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Virgin Atlantic And Virgin Australia Face Uncertain Future; Richard Branson Offers Private Island As Collateral

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Virgin Atlantic And Virgin Australia Face Uncertain Future; Richard Branson Offers Private Island As Collateral

Virgin Australia and Virgin Atlantic are in need of government aid to survive the pandemic crisis, says group founder Sir Richard Branson.

What Happened

Branson, who infused $250 million into the Virgin Group companies, is ready to offer his privately-owned Necker Island as collateral to save jobs, according to CNN. Underscoring the need to support both Virgin branded airlines in a letter to employees, he remarked, “If Virgin Australia disappears,” Qantas Airways Limited (OTC: QABSY) “would effectively have a monopoly of the Australian skies.”

He also said Virgin Atlantic was vital, as it provided competition to International Consolidated Airlines Group, S.A. (OTC: ICAGY) owned British Airways, reported CNN.

In his letter posted on Twitter, Branson lamented the lack of government help in Australia saying, “In most countries federal governments have stepped in, in this unprecedented crisis for aviation, to help their airlines. Sadly, that has not happened in Australia.”

Virgin Australia has entered voluntary administration and the company’s board has appointed Vaughan Strawbridge, John Greig, Sal Algeri and Richard Hughes of Deloitte as voluntary administrators of the company, and some of its subsidiaries.

Why It Matters

Virgin Atlantic is seeking a loan from the government in the United Kingdom, which Branson has said the company will repay. A specific amount has not been disclosed, according to CNN.

Virgin Australia has seen all its income evaporate due to the coronavirus pandemic. The collapse of Virgin Australia comes on the heels of FlyBe’s bankruptcy last month. FlyBe was the U.K.’s largest domestic airline.

The Australian carrier has already furloughed 80% of its 10,000 workers, but will continue to operate flights for essential workers, freight and repatriation purposes, according to Bloomberg.

Meanwhile, major U.S. airlines have reached a deal with the United States Treasury over a bailout program that will provide up to $50 billion in assistance to the aviation industry.

 

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