Originally Posted by
Kirks gusset
Easyjet:" We estimate that our operating costs burn is in the region of £30-40 million per week, whilst the fleet is grounded. This compares to circa £125 million when flying a full schedule". That's a difference of 10M a week! surely they can be a bit more refined than that, how the hell can you be 10M adrift!! so based on a 500M loan they have 16 weeks or 12 weeks buffer..
Branson doesn't need Virgin to continue, OK it will be a big dent to his reputation if it folds, On the other hand it does seem he is genuinely committed to keeping the airline going, mindful of the staff and consequences and frankly I don't blame him for wanting a piece of the pie from the treasury, after all we give millions in "AID" to Africa which sadly mostly gets spent on arms and fast cars for the dictators or criminals. If we regard Virgin as a "British brand" we should be rallying support for it. Whether or not the airlines will prevail after the restrictions without more hand-outs is obviously on the minds of the bean counters and we may be better of accepting a successful few rather than a struggling many.
Virgin Atlantic (not Richard Branson) is not seeking a 'hand out'. It is looking for a line of credit of approximately £500m on commercial terms. If it can achieve that without guarantees from the UK government, I'm sure it will happily do so. However, this is a very difficult environment from which to make projections of future revenue, and so UK banks (which are obligated under the current government guarantee schemes to protect small and medium sized businesses by offering loans without preconditions, yet aren't doing so) are being extremely conservative. Ironic, given that they were rescued 12 years ago by unlimited grants from government plus a policy of 'quantitative easing' which effectively removed the consequences of their foolhardy practices of the previous 10 years.
Virgin Atlantic is not the most profitable airline, but it is a major player in the marketplace, and has around 25% of UK-US traffic. It was looking forward to both returning to profit and some moderate expansion in the short to medium term. There is no logical reason to believe that it cannot continue to hold its own in whatever shape the long-haul market takes after things reopen. As happened after the various shocks that the market has had in the last 25-30 years, there will be a short-term correction before the market returns to growth. It's up to the treasury (and its advisers Morgan Stanley) to assess whether or not the financials make a commercial loan viable or not, and what actions need to be taken by the company to improve its position from their perspective. It should also be borne in mind that the problems for the entire industry were not brought on by the actions of the industry (unlike the banks), but by the actions of governments in shutting down international travel.
However, the reaction by the public - and, surprisingly, people in this forum - to Virgin asking for help has been entirely emotional, uninformed, and essentially spiteful, and fuelled essentially by a distaste of wealth without any consideration of what that wealth represents in terms of the employment it has created, and the fact that it is almost entirely shareholdings in businesses and thus to be released for other purposes would require those shareholdings to be sold - at which point the notional extent of that wealth would be seen to be far less than the Sunday Times estimated in 2019.
The Virgin companies are great places to work, and look after their employees extremely well. Their existence generally works well for their customers as well, though inevitably there are individual stories where that is not so, as is the case for every large company. The UK-registered Virgin companies (which includes Virgin Atlantic) pay their taxes in UK, as of course do the vast majority of their employees.
I am about to retire from the industry, so the future of Virgin Atlantic will not affect me personally, but it would be a crying shame if its 10,000 employees and their families were thrown on the scrapheap because of the braying hoards of uninformed commentators who simply want to stick a finger up to Richard Branson