Coronavirus: Virgin Atlantic seeks new investors amid Richard Branson tax row
Virgin Atlantic is reported to have approached more than 100 investors as it rushes to raise cash, with the airline battling to survive the coronavirus crisis.
A spokesperson confirmed the airline had appointed investment bank Houlihan Lokey to seek private sector funding. Reports suggest around half the investors have shown interest.
But she said the airline was in a “stable position” despite Virgin tycoon Richard Branson, its majority shareholder, warning his empire faced its most challenging period ever.
A cost-cutting drive is underway at the UK-based airline amid an unprecedented decline in flight revenues. Virgin Australia went into administration last week.
A source said talks over government funding were also “ongoing and constructive,” with the airline seeking a £500m ($624m) rescue package involving commercial loans and guarantees. Branson has said it needs government aid to stay afloat.
READ MORE: Richard Branson warns of Virgin Atlantic collapse without state support
The comments come in spite of reports in the Sunday Telegraph that the bid for government support “has been effectively shelved” and controversy over the company receiving any state aid.
Ministers are said to have been unimpressed by Virgin Atlantic’s initial proposals, and wanted more evidence that private funding options had been exhausted. The UK chancellor has publicly warned airlines that aid from the taxpayer can only be a “last resort.”
Branson’s tax affairs and past comments mean his bid for taxpayer cash has already sparked a backlash. Rival airline boss Michael O’Leary of Ryanair accused him of trying to “fleece” the taxpayer, and told the billionaire to “write the cheque himself.”
Christian leaders in Britain also hit out at large firms and the wealthy for using tax havens during the crisis on Monday, and warned offshore companies should not receive bailouts in a letter to the Times.
READ MORE: Government to bail out key EU freight routes and UK tram routes
Branson felt compelled to state last week that he “did not leave Britain for tax reasons” when he moved to the British Virgin Islands. He also said his UK companies were registered to pay tax in the UK, with Virgin Atlantic headquartered in Crawley.
He even suggested that the Caribbean island he owns could be offered as collateral for a government loan, saying his business “will raise as much money against the island as possible to save as many jobs as possible around the group.”
He has also come under fire for his previous hardline stance on state support for other airlines. He urged the last Labour government not to bail out British Airways during the global financial crisis in 2008.
“Because of significant costs to our business caused by unprecedented market conditions which the COVID-19 crisis has brought with it, we are exploring all available options to obtain additional external funding,” said a Virgin Atlantic spokesperson.
“Virgin Atlantic is committed to continuing to provide essential connectivity on competitive terms to consumers and businesses in Britain and beyond, once we emerge from this crisis.”
Virgin Atlantic, 51% owned by Branson’s Virgin Group, last month began a recruitment freeze across the company and said its chief executive and senior leaders would take significant short-term pay cuts.
