Airline collapses under strain Billionaire seeks airline bailout
LONDON: Sir Richard Branson has pledged his luxury island resort as collateral to help get a UK Government bailout of his stricken airline Virgin Atlantic, the BBC reported yesterday.
The billionaire Virgin Group boss said in an open letter to staff he was not asking for a handout, but a commercial loan, believed to be about £500 million ($NZ1 billion).
The airline’s survival was in doubt, and his Necker Island home in the Caribbean could be mortgaged, he said.
Sir Richard said in his letter to staff: ‘‘Many airlines around the world need government support and many have already received it.’’
The crisis facing airlines, and the staff they employ, was ‘‘unprecedented’’, he said.
Despite his wealth — he is the 312th richest person in the world with an estimated $US5.2 billion fortune, according to Bloomberg — this did not mean he had ‘‘cash in a bank account ready to withdraw’’.
Sir Richard hit back at criticism that he was a tax exile who did not deserve help, saying he and his wife ‘‘did not leave Britain for tax reasons but for our love of the beautiful British Virgin Islands’’. — RNZ
SYDNEY: Virgin Australia Holdings Ltd yesterday succumbed to third partyled restructuring that could lead to a sale, making Australia’s secondbiggest airline the AsiaPacific region’s biggest victim of the coronavirus crisis gripping the industry.
Virgin reported an annual loss for seven consecutive years even before authorities worldwide began restricting movement to slow the spread of the virus. It nevertheless commanded a secure share of Australia’s domestic aviation market before calling in administrators yesterday with debt of $A5 billion ($NZ5.3 billion).
More than 10 parties had already expressed interest in recapitalising Virgin, which was continuing to fly a skeleton schedule under its current management team, Vaughan Strawbridge, of Deloitte, said.
Virgin appointed Mr Strawbridge as voluntary administrator to lead a sales process after the Australian Government rejected a plea for a $A1.4 billion loan.
‘‘Generally, you get the best outcome where you sell it as a whole, so that is definitely the preferred approach,’’ Mr Strawbridge said.
A sale was most likely to involve a deed of company arrangement, which was a binding agreement with creditors, and the aim was to complete the sale within a few months, he said.
Moody’s said unsecured creditors were likely to take a significant haircut on the value of their debt as part of any deal, and that it might be preferable to put the company in liquidation with uncertain recovery prospects.
The Government has appointed Nicholas Moore, who for a decade led investment bank Macquarie Group Ltd, to engage with the administrator to find a ‘‘marketled solution’’ with a view to keeping two airlines on key routes, Treasurer Josh Frydenberg said.
Virgin employs 10,000 people directly and 6000 people indirectly. It competes with larger rival Qantas, which would have a virtual monopoly in Australia if Virgin stopped flying.
Virgin, which grew rapidly after the 2001 collapse of Australia’s then secondlargest carrier Ansett, has a share of around onethird of the domestic market but that could decline under a restructuring plan.
More than 90% of Virgin’s shares are controlled by investors including Singapore Airlines Ltd, Etihad Airways, Chinese conglomerate HNA Group and Richard Branson’s Virgin Group, which have all suffered a sharp fall in revenue because of the pandemic.
Mr Branson said on Twitter his company would work with administrators, management, investors and the Government to return Virgin Australia to health. — Reuters