Manchester Airport Group (MAG) has joined Airbus, Rolls Royce and Heathrow Airport in lobbying the government to bail out cash-strapped Virgin Atlantic.
Charlie Cornish, chief executive of Manchester Airport owner MAG became the latest industry partner of Virgin to write to Chancellor Rishi Sunak in support of a £500 million loan and credit-guarantee package sought by the carrier.
Virgin Atlantic is seeking to become the first UK carrier to receive state aid in the Covid-19 crisis.
It needs a loan to cover fixed costs of about £20 million a week while flights are grounded and a credit guarantee to stop credit card companies withholding payments.
The airline carried almost one million passengers to and from Manchester last year.
Cornish told the Chancellor that Virgin’s flights to the US from Manchester “directly benefit” the economies of the city and surrounding region.
He wrote: “Virgin Atlantic’s growth in capacity has been essential in allowing Manchester to become one of the best-connected European airports to the US.”
Chancellor Sunak ruled out a general bail-out of the sector at the end of March but pledged to consider “bespoke support as a last resort” for carriers “having exhausted other options”.
Manufacturers Rolls Royce and Airbus have also written in support of Virgin’s case, with Airbus calling on the government to “do it all it can to support Virgin”.
The Chancellor made clear in a letter to the aviation sector: “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.”
This is interpreted to mean the government would take a stake in the airline 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 has offered to put $250 million into Virgin businesses, with more than $200 million promised to the airline.
Delta Air Lines, which owns a 49% stake in Virgin Atlantic, is understood to be prepared to provide an additional $100 million subject to conditions attached to a US government bail-out of national carriers.
However, reports suggest ministers are concerned about the reaction to aiding Virgin given “questions over Richard Branson’s tax affairs”.
Financially stronger carriers including Ryanair and British Airways parent IAG are also expected to contest the award of state aid to a weaker rival.
Ryanair confirmed its opposition on April 3 saying “We support the EU Commission’s position that any government support [for the sector] must comply with all EU State Aid and Competition rules.”
Willie Walsh, chief executive of IAG, also said before Easter: “A lot of weak airlines were struggling prior to this downturn and I struggle to see how they will be able to survive even with government assistance.”