Virgin Atlantic

[Jwscud]

I suspect it’s more likely this is an exercise in proving to HMG that there is no commercially viable source of capital and thus a government loan is required.

My thoughts with my friends either side of the door at VS. Many of us may be sharing your situation soon.

[Count von Altibar]

There's a lot of hopeful people posting which is totally understandable either employed or used to work there. I'm afraid it really looks like things are stacked massively against Virgin Atlantic, survival is unlikely given the money they owe to Delta and a complete lack of assets to secure treasury/bank loans against. Hopefully Richard Branson can come up with a buyer in the coming days but who wants to buy an airline in a depression and what type of an aviation market are we all coming back to after May. It just doesn't look good at all for Virgin Atlantic.

[peacheyglobes]

Originally Posted by Jwscud

I suspect it’s more likely this is an exercise in proving to HMG that there is no commercially viable source of capital and thus a government loan is required.

My thoughts with my friends either side of the door at VS. Many of us may be sharing your situation soon.

It wouldn't seem to prove to HMG that as a dominant shareholder Virgin Group (including SRB himself) are unable to raise these funds. It may be saying 'look, we tried' but this doesn't show how SRB couldn't raise funds through for instance equity sale of his Virgin Galactic enterprise, or mortgaging of his own assets including Necker Island.

[xray one]

Kirks gusset wrote a pointless post:

Why on earth didn't Branson just let the Virgin Board CEO do the talking? he's the one who's now made this a personal crusade.

So the other headline would have been, 'Branson hides on his island letting the crew fight his battles...'

[Ex Cargo Clown]

They'll be another issue here. If VS is bailed out then BE and TCX will go mad. One rule for one, one for another.....

[Bora Bora]

I think you'll agree those were different times, Cargo C. Even though FlyBe went bust just after the virus started biting, the fact they went so quickly was because they had already dug a deep hole in the years before. Virgin was a good running airline that - had corona not derailed things - would still have been ticking along nicely. And for years, if not decades, to come. So an invalid argument, I'm afraid.

[pudoc]

Originally Posted by Ex Cargo Clown

They'll be another issue here. If VS is bailed out then BE and TCX will go mad. One rule for one, one for another.....

This has already been mentioned and answered. The difference is BE and TCX were struggling when times were good, Virgin weren’t. COVID was just the final straw for BE having nearly collapsed a year prior.

[RexBanner]

Flybe were always going to go to the wall in March. I’d already seen an interview with Michael O’Leary a few weeks earlier where he’d said that’s when their money would run out. Now admittedly he’s called a lot of failures which subsequently didn’t happen but he must have crunched the numbers. Coronavirus played very little part (if any) to the demise of Flybe in the end.

[foxvc10]

Does the airline own the aircraft?

[TURIN]

Originally Posted by virgin mary

News Flash

Virgin Atlantic will survive, with or without Government assistance.....

We are going to be a thorn in Willie Walsh’s side for a long time yet! But we also wish our friends at BA and all other airlines well! As an industry and as a Company we will get through this together. #Bekind

Walsh was supposed to have stepped aside by now. He has stayed on to get through this uncertain time.

If Virgin survive it won't be Walsh you have to worry about.

[pudoc]

Originally Posted by foxvc10

Does the airline own the aircraft?

A decent proportion of them.

[fruitbat]

Eye opening figures when you think about it..

“Virgin accumulated £211m of losses last decade for a negative 0.1% operating margin. British Airways made £11 billion at a 10% margin”

https://www.forbes.com/sites/willhor.../#59fdbf3a6ea2

[dead_pan]

If they weren't so hard-pressed themselves I reckon one of the Gulf carriers could have been tempted to take a punt on Virgin, at a knock-down price of course.

[spottyemm]

Which would be very nice for the employees......unfortunately EU airline ownership rules still apply.

[xray one]

fruitbat wrote:

Eye opening figures when you think about it..

There are many reasons why there is a large discrepancy between the 2 Airlines - size is your starter for ten. Some are of Virgin's making others not. Virgin's main mistake was the purchase of 19 A340-600s (4 engines 4 long haul) with out a doubt the 777 was a far better option. As a long haul only Airline we don't have the luxury of a short haul operation to feeds us - we can discuss the failing of Little Red at a later date, suffice to say operating only a handful of destinations (minus GLA) was always going to be difficult. We didn't get gifted a brand new terminal (I don't mean free by gifting - it's the ability to have your own brand new terminal) As has been said before, the ducks were now in a row with brand new fleet of A330s Neo's from next year, A350s and B789s, 2 engine fuel efficient aircraft, a better route structure and a feeded in the USA with Delta. We would never make Billions but we would employ 10,000 people, give a great service and put £350/400 million per year in the treasuries coffers.

Really, what's wrong with that?

[BirdmanBerry]

Originally Posted by virgin mary

News Flash
This is all helping to minimise our daily cash burn and make our cash reserves go a little further.

According to Companies House accounts VA have no cash reserves, they're in negative retained profit.

[WHBM]

Originally Posted by xray one

and put £350/400 million per year in the treasuries coffers.

However can VA anticipate this level of profit, to put that much corporation tax into the UK government Treasury, given that

Originally Posted by fruitbat

“Virgin accumulated £211m of losses last decade for a negative 0.1% operating margin. British Airways made £11 billion at a 10% margin”

Originally Posted by fruitbat

https://www.forbes.com/sites/willhor.../#59fdbf3a6ea2

Those losses despite being centred at what is probably the best O&D hub in the world for business travel demand.

As I understand it, Virgin Atlantic may do fine financially each year, but under the "Starbucks Method" of accounting, whatever level of profit they anticipate in any year is then sucked out beyond the reach of Her Majesty's Government by Virgin Group Holdings Ltd, based beyond the taxman's reach in an obscure accountant's office in the British Virgin Islands (not one of VA's Caribbean destinations; largest aircraft serving there is an ATR), which invoices for the "Use of Brand", which appears in Virgin Atlantic's accounts as a "marketing expense".

[BleedingOn]

WHBM the £350-400 million that X-ray one refers to is not corporation tax but PAYE and NIC from the employees

[truckflyer]

Originally Posted by BleedingOn

WHBM the £350-400 million that X-ray one refers to is not corporation tax but PAYE and NIC from the employees

The problem with "creative accounting" such as "expense to Virgin Islands", to dilute company profits and pay less Company tax, creates a problem when you ask for a loan.
Someone lending them money would want to do due diligence, and see if they will be viable to pay "our" money back again.

I am guessing who ever checked the company and asked them to make a new application for government funds, can't have been happy with what they saw.

I can set up a company, and turn around large amounts of money, and I can also spend on all kind of relevant business expenses, which benefits me so I pay less tax. However if I go to the bank, and show no profits, they will not give me a loan, just because I tell them I can pay all my staff, but over a decade I have made negative profit, they not going to be very convinced that I will be able to pay them back the loan I am applying for.

[Andy D]

Originally Posted by WHBM

As I understand it, Virgin Atlantic may do fine financially each year, but under the "Starbucks Method" of accounting, whatever level of profit they anticipate in any year is then sucked out beyond the reach of Her Majesty's Government by Virgin Group Holdings Ltd, based beyond the taxman's reach in an obscure accountant's office in the British Virgin Islands (not one of VA's Caribbean destinations; largest aircraft serving there is an ATR), which invoices for the "Use of Brand", which appears in Virgin Atlantic's accounts as a "marketing expense".

Interestingly, the initial stage of licensing seems to be run through a UK company – VAL TM Limited – and in the five financial years 2014–18 it received £61m in royalty payments from Virgin Atlantic

£ (,000)
2014 10,745
2015 12,183
2016 12,329
2017 12,637
2018 13,157

Even from a quick wander around companies house (and there are other data sources), it's possible to tease quite a bit of the corporate structure and cashflows apart if someone has time, will of course loose sight when the cash is transferred to BVI companies and family trusts though