To help alleviate a financial crunch presented by the ongoing coronavirus cataclysm, Virgin Atlantic(VA) is calling on the British government to provide £500 million government-backed loans and credit guarantees. Airbus and Rolls-Royce Holdings Plc, which respectively manufactured aircraft and engines for Virgin Atlantic, have also been lobbying the U.K. government on Virgin Atlantic’s behalf. In an attempt to save the airline, Richard Branson, who owns 51% of the airline, has injected close to 100mn Pound Sterling, which is, however, clearly not enough. The other big shareholder of the carrier, Delta, is also in a tight spot, burning through about $50 million of cash a day.
Pandemics are a known risk in the airline business, but nobody could anticipate a shock as widespread and potentially long-lasting as the current one. In accordance, some government assistance is justified – in view of the roughly 8,500 jobs at stake. However, the British government’s offer to cover 80% of the wages of furloughed workers is already pretty generous; Virgin Atlantic’s yearly wage bill is more than £300 million.
Virgin Atlantic’s quest for a state bailout has been backed by some of aviation’s biggest companies – the aerospace giants Airbus and Rolls-Royce. In one of the letters, the general counsel and UK chairman of Airbus, John Harrison, stated:
‘Virgin’s collapse could have an extremely negative impact on the A330 programme. All wings for these aircraft are designed and manufactured in the UK, and orders from airlines like Virgin are vital for the continuation of our business.’
Rolls-Royce has also stressed the significance of Virgin’s custom to the company and its UK supply chain.
Virgin has parked up to 85% of its aircraft fleet and put most staff on eight weeks’ unpaid leave, as well as cutting executive pay. To avoid maintenance and less efficient operations, in an attempt to save cash whoever they can, Virgin Atlantic has retired its remaining Airbus A340-600 fleet on March 30, 2020.
The retirement of these last three A340s was previously planned for the end of May. Originally, the aircraft type was set to be retired in 2019 but had its schedules extended several times due to the ongoing issues with Rolls-Royce Trent 1000 engines that power the airline’s Boeing 787-9 fleet. Now, it was withdrawn from service over two months earlier, likely because of Coronavirus, which has caused a significant drop in demand. The final commercial flight operated by the majestic A340-600 was flight VS412 from Lagos, Nigeria to London Heathrow, operated by G-VFIT, which was first delivered to Virgin in May 2006.
Like most airlines, Virgin Atlantic is no exception to be hanging by a thread. Whether the billionaire owner of the airline, Richard Branson, can successfully lead VA out of this financial scare is certainly to be seen!
What are your thoughts on VA’s state? And as we will certainly do, will you miss their A340-600s? Have you ever been on one? Let us know in the comments!