Virgin Atlantic has appealed to the government for an emergency loan and is awaiting a decision expected late this week or early next, with a cash injection likely to see the carrier part nationalised.
Senior representatives of the airline met Rothschilds, the financial advisory group working with the government on support for aviation, last Friday to present the case for a loan.
They did so after Chancellor Rishi Sunak ruled out a general bail-out of the sector but pledged to consider “bespoke support as a last resort” for carriers “having exhausted other options”.
Virgin Atlantic declined to comment. However, an aviation industry source said: “Virgin Atlantic needs an emergency loan facility.
“The ball is now in the government’s court. It remains to be seen what they deem appropriate [and] what conditions are attached. It could involve a government stake in the airline.”
That would dilute the ownership of Branson and of Delta, which holds a 49% stake in Virgin Atlantic.
The Chancellor made clear in a letter to the aviation sector last week: “Taxpayer support would only be possible if all commercial avenues have been fully explored including raising further capital from existing investors.”
Should cash be made available, Sunak added: “Terms would be structured to protect taxpayers’ interest.”
It’s expected the government would take a stake reflecting the size of any loan, in the same way the Treasury took large stakes in several banks in 2008.
Virgin Group chairman Sir Richards Branson offered to put $250 million into Virgin Group businesses last week, with more than $200 million to go to the airline.
Delta Air Lines is understood to be prepared to provide an additional $100 million, subject to conditions attached to a $58-billion US government bail-out of American carriers.
Noting the Chancellor’s stipulation that any support would be “as a last resort”, the source said: “Virgin hasn’t gone to the government lightly. You can draw your own conclusions.”