Branson has committed to injecting $250 million into his brands to save jobs, of which “a big part” is going to Virgin Atlantic, according to the letter. Moves are also under way to raise money against his Necker Island home and other assets, though with “no money coming in and lots going out,” such measures alone won’t be enough, he said.
Any loan to Virgin Atlantic would be on commercial terms and fully repayable, the entrepreneur said, citing 600 million pounds ($746 million) in U.K. government-backed financing for discount carrier EasyJet Plc.
Virgin Atlantic customers including planemaker Airbus SE, engine manufacturer Rolls-Royce Holdings Plc and airport operators Heathrow Ltd. and Manchester Airports Group have written to the government saying how important Virgin Atlantic is to their business. Branson also said in his letter that a collapse would remove the chief rival to British Airways, pushing up fares.
Virgin Australia’s situation is even more critical, with debts of more than A$5 billion ($3.2 billion) at the end of 2019.
Branson now holds only a 10% stake in the Brisbane-based carrier, compared with 51% of Virgin Atlantic. Etihad Airways, Singapore Airlines, Nanshan Group and HNA Group each have holdings of about 20%.
Virgin Australia had asked the government for a A$1.4 billion loan, convertible into equity, to see it through the crisis. It competes in what’s essentially a two-player market dominated by Qantas Airways Ltd., and hasn’t made an annual profit for seven years.
--With assistance from David Hellier and Alex Morales.
This article was provided by Bloomberg News.