Virgin Atlantic awaits bailout decision

Senior figures at Virgin Atlantic are hopeful the UK government will make a decision shortly on their appeal for state aid.

Virgin Atlantic is seeking a £500 million bailout, split between a commercial loan and a credit guarantee to release funds from card companies withholding payments.

The carrier has been in talks on a government cash injection since the beginning of April

A decision had been expected before Easter, but industry sources suggest the Treasury is still considering the request – first presented to merchant bank Rothschilds which is acting as advisors to the Treasury on airline financing.

A source confirmed: “The focus now is on the outcome of the government conversations. The airline does really need the government’s support.

“There is only one plan right now and that is government support.”

Chancellor Rishi Sunak pledged to consider “bespoke support” to UK airlines at the end of March, but only “as a last resort” for carriers “having exhausted other options”.

However, it’s understood a negative response from the Treasury would not spell the immediate end of the airline.

The source said: “Virgin Atlantic went into this year in a cash position where it can weather the storm a little longer into the year.

“But it would mean the airline would look very different depending on the government’s decision.”

The airline’s cash position is better than has been reported based on operating results for 2018 which are the most up to date publicly available.

Operating results for 2019 could be made available shortly.

The source confirmed a large portion of the $250 million pledged by founder and Virgin Group chairman Sir Richard Branson to Virgin businesses is in the process of going through.

However, any capital injection from 49% shareholder Delta Air Lines would be held up by US government conditions attached to federal aid to US carriers.

Manchester Airport Group (MAG), Heathrow, Airbus and Rolls Royce have all lobbied the government in recent days to bail out Virgin Atlantic, which needs a loan to cover fixed costs of about £20 million a week while flights are grounded as well as a credit guarantee.

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