Virgin Atlantic ‘seeks buyer’ amid Covid-19 crisis for airlines

Founder Richard Branson sought government money to secure the airline’s survival

Virgin Australia aircraft are seen parked on the tarmac at Brisbane International airport on April 21, 2020. Cash-strapped Virgin Australia collapsed on April 21, making it the largest carrier yet to buckle under the strain of the coronavirus pandemic, which has ravaged the global airline industry. / AFP / AFP  / Patrick HAMILTON
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Airline Virgin Atlantic is reportedly seeking a buyer after struggling to secure a UK government bailout to cope with the devastating impact of the coronavirus outbreak.

British newspaper the Sunday Telegraph reported that the airline had "effectively shelved" efforts to secure a £500 million bailout from the UK government and is now focused on seeking private investment.

The UK-based airline said on Sunday that talks remained “ongoing and constructive” and were part of efforts to secure outside funding.

The newspaper reported that about 100 companies had been sounded out by investment bank Houlihan Lokey.

“Because of significant costs to our business caused by unprecedented market conditions which the Covid-19 crisis has brought with it, we are exploring all available options to obtain additional external funding,” a company spokeswoman said. The options included putting the company into administration, the newspaper reported.

The airline is 51 per cent owned by Virgin group, headed by founder Richard Branson, and 49 per cent by US airline Delta, which is facing its own problems, having secured $5.6bn (Dh19.8bn) from a $50bn US government bailout fund to help pay salaries and applied for a further $4.6bn loan.

The European Union, which the UK left earlier this year but continues to negotiate its post-Brexit relationship, limits foreign ownership of member airlines to 49 per cent.

“If the UK government does help Virgin Atlantic to survive, it will not be free money but repaid on commercial terms,” Mr Branson wrote in an open letter to employees this week.

The publicity-loving billionaire told staff on Monday that he planned to raise as much money as he could against his own private island in the Caribbean as he faces Covid-19 problems across businesses that also include hotels and cruises.

Mr Branson, who turns 70 in July, has been a resident of Necker Island since 2006 but politicians who opposed his bid for state aid said it was a tax haven and should be refused UK state aid.

Virgin’s Australian airline has already called in administrators after it failed to secure investment. It is working with administrators to try to resume operations.

“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,” the entrepreneur said.

The Sunday Telegraph reported that the Singapore sovereign wealth fund Tamesek was among the investors interested in rescuing the UK airline.

A company official said that “constructive” discussions with an unspecified number of stakeholders continued and that the airline remained in a “stable” position.