A spokesperson for Virgin Atlantic says the airline is still in “ongoing and constructive” talks with the British government over a taxpayer-funded bailout worth an estimated £500 million. The statement followed media reports in the British media that billionaire majority shareholder Sir Richard Branson was urgently racing to find a private investor to buy the embattled carrier.
While the spokesperson admitted Virgin Atlantic was “exploring all available options to obtain additional external funding,” the airline denied a report in the Sunday Telegraph that it had “effectively shelved” the prospect of getting a bailout from the British government.
Last week, Sir Richard published an open letter to all Virgin Group employees to make the case for a government-backed bailout, telling staffers that any taxpayer-funded cash injection “wouldn’t be free money and the airline would pay it back” in the form of a commercial loan.
Sir Richard has come under pressure to spend his own fortune to stave off the collapse of the embattled airline which he started 36 years ago with just one plane. The entrepreneur, however, has countered that “many airlines around the world need government support and many have already received it.”
The Luton-based Low-cost carrier easyJet has already secured a £600 million loan from the British government. It’s founder, Sir Stelios Haji-Ioannou still owns 34 per cent of the airline but has so far refused to inject any of his own money and has said easyJet “won’t get a penny” until the “scoundrels” on the board resign.
Several companies are said to have shown an interest in rescuing Virgin Atlantic, including Singapore’s sovereign wealth. Any deal would likely see Sir Richard left without a stake in Virgin Atlantic.
Last week, the chief executive of Delta Air Lines, which owns a 49 per cent stake in Virgin Atlantic, said his airline was in no position to offer a rescue package and predicted Virgin might fall into administration.
“I trust Virgin will work through its challenges with the government and with Richard,” Ed Bastian told CNBC. “If they are required to go through an administration process in the UK, I am confident they could re-emerge,” he continued.
