Richard Branson says Virgin Atlantic will collapse without government support
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“We will do everything we can to keep the airline going – but we will need government support to achieve that in the face of the severe uncertainty surrounding travel today and not knowing how long the planes will be grounded for”, Branson said in an open letter to Virgin employees. “This would be in the form of a commercial loan — it wouldn’t be free money and the airline would pay it back”.
Last month, Virgin Atlantic asked for a £500 million bailout, which was rejected by the government. On Friday, the Financial Times reported that the airline’s first bid had been rejected by the government and was told it needed to explore other ways to raise money before seeking a bailout.
Virgin Atlantic, which is based in the U.K., is 51% owned by Branson’s own Virgin Group. The other 49% is owned by U.S. carrier Delta Air Lines.
In his letter, Branson dismissed the argument that he should be paying from his personal wealth to save the airline, rather than relying on government funding.
“I’ve seen lots of comments about my net worth – but that is calculated on the value of Virgin businesses around the world before this crisis, not sitting as cash in a bank account ready to withdraw”, Branson wrote.
Branson offered his famed Necker Island as collateral in an attempt to secure funding from the government. In his note, Branson said he would “raise as much money against the island as possible to save as many jobs as possible around the Group”.
According to The Guardian, Branson pledged to inject $250 million into the Virgin Group. Of that money, $100 million is thought to be for Virgin Atlantic.
“Today, the cash we have in the Virgin Group and my personal wealth is being invested across many companies around the world to protect as many jobs as possible, with a big part of that going to Virgin Atlantic”.
Prior to Branson’s plea, the airline had taken a number of cost-cutting measures, including employees taking a wage reduction for eight weeks.
On Monday, another member of the Virgin Group, Virgin Australia, was reported to have entered voluntary administration.
Featured photo by David Paul Morris/Getty Images.
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