By Clive Irving
The Daily Beast
The coronavirus could succeed in doing something that British Airways has been trying its hardest to do for 36 years: kill off Virgin Atlantic, the airline created by the swashbuckling entrepreneur Richard Branson.
The airline had been losing money for two years before the pandemic hit. Now it’s grounded and desperately seeking a bailout from the British government. But they rejected Branson’s first appeal and said he should consider “other options” before asking for state aid.
In a letter to the airline’s staff Branson said its survival was in doubt and he was offering his private Caribbean idyll, Necker Island, as collateral for a commercial loan, believed to be as much as half a billion pounds.
The British government has taken a far tougher line with airlines than the Trump administration has with U.S. carriers. Instead of targeting specific industries for bailouts it put workers before owners and shareholders by guaranteeing all furloughed workers a minimum of 80 percent of their wages for three months, with an extension if needed.
In contrast, U.S. airlines share a $25 billion bailout despite the fact that over the last decade the five largest of them put 96 percent of the cash they generated to buy back their own shares, pushing up the share price and enriching their investors.
The British government—setting a tone highly unusual for the Conservative Party—is insisting that airlines should first turn to their investors for help before bringing out the begging bowl.
Branson has a net worth of around $4.7 billion. As well as offering his island as security for loans he offered just $100 million of his own money as part of a rescue package for the airline. Under pressure to do more, he said—causing some amazement—that his wealth did not mean he had “cash in a bank ready to withdraw.”
If Virgin Atlantic does go under, the loss will be deeply felt by the devoted cohort of the movie and media crowd who have long preferred its ultra-hip style in business class airplane cabins and lounges to that of its main competitor over the pond, British Airways.
And one person who agrees with the refusal to bail out Branson is Willie Walsh, the CEO of the International Airline Group, which owns British Airways. He is boasting that his airline has enough cash to survive and he was hardly likely to show mercy toward Virgin Atlantic.
Ever since Branson launched his airline in 1984 there has been a running feud between him and successive British Airways bosses. The basic branding of Virgin was explicitly to be the “not your grandfather’s airline”, i.e., BA.
Although Virgin began as a no-frills cheaper alternative flying a few flights out of London’s second airport, Gatwick, it eventually evolved into a full-service competitor pulling in business class passengers with the front of its cabins styled as Upper Class (combining first and business) and a similarly swish Heathrow lounge with its own direct access for those arriving in limos.
This was an audacious and direct attack on BA, who had previously enjoyed a hammerlock on the most lucrative business class route in the world, the North Atlantic, where it kept prices high.
https://www.thedailybeast.com/will-richard-bransons-virgin-atlantic-be-the-first-airline-killed-by-coronavirus?source=articles&via=rss
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