Virgin Atlantic is leading Britain’s airline industry to request for emergency government support worth up to £7.5 billion and avert a catastrophe that would wipe out tens of thousands of jobs.
Sky News and other news outlets reported on Saturday that Peter Norris, the chairman of Virgin Atlantic Airways’ majority shareholder, Virgin Group, will write to Prime Minister Boris Johnson on Monday to warn that the sector needs immediate financial aid to survive.
The bailout request will come ahead of what could prove to be the bloodiest week in British aviation history, with British Airways, Virgin Atlantic, easyJet and Ryanair all expected to announce mass groundings of aircraft and potentially huge redundancies as the COVID-19 crisis escalates.
Mr Norris’s letter – which is also understood to be being signed by Shai Weiss, Virgin Atlantic’s chief executive – would ask the government to provide airlines with a credit facility to help them finance themselves through a potentially protracted period of negligible revenue.
That support, which the Virgin chairman estimates would be worth between £5bn and £7.5bn across the industry, would include cash advances and guarantees, as well as other measures to ensure that credit card companies do not continue to hoard revenue from airline bookings.
Under Mr Norris’s blueprint, this emergency financing would be repaid once trading returns to more normal levels.
Mr Norris would also ask the PM to extend the timetable for allowing airlines to keep planes grounded without losing their prized take-off and landing slots for the entire summer season.
The trade body IATA has estimated that the airline industry globally could forfeit $113bn in revenue as a result of COVID-19 – a figure it may have to increase again.
This week, Alex Cruz, BA’s chief executive, told the flag-carrier’s 45,000 staff that it was being engulfed by “a crisis of global proportions like no other we have known”.
Mr Cruz warned of impending job cuts, although he declined to say in his message to employees how many would be affected.
He added that the COVID-19 situation was “more serious” than the financial crisis of 2008, the SARS epidemic and the terrorist attacks of September 11, 2001.
The UK aviation industry generates approximately £10bn of GDP and employs roughly 200,000 people.