Coronavirus: Virgin Atlantic still in government talks for bailout package

Lianna Brinded
Head of Yahoo Finance UK
A Virgin Atlantic plane coming in to land at Heathrow Airport. Photo:Steve Parsons/PA Images via Getty Images

Virgin Atlantic is reportedly still in talks with the UK government over a potential bailout package to help it cope with the impact from the coronavirus pandemic.

UK-based Virgin Atlantic is 51% owned by Branson's Virgin group and 49% owned by US airline Delta (DAL).

According to a report from Reuters, despite a Sunday Telegraph article that said founder Richard Branson was seeking a buyer for the airline and talks with the government for £500m ($624m) fund had been "effectively shelved," a spokesperson said that it was incorrect to say that Virgin Atlantic has set a deadline to seek a buyer.

"Because of significant costs to our business caused by unprecedented market conditions which the COVID-19 crisis has brought with it, we are exploring all available options to obtain additional external funding," the spokesperson added before saying talks with the UK government were "ongoing and constructive."

READ MORE: Coronavirus: Richard Branson warns of Virgin Atlantic collapse without government loan

On 14 April, the International Air Transport Association (IATA) said that estimated global airline losses from the impact of COVID-19 have risen to $314bn (£253bn). This is 25% more than previously forecasted. This is also down to a 55% drop in 2020 passenger revenue compared with last year.

Less than a week ago, Branson warned that Virgin Atlantic could collapse under the weight of the coronavirus crisis if it did not receive a government loan — consisting of commercial loans and guarantees.

The tycoon even suggested that his Caribbean island could be offered as collateral for the loan, noting that his team “will raise as much money against the island as possible to save as many jobs as possible around the group.”

In an open letter to Virgin’s 70,000 employees, Branson said that while the company would do “everything” to keep the airline going, it will “need government support to achieve that.”

Last month, Virgin Atlantic initiated a recruitment freeze across the company and said that its chief executive and senior leaders would take significant short-term pay cuts.

Branson pointed to “the severe uncertainty” surrounding travel, and said the airline did not know how long its aircraft would be grounded.

“This would be in the form of a commercial loan — it wouldn’t be free money and the airline would pay it back,” Branson wrote, pointing to the £600m package granted to EasyJet (EZJ.L).