Airline tycoons told to cough up

Ministers: shareholders must contribute in bailout

AIRLINE tycoons will have to put their hands in their pockets if they want a bail out, Transport Secretary Grant Shapps warned yesterday.

The industry has been pleading for state aid after being crippled by the Covid-19 pandemic.

Virgin Atlantic, part of Sir Richard Branson’s business empire, has led calls for an £7.5bn industry rescue package. This would include cash advances which would only have to be paid back when airlines have recovered.

Easyjet, founded by another super wealthy entrepreneur Sir Stelios HajiIoannou, and regional airline Loganair, controlled by the secretive Bond brothers, have also begged for help from the Government.

But as British Airways suspended all flights to and from London Gatwick – after Easyjet was forced to ground its entire fleet on Monday – ministers are scrambling to find alternatives to a taxpayer bail out,

Insiders say they are acutely conscious of the need to ensure those who have made fortunes from the airline industry in the good times ‘share the pain’ with taxpayers.

Shapps said ‘ detailed discussions’ are taking place with airlines, airports and ‘ancillary services’, which include specialist firms employing airport workers.

Speaking on BBC Radio 4’s Today programme, he said: ‘We do want there to be competition in the airline market. We think that’s absolutely right when we come out of this crisis for that to be there.

‘Having said that, we also are very firmly aware that a lot of the large airlines have shareholders who will also be expected by the public to put their hands in their pockets.

‘ It can’t be right for example that in the good times the shareholders benefit and in the bad times the taxpayer pays. So we’ve got to get that balance right.’

He added that ‘it is a question of finding the right solutions from the whole wide range of packages that the Chancellor has announced’. Ministers are conscious that a straight-forward bailout for airlines would be politically toxic, and would be seen by many as special treatment for the super-rich. Branson is worth an estimated £4bn and lives on Necker, his own Caribbean island. He has come under fire for quickly putting 7,300 employees on unpaid leave, before the Government even announced its wage subsidy support package for furloughed staff. Labour MP Kat e Osborne branded the decision an ‘absolute disgrace’ while he was urged by Labour’s shadow education secretary Angela Rayner to sell his private island to pay staff.

Branson (pictured above with burle squestar Dita Von Teese) subsequently pledged £215m from his personal fortune and Virgin Group’s coffers to help rescue the airline.

Stelios ( picturedbelow), who owns 34pc of Easyjet with his family, has also been lambasted for pocketing a £60m dividend as the budget airline has plunged into crisis.

Much lower-profile are Stephen and Peter Bond, who own Loganair, now the UK’s biggest airline following the collapse of Flybe.

The brothers are also controversial figures.

They previously owned FlyBMI, which collapsed just over a year ago – leaving hundreds of passengers stranded across Europe and most of its 376 staff without jobs.

Subsequently some of its more lucrative routes were taken over by the Scottish-based Loganair, which is now warning it could go bust without a government bail out.

Last week Chancellor Rishi Sunak said the Government would only step in to help airlines as a ‘last resort’ once they have exhausted all other options. He said decisions would be taken with individual airlines on a ‘case by case basis’.

But Tim Alderslade, chief executive of industry lobby group Airlines UK, said more support is urgency needed from ministers, including allowing airlines to offer vouchers to customers for cancelled flights rather than refunds.

He said: ‘The situation is now very grave for airlines, and we’re seeing on a daily basis some of the practical impacts of this crisis, from planes being grounded to airports closing their doors.’