WW "airlines to go bust"
Apr 25, 2020, 4:53 pm
#1156
Join Date: May 2003
Location: DEL
Programs: Mucci du Miel d'Or
Posts: 2,376
The UK economy depends on global trade and a strong network carrier will be seen as a key element of maintaining the right environment for the economy, particularly post COVID and Brexit. I don't see the return of nationalised carriers, but I can see more readiness by the government to support the maintenance of a UK based carrier which delivers strong connectivity. Germany and France's readiness to shore up their network carriers will not have gone unnoticed and I think the UK government will be much more willing to consider state support.
Apr 25, 2020, 5:05 pm
#1157
Join Date: Oct 2018
Location: London, UK
Programs: BAEC
Posts: 3,440
I disagree with some people above. BA should be saved because it has such an big impact on the UK and its economy. Without BA, many destinations would be left unserved, there would be mass job losses (within BA/LHR and the wider travel industry).
The UK does need a flag carrier, from a practical and pride point of view. If one of the largest economies can’t support one main carrier then something’s wrong.
As for Virgin, most of their network is leisure based and is just a copy of BA’s main long haul routes. Arguably, Flybe deserved to be saved more than Virgin, it provided key links within the U.K., connecting smaller communities and their economies.
The UK does need a flag carrier, from a practical and pride point of view. If one of the largest economies can’t support one main carrier then something’s wrong.
As for Virgin, most of their network is leisure based and is just a copy of BA’s main long haul routes. Arguably, Flybe deserved to be saved more than Virgin, it provided key links within the U.K., connecting smaller communities and their economies.
Apr 25, 2020, 5:28 pm
#1158
Join Date: May 2003
Location: DEL
Programs: Mucci du Miel d'Or
Posts: 2,376
Looking at the Sunday papers it appears that Virgin Atlantic are now looking for funding elsewhere, having assessed that the UK government is not going to come to its aid, or at least on terms acceptable to the company.
Most articles are behind paywalls, but the Sun piece here gives a brief overview of Virgin's latest position and takes aim at the airline in the process. I flag the piece as I know the title will be unfamiliar to the sophisticated types here : )
Most articles are behind paywalls, but the Sun piece here gives a brief overview of Virgin's latest position and takes aim at the airline in the process. I flag the piece as I know the title will be unfamiliar to the sophisticated types here : )
Apr 26, 2020, 2:33 am
#1159
Join Date: Mar 2017
Posts: 726
Looking at the Sunday papers it appears that Virgin Atlantic are now looking for funding elsewhere, having assessed that the UK government is not going to come to its aid, or at least on terms acceptable to the company.
Most articles are behind paywalls, but the Sun piece here gives a brief overview of Virgin's latest position and takes aim at the airline in the process. I flag the piece as I know the title will be unfamiliar to the sophisticated types here : )
Most articles are behind paywalls, but the Sun piece here gives a brief overview of Virgin's latest position and takes aim at the airline in the process. I flag the piece as I know the title will be unfamiliar to the sophisticated types here : )
I don't know the finer details but I see Wizz Air have qualified to apply for UK Government support!
https://www.morningstar.co.uk/uk/new...-facility.aspx
Apr 26, 2020, 3:23 am
#1160
Join Date: Oct 2019
Location: clue is in the nym
Programs: BA Gold, TP Gold, VS Gold, Hilton Diamond, IHG Diamond, Hyatt Globalist, Marriott Platinum
Posts: 832
I don't know the finer details but I see Wizz Air have qualified to apply for UK Government support!
https://www.morningstar.co.uk/uk/new...-facility.aspx
https://www.morningstar.co.uk/uk/new...-facility.aspx
Last edited by southlondonphil; Apr 26, 2020 at 3:31 am
Apr 26, 2020, 4:49 am
#1161
Join Date: Nov 2017
Location: UK
Programs: Mucci Chevalier de Actes Bénéfiques pour les Autres, BAEC Gold.
Posts: 1,487
From BBC News:
More at:
https://www.bbc.co.uk/news/business-52431290
If the government won't bail him out, I can't see the private sector doing so!
I think Willie Walsh must be enjoying this!
Virgin Atlantic says it is still in talks with the UK government about a coronavirus-related bailout.
It follows reports in the Sunday Telegraph that billionaire Virgin Group boss Sir Richard Branson is seeking a buyer for the airline.
Virgin Atlantic said talks were "ongoing and constructive", but added that it is also looking at raising cash from the private sector.
Many airlines have been struggling as revenues have dropped amid travel bans.
However, sources at the airline told the BBC that the firm had not set an end of May deadline for finding a buyer.
It follows reports in the Sunday Telegraph that billionaire Virgin Group boss Sir Richard Branson is seeking a buyer for the airline.
Virgin Atlantic said talks were "ongoing and constructive", but added that it is also looking at raising cash from the private sector.
Many airlines have been struggling as revenues have dropped amid travel bans.
However, sources at the airline told the BBC that the firm had not set an end of May deadline for finding a buyer.
https://www.bbc.co.uk/news/business-52431290
If the government won't bail him out, I can't see the private sector doing so!
I think Willie Walsh must be enjoying this!
Apr 26, 2020, 5:04 am
#1162
Join Date: Nov 2017
Posts: 3,061
The government told Virgin they hadn’t done enough to get money from commercial sources. So they’re trying properly to get some. If it works, fine. If it doesn’t, back to the government with a “look, we did try this time”. It’s not the end of the road for government help, whatever it looks like upfront.
Apr 26, 2020, 6:18 am
#1163
Join Date: May 2003
Location: DEL
Programs: Mucci du Miel d'Or
Posts: 2,376
Yes, at face value. But...
The government told Virgin they hadn’t done enough to get money from commercial sources. So they’re trying properly to get some. If it works, fine. If it doesn’t, back to the government with a “look, we did try this time”. It’s not the end of the road for government help, whatever it looks like upfront.
The government told Virgin they hadn’t done enough to get money from commercial sources. So they’re trying properly to get some. If it works, fine. If it doesn’t, back to the government with a “look, we did try this time”. It’s not the end of the road for government help, whatever it looks like upfront.
Apr 27, 2020, 5:14 am
#1164
Join Date: Aug 2015
Programs: BA OWS, A3*G
Posts: 262
After the sale of Condor (ex-Thomas Cook) to LOT fell through, European Commission now authorised a second loan from the German government in two years, this time for €550M. Interesting bit of Forbes article:
Originally Posted by Forbes
This decision will be a blow to Ryanair’s argument against state aid for other competitors. As Bloomberg has reported, O’Leary argued in a letter sent to Vestager, that aid should be proportional to an airline’s share of traffic in a particular market. This argument would serve the low-cost leader’s interest since Ryanair might then arguably qualify to file for state-aid from various EU States in which the airline has a considerable share of traffic.However, the details published by the European Commission of the approval of Condor’s aid package would not favor Ryanair’s argument.
The approval makes clear that the decision to lend aid to certain companies is at the discretion of the Member State. The aid is understood to be primarily for the purposes of preventing the collapse of companies due to a lack of liquidity caused by “exceptional circumstances” with the coronavirus pandemic considered exceptional.
The approval makes clear that the decision to lend aid to certain companies is at the discretion of the Member State. The aid is understood to be primarily for the purposes of preventing the collapse of companies due to a lack of liquidity caused by “exceptional circumstances” with the coronavirus pandemic considered exceptional.
Apr 27, 2020, 7:47 am
#1166
Join Date: Oct 2013
Programs: BA Gold, VS Gold, IHG Platinum, Hilton Gold, Hertz Presidents Circle.
Posts: 1,448
I disagree with some people above. BA should be saved because it has such an big impact on the UK and its economy. Without BA, many destinations would be left unserved, there would be mass job losses (within BA/LHR and the wider travel industry).
The UK does need a flag carrier, from a practical and pride point of view. If one of the largest economies can’t support one main carrier then something’s wrong.
As for Virgin, most of their network is leisure based and is just a copy of BA’s main long haul routes. Arguably, Flybe deserved to be saved more than Virgin, it provided key links within the U.K., connecting smaller communities and their economies.
The UK does need a flag carrier, from a practical and pride point of view. If one of the largest economies can’t support one main carrier then something’s wrong.
As for Virgin, most of their network is leisure based and is just a copy of BA’s main long haul routes. Arguably, Flybe deserved to be saved more than Virgin, it provided key links within the U.K., connecting smaller communities and their economies.
Apr 27, 2020, 7:56 am
#1167
Join Date: Oct 2015
Posts: 116
Given how long this could go on for I would think state help is only going to be available with the knowledge something worthwhile salvaging will be there at the end of it if all the cash is simply burned through. Clearly for me BA given size and global reach would be nationalised and unfortunately Virgin and others will go to the wall
Apr 27, 2020, 9:03 am
#1168
Join Date: Feb 2011
Posts: 5,797
That would be unmanageable. The government will never allow BA to go under and leave the UK with no major airline. Whether they remain under the control of IAG is all that might change.
Apr 28, 2020, 12:37 am
#1169
Join Date: Oct 2009
Posts: 5,041
Could Norwegian also borrow from the UK government? there's an operating subsidiary, "Norwegian UK Limited"
Here's "Norwegian Air Shuttle ASA Presentation to bondholders, April 27th"
66 pages: Restructuring proposal, "New Norwegian", page 58-66 risk (factors very detailed)
https://www.norwegian.no/globalasset...april-2020.pdf
Here's "Norwegian Air Shuttle ASA Presentation to bondholders, April 27th"
66 pages: Restructuring proposal, "New Norwegian", page 58-66 risk (factors very detailed)
https://www.norwegian.no/globalasset...april-2020.pdf
Apr 28, 2020, 1:16 am
#1170
Join Date: May 2014
Posts: 7,238
People here are talking about "flag carriers" like it's 1975.
That model is dead and has been dead for longer than mullets have gone out of fashion. 260 million passengers flew in/out of the UK in 2018: only 45 million with BA. As others mentioned in another thread, out of 160+ routes that BA has only 24 are in complete direct monopoly, i.e. no other direct competitor. Leaving aside emotions, memories and "OMG-what-am-I-gonna-do-with-all-my-Avios" the disappearance of BA would not be the end of the world for the civil aviation industry. Airlines aren't strategic asset, they aren't the telecom industry, cutting-edge companies or steel mills: they don't trasform products, they don't invent, they merely move things from A to B. And I say it as a passionate lover of the industry!
In normal, non-Covid circumstances, if BA or VS were to go belly up I'd say to let them. I follow closely Italy's woes with Alitalia, a company responsible for approx. 22 million of the country's 190 million passengers and with an absymal coverage of its intercontinental market. In the past 5 years alone the government there invested in Alitalia three times for a total of 1.8 billion euros. This is about 200 million cheaper than a new metro line like Milan's M5! And this is for an airline with 90 airplanes: think how much a BA-sized bailout would cost. Also, history suggests (see Malév, see Spanair, see Air Berlin) that where there is market interest then you see other airlines enter fairly quickly. BUD airport, for instance, had two lean years in 2012 and 2013 following the demise of Malév but then beat the 2011 record in '14. And this is BUD: I honestly doubt that LHR's slots would go without anyone for more than a few months in the event of the closure of BA or VS. Would everything be exactly the same? Absolutely not: although the number of transits is lower than, say, DXB or AMS there are still some 30-40% of transfers on BA's planes: that would have an impact either on routes or frequencies... but in the list of things that worry me the most with regards to Heathrow's importance as a large world airport the potential decline of the City ranks higher than having or not having BA.
Now we are obviously in different times. My bet would've been that, had no one caught Covid-19 from eating pangolins or bats or whatever it was, Virgin would've made a tiny profit (as usual) and BA a much larger one, perhaps not at the levels of the last few years. Now we're seriously considering their potential demise. It's 100% clear that this crisis is an external shock, something they had nothing to do with and little chance to shield away from. This isn't Virgin going bust because Branson invested all their profits into, who knows, a brand of energy drinks for badgers; I'd say they should be given the chance to survive. However it shouldn't be with no strings attached: if BA or VS are to be rescued it should be either via a loan or, like in the RBS case, with government taking a stake and stopping share buy-backs and multiple yearly dividend. I'm not too sure about VS, because I haven't followed them too close, but it's been painfully clear to me, ever since Alex joined, that it's been managed with an eye for the next 2 years, not 20.
That model is dead and has been dead for longer than mullets have gone out of fashion. 260 million passengers flew in/out of the UK in 2018: only 45 million with BA. As others mentioned in another thread, out of 160+ routes that BA has only 24 are in complete direct monopoly, i.e. no other direct competitor. Leaving aside emotions, memories and "OMG-what-am-I-gonna-do-with-all-my-Avios" the disappearance of BA would not be the end of the world for the civil aviation industry. Airlines aren't strategic asset, they aren't the telecom industry, cutting-edge companies or steel mills: they don't trasform products, they don't invent, they merely move things from A to B. And I say it as a passionate lover of the industry!
In normal, non-Covid circumstances, if BA or VS were to go belly up I'd say to let them. I follow closely Italy's woes with Alitalia, a company responsible for approx. 22 million of the country's 190 million passengers and with an absymal coverage of its intercontinental market. In the past 5 years alone the government there invested in Alitalia three times for a total of 1.8 billion euros. This is about 200 million cheaper than a new metro line like Milan's M5! And this is for an airline with 90 airplanes: think how much a BA-sized bailout would cost. Also, history suggests (see Malév, see Spanair, see Air Berlin) that where there is market interest then you see other airlines enter fairly quickly. BUD airport, for instance, had two lean years in 2012 and 2013 following the demise of Malév but then beat the 2011 record in '14. And this is BUD: I honestly doubt that LHR's slots would go without anyone for more than a few months in the event of the closure of BA or VS. Would everything be exactly the same? Absolutely not: although the number of transits is lower than, say, DXB or AMS there are still some 30-40% of transfers on BA's planes: that would have an impact either on routes or frequencies... but in the list of things that worry me the most with regards to Heathrow's importance as a large world airport the potential decline of the City ranks higher than having or not having BA.
Now we are obviously in different times. My bet would've been that, had no one caught Covid-19 from eating pangolins or bats or whatever it was, Virgin would've made a tiny profit (as usual) and BA a much larger one, perhaps not at the levels of the last few years. Now we're seriously considering their potential demise. It's 100% clear that this crisis is an external shock, something they had nothing to do with and little chance to shield away from. This isn't Virgin going bust because Branson invested all their profits into, who knows, a brand of energy drinks for badgers; I'd say they should be given the chance to survive. However it shouldn't be with no strings attached: if BA or VS are to be rescued it should be either via a loan or, like in the RBS case, with government taking a stake and stopping share buy-backs and multiple yearly dividend. I'm not too sure about VS, because I haven't followed them too close, but it's been painfully clear to me, ever since Alex joined, that it's been managed with an eye for the next 2 years, not 20.