed earlier this year. ".


Per VS:

https://simpleflying.com/virgin-atlantic-additional-funding/
“We continue to bolster our balance sheet in anticipation of the lifting of international travel restrictions during the second quarter of 2021. This latest £160 million financing provides further resilience against a slower revenue recovery in 2021 and follows a $230 million financing on two Boeing 787s in January, which allowed us to pay down debt and strengthen our cash position,” the spokesperson told Simple Flying.
“We remain confident that Virgin Atlantic will emerge a sustainably profitable airline and would like to thank our creditors and shareholders, Virgin Group and Delta, for their ongoing support and unwavering belief in our future.”


Yet;

https://www.bloomberg.com/news/articles/2021-03-13/virgin-atlantic-to-raise-160-million-pounds-from-shareholdersIn January, Virgin Atlantic sold two Boeing Co. 787 jetliners to fund the repayment of a loan from hedge fund Davidson Kempner Capital Management that formed the basis of its rescue last year. The sale and leaseback deal raised $234 million and after paying off the balance of the $170 million borrowed from New York-based Davidson Kempner at the height of the coronavirus crisis, the airline was left with 70 million pounds for its own funds.


Additionally, is DL also going to offer loans to other, failing interests - namely LATAM, or AeroMexico?

Oh, right:
https://www.forbes.com/sites/willhorton1/2020/04/23/virgin-atlantic-owes-delta-200-million-wont-receive-cash-from-us-shareholder/?sh=7c588c9230d2“We’re not in a position to be making any financial commitments to any of them,” Bastian told investors. “They are aware of that.” Delta’s other major investments include Aeromexico and LATAM.".


Perhaps the best investment - would be getting more of those DL employees back to work?

https://people.com/travel/delta-planning-to-bring-back-400-pilots-by-summer/Earlier this month, Delta's senior vice president of flight operations John Laughter detailed in a memo to staff that the airline plans to return 400 pilots to regular flying status by summer 2021, so they are ready to fly again by summer 2022, according to a report from CNBC. "As we looked at ways to better position ourselves to support the projected recovery, we saw an opportunity to build back additional pilot staffing in advance of summer 2022 by bringing 400 affected pilots back to active flying status by this summer," Laughter said in his staff note, per the publication


Seems like DL knows how to spend the money well, at home. Instead of 400, can we not spend less on failing foreign carriers, and focus on bringing back even more people and jobs to the success that DL can manage?
 
MIflyer12
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Re: New Delta loan to Virgin Atlantic?

Sun Mar 14, 2021 10:16 pm

Rajahdhani wrote:
If proven to be true - it also does not play well with the many gracious and caring DL employees, that accepted early departures from their careers - to save the carrier, to see it done this way, and now.


They took a voluntary buyout, at a cost of about $170K/employee. As in 'I would rather take your money than stay.'

Reuters reported this financing a little differently. https://www.reuters.com/article/us-heal ... SKBN2B607R

The deal with Griffin Global Asset Management to raise just over $230 million from the two planes was meant to enable Virgin Atlantic to repay a loan taken on as part of its rescue deal last year.

In the latest raise, Branson’s Virgin Group is set to provide about 100 million pounds and the remaining 60 million pounds would include deferrals, according to Sky News, which first reported the development.


I'm wondering if DL's participation (if any) is simply a deferral of $ owed DL for software use, SkyMiles buys, or things like that.
 
TTailedTiger
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Re: New Delta loan to Virgin Atlantic?

Sun Mar 14, 2021 10:22 pm

jayunited wrote:
ah414211 wrote:
If true, Delta should be required to pay back all of the tax payer funded bailout dollars immediately!


I don't know if Delta should be required to pay back the cares act funds, if we were to all up all three cares acts Delta or any legacy Us carrier has received it could easily total $12 billion dollars if not more. There is no way Delta or any other carrier could pay that back right now its not realistic.

I understand why Delta is going down this road of helping out Virgin Atlantic, but the optics of it looks bad. With Delta is still loosing billions of dollars and slated to receive over $5 billion dollars in this latest round of care act funds just approved by Congress I think it might have been better if they would have waited a few weeks or months before helping out Virgin Atlantic.


Disagree. If Delta can send money to a foreign airline then they have no business keeping taxpayer funds. The airlines can go Ch 7 as far as I'm concerned. Start over from scratch.
 
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vhtje
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Re: New Delta loan to Virgin Atlantic?

Sun Mar 14, 2021 10:56 pm

I thought the CARES act expressly forbade recipient funds going offshore from the United States?
I only turn left when boarding aircraft. Well, mostly. All right, sometimes. OH OKAY - rarely.
 
chonetsao
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Re: New Delta loan to Virgin Atlantic?

Sun Mar 14, 2021 11:05 pm

vhtje wrote:
I thought the CARES act expressly forbade recipient funds going offshore from the United States?


That is my understanding as well. And I thought the forum spent a long time last year to discuss this aspect.

However I do feel we need more details on this 'loan'. Currently the information available is rather opaque.
 
deltairlines
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Re: New Delta loan to Virgin Atlantic?

Sun Mar 14, 2021 11:13 pm

vhtje wrote:
I thought the CARES act expressly forbade recipient funds going offshore from the United States?


That was my first thought when I saw this topic.
 
United1
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Re: New Delta loan to Virgin Atlantic?

Sun Mar 14, 2021 11:23 pm

vhtje wrote:
I thought the CARES act expressly forbade recipient funds going offshore from the United States?


It does but depending on how this deal is structured there may not be any funds going overseas. Referencing the second article if all DL did was allow VS to defer paying DL back for a prior (pre-covid loan) or services rendered ect that probably wouldn't violate any of the payroll support programs DL is part of.

The optics of this may look kind of iffy (just like the optics of DL cutting staff hours while keeping the payrate the same did) but they probably don't violate any of the contract terms DL agreed to. Although I do feel both of these moves by DL violate the spirit of what Cares was intended to do.
I know the voices in my head aren't real but sometimes their ideas are just awesome!!!
 
sxf24
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Re: New Delta loan to Virgin Atlantic?

Sun Mar 14, 2021 11:25 pm

The CARES Act funds accepted by Delta were only for payroll. There were no limitations on the investments Delta could make.

They declined to participate in the loan program that would have given the government ownership rights.
 
jbs2886
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Re: New Delta loan to Virgin Atlantic?

Sun Mar 14, 2021 11:31 pm

Rajahdhani wrote:
If proven to be true - it also does not play well with the many gracious and caring DL employees, that accepted early departures from their careers - to save the carrier, to see it done this way, and now.

Of December, 2020:
https://www.usatoday.com/story/travel/airline-news/2020/12/10/delta-air-lines-asks-employees-take-furloughs-amid-new-travel-slump/3876429001/
CEO Ed Bastian said Wednesday that Delta will need takers for its unpaid-leave program “for the foreseeable future.”
“I ask everyone to consider whether a voluntary leave makes sense for you and your family,” he said in a memo to employees.
With revenue down sharply, Delta expects to lose up to $12 million a day on average during the fourth quarter.


I would also argue - that it is not a prudent business move, either.

Anything that can be used to help 'save' VS, could just as easily have been used to purchase assets, if the carrier failed.

Looking at VS, perhaps the time is now - to finally stand on their own. Their endless cycles of foreign 'saviors' rightly should be ended, and now. Instead of a loan, perhaps VS should perform and work, well enough - to provide DL with a return on their initial investment?

Per Mr. Bastian, in April of 2020:

https://www.forbes.com/sites/willhorton1/2020/04/23/virgin-atlantic-owes-delta-200-million-wont-receive-cash-from-us-shareholder/?sh=7c588c9230d2
“We are not in a position to invest any more money into Virgin. We’re already at the ownership cap of 49%,” Bastian said. Delta could directly invest in Virgin Atlantic only if Branson’s Virgin Group invested a comparable amount in order to ensure Virgin Atlantic maintains majority U.K. ownership."


Of note though - is that the major focus of the article, was that - VS owes DL a lot of money to being with...

https://www.forbes.com/sites/willhorton1/2020/04/23/virgin-atlantic-owes-delta-200-million-wont-receive-cash-from-us-shareholder/?sh=7c588c9230d2
"But Delta will not be providing Virgin Atlantic any financial assistance. It is Delta expecting cash: Virgin has to pay Delta $200 million related to their joint-venture, the airlines agreed earlier this year. ".


Per VS:

https://simpleflying.com/virgin-atlantic-additional-funding/
“We continue to bolster our balance sheet in anticipation of the lifting of international travel restrictions during the second quarter of 2021. This latest £160 million financing provides further resilience against a slower revenue recovery in 2021 and follows a $230 million financing on two Boeing 787s in January, which allowed us to pay down debt and strengthen our cash position,” the spokesperson told Simple Flying.
“We remain confident that Virgin Atlantic will emerge a sustainably profitable airline and would like to thank our creditors and shareholders, Virgin Group and Delta, for their ongoing support and unwavering belief in our future.”


Yet;

https://www.bloomberg.com/news/articles/2021-03-13/virgin-atlantic-to-raise-160-million-pounds-from-shareholdersIn January, Virgin Atlantic sold two Boeing Co. 787 jetliners to fund the repayment of a loan from hedge fund Davidson Kempner Capital Management that formed the basis of its rescue last year. The sale and leaseback deal raised $234 million and after paying off the balance of the $170 million borrowed from New York-based Davidson Kempner at the height of the coronavirus crisis, the airline was left with 70 million pounds for its own funds.


Additionally, is DL also going to offer loans to other, failing interests - namely LATAM, or AeroMexico?

Oh, right:
https://www.forbes.com/sites/willhorton1/2020/04/23/virgin-atlantic-owes-delta-200-million-wont-receive-cash-from-us-shareholder/?sh=7c588c9230d2“We’re not in a position to be making any financial commitments to any of them,” Bastian told investors. “They are aware of that.” Delta’s other major investments include Aeromexico and LATAM.".


Perhaps the best investment - would be getting more of those DL employees back to work?

https://people.com/travel/delta-planning-to-bring-back-400-pilots-by-summer/Earlier this month, Delta's senior vice president of flight operations John Laughter detailed in a memo to staff that the airline plans to return 400 pilots to regular flying status by summer 2021, so they are ready to fly again by summer 2022, according to a report from CNBC. "As we looked at ways to better position ourselves to support the projected recovery, we saw an opportunity to build back additional pilot staffing in advance of summer 2022 by bringing 400 affected pilots back to active flying status by this summer," Laughter said in his staff note, per the publication


Seems like DL knows how to spend the money well, at home. Instead of 400, can we not spend less on failing foreign carriers, and focus on bringing back even more people and jobs to the success that DL can manage?


As MIflyer points out, there are a lot of misconceptions here about the employees who left Delta. Moreover, I want to specifically take issue with "DL could just buy the assets if Virgin goes under." DL can't buy the O&D and loyalty Virgin has on British point of sale, nor the significant hub. In virtually no situation will DL be able to acquire even half of VS's LHR slots, which are absolutely key to DL having a strong London presence. Put another way, those DL employees can get more hours if VS comes back stronger. If VS folds, DL may lose more employees.

Finally, I think there are a lot of assumptions that DL is providing cash. If, as we understand, DL cannot send cash to foreign airlines, your points are all moot. Indeed, I suspect this is further deferrals of payment VS owes to DL.
 
United1
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Re: New Delta loan to Virgin Atlantic?

Sun Mar 14, 2021 11:40 pm

sxf24 wrote:
The CARES Act funds accepted by Delta were only for payroll. There were no limitations on the investments Delta could make.

They declined to participate in the loan program that would have given the government ownership rights.


There are limitations some on the kinds of investments DL (and everyone else) who took payroll support money can make....mainly they can't purchase shares of any publicly traded company. Also the government does have warrants to purchase shares of DL at a pre determined price if they wish as well as keep in mind DL is required to pay back part of the payroll support they received from the feds.

https://home.treasury.gov/policy-issues ... m-payments
I know the voices in my head aren't real but sometimes their ideas are just awesome!!!
 
cvsirls
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Re: New Delta loan to Virgin Atlantic?

Sun Mar 14, 2021 11:49 pm

sxf24 wrote:
The CARES Act funds accepted by Delta were only for payroll. There were no limitations on the investments Delta could make.

They declined to participate in the loan program that would have given the government ownership rights.

Ding ding ding.
As you stated, Delta did NOT take the government "loan" which has those strict requirements! Delta can do with it's cash as it pleases, as it doesn't violate any of the rules associated with the cares act grants.

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NLINK
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 12:33 am

As others have said Delta and also Southwest are not under tight restrictions since they went the private equity route. This should let them be more nimble on the recovery than the other big 2. Funny how a lot of people on here like to bash Delta for years of success.
 
airzona11
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 12:43 am

Shows the value of LHR.

[twoid][/twoid]
NLINK wrote:
As others have said Delta and also Southwest are not under tight restrictions since they went the private equity route. This should let them be more nimble on the recovery than the other big 2. Funny how a lot of people on here like to bash Delta for years of success.


This highlights the problem of any company taking government money or gov backed loans. It sucks that future generations are on the hook for money being spent today that no one can easily track.
 
slcdeltarumd11
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 1:14 am

As a taxpayer id be furious if this is true! Delta has so much extra cash they can bail out other businesses. Seems wrong. Is delta gonna come crawling back begging for more free money if the new variants create a new waive? We are far from over with covid! It's not impossible to imagine a new variant that the current vaccines don't cover
 
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Rajahdhani
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 1:16 am

jbs2886 wrote:
Finally, I think there are a lot of assumptions that DL is providing cash. If, as we understand, DL cannot send cash to foreign airlines, your points are all moot. Indeed, I suspect this is further deferrals of payment VS owes to DL.


Fair point here, and I have cleaned up the quote from above in hopes of keeping it all from getting unwieldily.

In your opinion, what is your opinion of the future of VS?

If we are to assume that the logic is correct, perhaps DL has reasoned that without relief, the carrier cannot survive to then repay any interests owed. That said, is this just kicking the bucket, down the road?

https://www.statista.com/statistics/1010514/virgin-atlantic-airways-ltd-net-profit/
 
NLINK
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 1:21 am

slcdeltarumd11 wrote:
As a taxpayer id be furious if this is true! Delta has so much extra cash they can bail out other businesses. Seems wrong. Is delta gonna come crawling back begging for more free money if the new variants create a new waive? We are far from over with covid! It's not impossible to imagine a new variant that the current vaccines don't cover



Delta did not take the CARE act loan. They raised money on the private equity market and are free to do what they see fit for the best value for the shareholders.
 
United1
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 1:27 am

NLINK wrote:
slcdeltarumd11 wrote:
As a taxpayer id be furious if this is true! Delta has so much extra cash they can bail out other businesses. Seems wrong. Is delta gonna come crawling back begging for more free money if the new variants create a new waive? We are far from over with covid! It's not impossible to imagine a new variant that the current vaccines don't cover



Delta did not take the CARE act loan. They raised money on the private equity market and are free to do what they see fit for the best value for the shareholders.


...they also took paycheck protection money which limits things like investing in other companies, prevents paying dividends, prohibits stock buy backs, caps pay and requires DL to serve certain markets until sometime in 2022. DL also has to pay back roughly a third of what they were given and the government has warrants that they can redeem for either stock or cash.

So DL isn't exactly free to do what it wants :)
I know the voices in my head aren't real but sometimes their ideas are just awesome!!!
 
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NCAD95
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 1:29 am

I have no issue with allowing VS time to pay monies owed but if they are giving them an out right cash loan that is completely wrong and should be in violation of the cares act. The act was designed to take care of American companies and employees not foreign airlines that even their own government is unwilling to help. It is not America's problem to have bought into a dud they should ask their shareholders to pony up the cash if they want to gift their foreign airline partners with a cash injection. As far as employees taking buyouts if they felt they had a choice they would have stayed with Delta for the most part but they seen the writing on the wall and chose what they thought was the best option for them giving the situation at hand. Let's not blame employees for leaving when we all know they basically had no option.
 
skipness1E
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 1:33 am

If, as was likely in 2020, VS collapsed, then Delta becomes badly outgunned in the London market, they return to being a poor third against BA/AA and UA almost overnight, the VS loyalty base is up for grabs and hard fought market share vanishes.
We all love getting very angry at things in 2021, perhaps step back, pause for breath, see the wider strategy might be a coherent one bringing employee value and reward tomorrow and just chill?

Nah that was dumb, let the shrieking continue. x
 
Josh76040
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 1:39 am

If Delta has cash to give to VS, then it has cash to pay its employees. The US government should pull the plug on Delta’s PSP monies.
 
United1
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 1:40 am

skipness1E wrote:
If, as was likely in 2020, VS collapsed, then Delta becomes badly outgunned in the London market, they return to being a poor third against BA/AA and UA almost overnight, the VS loyalty base is up for grabs and hard fought market share vanishes.
We all love getting very angry at things in 2021, perhaps step back, pause for breath, see the wider strategy might be a coherent one bringing employee value and reward tomorrow and just chill?

Nah that was dumb, let the shrieking continue. x


I don't disagree it's part of a long term strategy and if its just extending payment terms probably a very smart move on DLs part. I don't even think DL did anything wrong but I think most people would agree the optics of this move look bad.
I know the voices in my head aren't real but sometimes their ideas are just awesome!!!
 
TTailedTiger
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 1:43 am

Delta had billions in the bank (and they are still bragging about it) and should never have been eligible for taxpayer assistance in the first place. Just like people who make above a certain income do not qualify for stimulus checks. A company cannot brag about their financial prowess while they're on welfare in my opinion.
 
Tack
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 1:44 am

DaveMetroD wrote:
It helps protect the Virgin Atlantic Heathrow slots which are important to Delta as a partner..


Obviously. But regardless of the CARES act implications, it looks like DL’s strategy of investing in its partners was crap, as well as all of us watching yet another Virgin branded airline flounder. Ridiculous.
 
NLINK
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 2:01 am

In the big scheme of things all the airlines were irresponsible and doing stock buybacks. In a true capitalist economy no US airline should have got a penny of taxpayer money. A couple would have survived and thrived. On the ethical side it would have been hard to do because it would effect so many employees in horrible ways.
 
PSA727
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 3:25 am

vhtje wrote:
I thought the CARES act expressly forbade recipient funds going offshore from the United States?


Delta had cash on-hand prior to receiving the CARES money. This is only a couple hundred million (and is being split with the Virgin Group). Plus. it is a loan which has to be paid back by VS. Moreover, it is in Delta's financial interest for VS to survive.
fly high, pay low...Germanwings!
 
tobsw
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 9:12 am

From what I understand, DL is not giving 'cash' directly to Virgin Atlantic. VS is getting $100M from the Virgin Group, and the remaining $60M are just payment deferrals. But it terms of accounting, that looks like another $60M cash is available. But it's not actually cash.
 
JibberJim
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 10:01 am

United1 wrote:
I don't disagree it's part of a long term strategy and if its just extending payment terms probably a very smart move on DLs part. I don't even think DL did anything wrong but I think most people would agree the optics of this move look bad.


I'm not sure "smart move" likely comes into it when the option was that or write off the entire investment when VA failed. I doubt there was any choice, they weren't getting the money due then regardless. How smart it is depends on if it does actually cost them more if and when VA completely fail, I imagine the scenarios where that makes a difference are pretty small (a deal where the existing equity is wiped out/heavily reduced and these payments could've been recovered) So they likely had no choice.

Given that the optics could have been "to help out our partners at VA and protect their jobs during these difficult times, we've agreed to delay the payment …. " would have been so much better, than "we're loaning almost bankrupt foreign airline with the rich owner a load of cash" Fails to play well in either the US or the UK.
 
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Polot
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 10:43 am

PSA727 wrote:
vhtje wrote:
I thought the CARES act expressly forbade recipient funds going offshore from the United States?


Delta had cash on-hand prior to receiving the CARES money. This is only a couple hundred million (and is being split with the Virgin Group). Plus. it is a loan which has to be paid back by VS. Moreover, it is in Delta's financial interest for VS to survive.

It really doesn’t matter if it is cash on hand prior to receiving the funds or not. DL is using CARES money to pay for things they under normal circumstances should be using their own cash on hand for. Taking free money allows DL to stretch their prior cash on-hand, but that does mean the US public is effectively subsidizing any loan that DL is giving a foreign airline which is why it’s forbidden. (Think of it this way- if DL had not received CARES money would they have enough cash on hand to loan a foreign airline money?).

Also loans have to be paid back assuming VS survives and is able to pay them back. If VS dies the only payback DL gets is whatever they can secure in a liquidation. There is always risks associated with giving out a loan.

That said I don’t think this is a loan in a traditional sense in which DL is actually giving VS money.
 
reltney
Posts: 696
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 11:25 am

Keep in mind Delta was profitable in February this year. They also paid bonuses to management only. Most assuredly they did not use cares funds for that as it’s against the agreement. Ed himself made 21 mil last year alone after proclaiming he gave up his “salary” with his stock options . Things are not what you think.
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NCAD95
Posts: 238
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 11:32 am

Deferred payments are not a loan and everyone should be practicing this during this difficult time Sadly banks and landlords didn't get this memo
 
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NCAD95
Posts: 238
Joined: Fri Aug 10, 2018 12:11 am

Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 11:38 am

reltney wrote:
Keep in mind Delta was profitable in February this year. They also paid bonuses to management only. Most assuredly they did not use cares funds for that as it’s against the agreement. Ed himself made 21 mil last year alone after proclaiming he gave up his “salary” with his stock options . Things are not what you think.


Anyone who though Ed was working for free is delusional.
 
bennett123
Posts: 10729
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Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 11:51 am

If VS fold then DL may not get those slots at LHR post COVID.
 
Razza92
Posts: 22
Joined: Wed Jan 01, 2020 11:39 am

Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 11:55 am

Good grief, everyone losing their heads! If you read the article it clearly states it’s $60 million in deferred payments ... as in DL are allowing VS to defer the payments they owe them till a time they can pay them off ... thus ‘virtually’ giving them $60 million on their balance sheet to play around with.
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ContinentalEWR
Posts: 4189
Joined: Wed May 24, 2000 2:50 am

Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 11:57 am

Perhaps Delta is turning into the new Etihad, investing in financially strapped airlines (though with very different circumstances, all exacerbated by COVID). I suppose Delta will ensure loans are not commingled with or sourced from US taxpayer bailout money, but the optics either way are not good. DL is an also-ran at LHR without VS, but is VS going to survive?
 
sxf24
Posts: 1090
Joined: Wed Aug 15, 2007 12:22 pm

Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 12:08 pm

reltney wrote:
Keep in mind Delta was profitable in February this year. They also paid bonuses to management only. Most assuredly they did not use cares funds for that as it’s against the agreement. Ed himself made 21 mil last year alone after proclaiming he gave up his “salary” with his stock options . Things are not what you think.


No, Delta was not profitable in February.
 
Boeing74741R
Posts: 1491
Joined: Tue Apr 17, 2007 5:44 am

Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 12:19 pm

Rajahdhani wrote:
Looking at VS, perhaps the time is now - to finally stand on their own. Their endless cycles of foreign 'saviors' rightly should be ended, and now. Instead of a loan, perhaps VS should perform and work, well enough - to provide DL with a return on their initial investment?


If the UK hadn't entered a further two lockdowns since this kicked off 12 months ago and had the UK government not effectively banned its citizens from travelling abroad until at least mid-May, then maybe DL wouldn't be providing assistance in the form of deferred payments at this time.

Other factors such as infection rates and countries such as the USA reopening borders are also at play.
 
cvsirls
Posts: 15
Joined: Mon Dec 11, 2017 9:49 pm

Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 12:54 pm

reltney wrote:
Keep in mind Delta was profitable in February this year. They also paid bonuses to management only. Most assuredly they did not use cares funds for that as it’s against the agreement. Ed himself made 21 mil last year alone after proclaiming he gave up his “salary” with his stock options . Things are not what you think.
Uhm.... What proof do you have of this? Source?
Also it was reported that he only gave up his BASE salary, which accounts for less than 6% of his overall compensation. And as it was stated multiple times on the other thread, they weren't "bonuses" in the normal sense, just payback for the 50% paycut they took last year, for managers (under the executive level) whose salary is considered at risk pay.

https://www.marketwatch.com/story/delta ... 2020-04-30

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cvsirls
Posts: 15
Joined: Mon Dec 11, 2017 9:49 pm

Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 1:01 pm

A lot of the questions can be answered by just reading the article.

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Corpsnerd09
Posts: 626
Joined: Tue Mar 30, 2004 2:05 pm

Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 1:01 pm

Razza92 wrote:
Good grief, everyone losing their heads! If you read the article it clearly states it’s $60 million in deferred payments ... as in DL are allowing VS to defer the payments they owe them till a time they can pay them off ... thus ‘virtually’ giving them $60 million on their balance sheet to play around with.


If you can refuse payment of a loan when you're cash strapped, then you shouldn't also be standing in line at the welfare office. This is business, DL isn't saving VS because they're BFFs and DL feels bad for them like it's being painted here, it's all just a convenient loophole to the CARES act to protect their business interests... and nothing will happen to them for doing it of course (a loophole is a loophole), everyone knows this subconsciously, but it's still a bit of a middle finger to the American tax payer.
 
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NCAD95
Posts: 238
Joined: Fri Aug 10, 2018 12:11 am

Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 1:12 pm

bennett123 wrote:
If VS fold then DL may not get those slots at LHR post COVID.


That's what taking a gamble means. You could lose as well. Nothing is guaranteed.
 
MIflyer12
Posts: 9288
Joined: Mon Feb 18, 2013 11:58 pm

Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 1:53 pm

sxf24 wrote:
reltney wrote:
Keep in mind Delta was profitable in February this year. They also paid bonuses to management only. Most assuredly they did not use cares funds for that as it’s against the agreement. Ed himself made 21 mil last year alone after proclaiming he gave up his “salary” with his stock options . Things are not what you think.


No, Delta was not profitable in February.


If anyone isn't ready to accept sxf24's correction, Delta has an 8-K filing out today with new revenue and cash burn guidance for 1Q21, along with revenue remarks specific to January and February.

Link to a PDF of the 3/15/2021 8-K SEC filing: https://d18rn0p25nwr6d.cloudfront.net/C ... 76674b.pdf

March is better than January or February, but both Jan and Feb revenues were worse than expected. DL is expecting an adjusted pre-tax quarterly loss of about $3 Billion. Heck, no, DL was not profitable in February.
 
Tack
Posts: 217
Joined: Thu Oct 04, 2018 11:13 pm

Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 2:19 pm

NCAD95 wrote:
bennett123 wrote:
If VS fold then DL may not get those slots at LHR post COVID.


That's what taking a gamble means. You could lose as well. Nothing is guaranteed.


Exactly. DL taking a financial stake in its partners was a horrible strategy. While DL can be Uber controlling of its own employees, purchases and operation, it has virtually no control of the forces at play with a carrier in another country. Bottom, line they rolled the dice, and are losing. And if that costs them LHR.. oh well.
 
xdlx
Posts: 972
Joined: Mon Aug 04, 2008 12:29 pm

Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 2:53 pm

Codeshares / Partnerships / Et AL..... are RISK SHARING ventures. DL has utilized this route expansion strategy for decades, insulating ITSELF from the
OWN METAL Exposure & COST STRUCTURE imposed by foreign markets in certain situations. DL is only deferring a payment DUE to them by VS. And hoping the strategy pays off in a post Covid world.
 
Tack
Posts: 217
Joined: Thu Oct 04, 2018 11:13 pm

Re: New Delta loan to Virgin Atlantic?

Mon Mar 15, 2021 6:07 pm

xdlx wrote:
Codeshares / Partnerships / Et AL..... are RISK SHARING ventures. DL has utilized this route expansion strategy for decades, insulating ITSELF from the
OWN METAL Exposure & COST STRUCTURE imposed by foreign markets in certain situations. DL is only deferring a payment DUE to them by VS. And hoping the strategy pays off in a post Covid world.


Lol surely you’re not suggesting that DL’s position in VS has similar risk to say a code sharing arrangement? If VS fails, the loss to DL is going to be a wee bit more substantial then exiting a code share agreement. They chose a strategy. Right now, it looks flawed. Even SRB has shown some reluctance to continue propping up VS. It’s ok, no airline C suite is perfect, even DL’s.

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