Virgin Atlantic will collapse unless the airline gets an urgent injection of finance, billionaire Richard Branson has warned after reports that the company and the government could not agree on the terms of a loan.
Founder Branson, who has an estimated fortune of more than £4bn, has now offered to put up his private Caribbean island of Necker as collateral for a £500mln loan from the UK government.
He said Virgin Group, the private company part-owned by Branson that owns a 51% stake in Virgin Atlantic, “will do everything we can to keep the airline going - but we will need government support to achieve that”.
The airline is asking for a commercial loan similar to the £600mln that was lent to easyJet (LON:EZJ) this month.
READ: Airlines to burn US$61bn of cash reserves in a quarter as costs remain high
Last month, Branson, who lives on Necker Island in the tax-free British Virgin Islands, committed to investing $250mln (£200mln) into his wider empire to help businesses and protect jobs, without giving details.
“As with other Virgin assets, our team will raise as much money against the island as possible to save as many jobs as possible around the group,” Branson said of the 74-acre Necker Island, which he bought as a 29-year-old.
In an open letter to staff on Monday, he added that the nature of the “unprecedented crisis” was that “many airlines around the world need government support and many have already received it”.
“We will do everything we can to keep the airline going – but we will need government support to achieve that in the face of the severe uncertainty surrounding travel today and not knowing how long the planes will be grounded for.”
It had been reported that the government was looking at a scheme where it would buy equity stakes in airlines and other companies pushed to the verge of collapse by the pandemic.
But on Friday the government rejected Virgin Atlantic’s proposal for a £500mln bailout, according to the Financial Times, with the airline told to explore other ways to raise cash before seeking a state bailout.
IAG, the Anglo-Iberian owner of Virgin Atlantic's long-haul rivals British Airways, has said it was not seeking financial assistance in terms of state aid from governments in either the UK or Spain, though like most airlines is using the furlough scheme.