Virgin Atlantic

[davidjohnson6]

The USA covers a vast geographical area, and their public transport system on the ground isn't able to carry people between cities - airlines *are* the domestic public transport system. In the USA, the airlines function almost as a utility to the masses and almost as a way of keeping the country together. The likes of American, Delta, United, SouthWest, Alaska and JetBlue are strategically important to the USA

VS gave up flying domestic routes almost 5 years ago and show no sign of restarting them. Maybe if VS were flying a significant number of short-haul routes to mainland Europe, one could argue they were a public utility. If VS want public cash while struggling to make a profit (i.e. dubious that they will be able to repay the taxpayer loan), there needs to be a strategic benefit to the UK
A taxpayer subsidy for an airline that devotes a significant amount of its fleet to taking people to Disneyworld and Carribbean beaches, especially when demand for these destinations is likely to be lower than in the past (i.e. lower yield, lower load factor, lower revenues), is not a priority

[PDXCWL45]

Originally Posted by SWBKCB

It gives an indication of whether you are likely to get anything back!

There needs to be some sort of objective criteria for the use of Government money - you don't just get what you ask for.

Surely the objective is the survival of the UK aviation industry and the airlines we have now not an investment opportunity for the future.

[SWBKCB]

Originally Posted by PDXCWL45

Surely the objective is the survival of the UK aviation industry and the airlines we have now not an investment opportunity for the future.

The objective is to make the best use of public money (i.e. the money you and I pay in tax). Why should airlines be a special case, and why should specific airlines be treated differently from all the others?

[PDXCWL45]

Originally Posted by SWBKCB

The objective is to make the best use of public money (i.e. the money you and I pay in tax). Why should airlines be a special case, and why should specific airlines be treated differently from all the others?

Exactly there should be an industry wide package that all airlines can access. Is the aviation industry in the UK not important enough for that? Instead it may well be a case of certain chosen airlines getting help and other's being turned away.

[SWBKCB]

There is money available - SRB's own statement says they want the same deal that EasyJet have got, but clearly they don't meet the criteria.

[caaardiff]

It would be interesting to see if Easyjet had the same scrutiny that is expected of Virgin Atlantic. Did they have to show an exact business plan of where the money would go? If they are profitable, what cash reserves do they have? Have they done enough and left no stone unturned before being allowed access to the money, as quoted by VSs CEO in the letter to staff. Stelios wants the new aircraft order cancelled or reduced, will the government money go towards part of that order? It needs to be on a level playing field.
Also not seen anything about what VS could/will do with future aircraft orders, there are still A350s due to arrive as well as the new A330s

[JSCL]

This just highlights how the UK political system is so broken. Councils pushed to a point where they are constantly operating in a deficit.

Yet look at the USA and Australia. It’s not just central Government funds, but states able to offer financial packages. The state of Queensland offering up a fist fight with the state of NSW to keep Virgin Australias HQ. A state that can offer up $200m just to keep those jobs in place. No region in the UK could service finance to a major employer on that level. Not even Wales or Scotland.

[SWBKCB]

It would be interesting to see if Easyjet had the same scrutiny that is expected of Virgin Atlantic.

I'd be AMAZED if it didn't. Do you really think that the Treasury handle public money in that way?

[jmccrew]

Given most easyJet a/c are registered in Austria then maybe Austria should bail them out

[inOban]

Where the a/c are registered is Immaterial. Easy is a British company, as is, surprisingly, Wizz. AFAIK they are accessing the same finance as is open to any other British company. Not special airline deals.

[LGS6753]

It is not Government money that is being lent , at least directly. The banks have been asked/told to advance money to companies in all sectors, and the UK Government will underwrite 80%. So the bank will do their usual due diligence prior to advancing their own risk capital. They won't want to be losing the non-underwritten 20%.

[JSCL]

Originally Posted by LGS6753

It is not Government money that is being lent , at least directly. The banks have been asked/told to advance money to companies in all sectors, and the UK Government will underwrite 80%. So the bank will do their usual due diligence prior to advancing their own risk capital. They won't want to be losing the non-underwritten 20%.

This is different. It’s BoE funds for bigger companies and employers, not just a high street bank. But similar principles apply.

[PDXCWL45]

Originally Posted by inOban

Where the a/c are registered is Immaterial. Easy is a British company, as is, surprisingly, Wizz. AFAIK they are accessing the same finance as is open to any other British company. Not special airline deals.

I thought that they'd moved HQ to Austria to remain an EU company. Not operational HQ but company HQ.

[Gurnard]

Can't see how EasyJet Europe is a British company. (EasyJet originally was a British until Brexit fears gave them other ideas.) Prior to Covid-19 pretty well all flights from UK bases were operated by UK registered aircraft, not Austrian. Seems a distinction between EZY and EJU. The EasyJet website distinguished between the two e.g. "Your flight is being operated by Easy Jet Europe." (Sorry this is on the Virgin page but it's responding to an idea raised.)

[qwertyuiop]

I think that Virgins biggest problem is that there is no need for their product in the next few years. It’s throwing good money into a black hole. Sad but true.

[brian_dromey]

Originally Posted by Gurnard

Can't see how EasyJet Europe is a British company. (EasyJet originally was a British until Brexit fears gave them other ideas.) Prior to Covid-19 pretty well all flights from UK bases were operated by UK registered aircraft, not Austrian. Seems a distinction between EZY and EJU. The EasyJet website distinguished between the two e.g. "Your flight is being operated by Easy Jet Europe." (Sorry this is on the Virgin page but it's responding to an idea raised.)

easyJet is in a somewhat unique position as the Haji-Ioannou family own 35% of the company and are both UK and Cypriot citizens, thus enabling them to count as UK owners for the UK business and EU citizens for the Europe business.It is entirely possible for companies to have subsidiaries in individual countries and to make use of schemes in each of those countries. There are relatively few industries where ownership is the important requirement. British Steel is owned by a Chineese company, for example. Brico Dépôt is owned by Kingfisher, a UK company who also own B&Q. Yet both of those companies are making use of the respective government schemes in the UK and France, no-one is batting an eye. Shareholder nationality is important for airlines because they are linked to traffic traffic rights, employment contracts, tax issues, etc are all secondary issues.

Both easyJet and Virgin are getting caught up by their relationship with billionaire owners/investors/founders. The reality is that Virgin Atlantic does not have collateral to put against a loan - commercial or government. They were at the beginning of their turnaround after several years of heavy losses and many assets have been mortgaged or sold and leased back to sustain the airline.

Many comments on the board suggest VS might retrench to LHR and cull LGW and MAN - I would argue the leisure focussed MCO and Caribbean operation is more likely to be profitable, it is essentially charter for Virgin Holidays. That might be the first to return, perhaps with high density A350s or 787s, as a one-type fleet instead of the 747s, which might be too large for the new reality. Using that logic the A330s might be best, they should be cheaper to finance, but cost more in fuel and maintenance. The gamble is how long fuel will remain a depressed prices.

[Skipness One Foxtrot]

Brian, retrenching to LHR means operating the Beach Fleet from there. LGW was 3-5 flights per day in summer and with traffic collapsing, they could operate the portfolio from LHR and move back to LGW if and when traffic bounces back that they really need the slots. It doesn’t mean closing all LGW routes, it means serving London from one airport.

[brian_dromey]

Originally Posted by Skipness One Foxtrot

Brian, retrenching to LHR means operating the Beach Fleet from there. LGW was 3-5 flights per day in summer and with traffic collapsing, they could operate the portfolio from LHR and move back to LGW if and when traffic bounces back that they really need the slots. It doesn’t mean closing all LGW routes, it means serving London from one airport.

That is possible and makes sense. Perhaps the future of VS looks like MCO/Caribbean for Virgin Holidays and DL hubs/focus cities in the US, with JNB, TLV and maybe HKG rounding out the network. Its going to be a drastically reduced network and at least one fleet type will surely go. Perhaps the A350’s will get a beach fleet layout to replace the 747s immediately and the 787s will do the rest, with the A330s dumped? Or vice-versa, does VS really need the capabilities of the 787 over the A330 on any of their routes? JNB and HKG, I guess?

[rog747]

Virgin's delayed start of the new route LHR to Sao Paulo has been now scrapped altogether...

[116d]

If you ask me, there's very little the 787's can do in the VS network that the A330ceo can't do. And when the neo's come along they will theoretically be able to fly anywhere on the current network. It's probably one reason amongst many why they went for the A330neo instead of ordering more 787's despite the merits of moving to a two-type fleet.

The A350's on order that are to directly replace 747's were due to be configured in a higher density layout to the first few A350's operating out of LHR anyway.

In any case, if VS does survive I can see merit in consolidating London operations out of LHR given there's probably going to be slots freed up as a result of a downturn.