Virgin Atlantic can expect no financial assistance from 49% shareholder Delta Air Lines, the US carrier has made clear, after the UK airline’s request for state aid was rebuffed last week.
Delta chief executive Ed Bastian told analysts: “We are not in a position to make any financial commitments to any [strategic partners].”
US carrier Delta has equity stakes in several airlines including AeroMexico and LATAM as well as Virgin Atlantic.
Bastian said: “These are all strategic partnerships. They are all going through a similar situation – arguably some more distressed than US airlines.
“We are not in a position to make any financial commitments to any of them and they know that.”
He insisted: “We are going to stay close to our partners and provide strategic support but not financial support.”
Virgin Atlantic was told last week to re-submit a £500 million bid for UK government aid amid reports that the Treasury was “unimpressed” by the request and not convinced the carrier had “exhausted other options”.
The carrier sought both a loan and a credit guarantee in a bid submitted in early April.
UK Chancellor Rishi Sunak has told airlines he will consider “bespoke support” for individual carriers only as “a last resort”.
Ministers reportedly remain concerned at the public reaction to rescuing a carrier jointly owned by the billionaire Sir Richard Branson and Delta Air Lines.
Branson’s Virgin Group owns 51% of Virgin Atlantic.
In an open letter to Virgin staff this week, Branson said: “We will do everything we can to keep the airline going – but we will need government support to achieve that.”
He insisted: “It wouldn’t be free money and the airline would pay it back. This would be in the form of a commercial loan.”
Bastian dismissed a suggestion that he might sell Delta’s stakes in Virgin Atlantic and other carriers, saying: “I have no interest in trying to sell at this point or any time in the future.”
However, he warned a failure by governments to financially support carriers would mean insolvencies.
Bastian said: “You may see some international airlines nationalised. You may see some go through bankruptcy.”
Delta announced a new round of fund raising and new credit facility on Thursday, a day after reporting it had raised $5.4 billion since early March.
The US carrier announced it would raise a further £1.5 billion in secured notes – bonds to be repaid ahead of other debts and due in 2025.
It also reported its intention to secure a further $1.5 billion loan, to be repaid by 2023.
Both the secured notes and the credit facility would be secured by the airline’s take-off and landing slots at airports including Heathrow, New York-JFK and New York LaGuardia as well as routes from London and “other European and Latin American routes”.
In a statement, Delta said the additional financing would be used “for general corporate purposes and to bolster its liquidity position”.
Delta also received the first $2.7 billion of the $5.4 billion it is due under the US Coronavirus Aid, Relief and Economic Security (CARES) Act this week.
In a statement on Wednesday, Delta chief financial officer Paul Jacobson said: “We expect to end the June quarter with $10 billion in liquidity.”
“We were burning $100 million per day at the end of March. We expect that cash burn to moderate to $50 million per day by the end of the June quarter.”
