New York (CNN Business)Virgin Atlantic has been searching for capital to keep it from collapse in the midst of the economic crisis caused by coronavirus.
The airline is now exploring options to work with outside investors, a Virgin Atlantic spokesperson confirmed to CNN Business Sunday. Investment bank Houlihan Lokey (HLI) has been appointed to lead the search, with a focus on private investors.”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,” the spokesperson said in a statement. The British airline has also requested financial assistance from the UK government.
The airline’s parent company, Virgin Group, and billionaire founder Richard Branson are supportive of the investor search, though they are not looking to sell Virgin Atlantic outright, according to a statement from a Virgin Group spokesperson. “Virgin Group is providing liquidity to help support its companies and save jobs,” the statement reads. “Richard and the Virgin Group are committed to the airline, and are not looking to sell Virgin Atlantic. They recognize that further investment will be necessary to make up for the total loss of revenue due to Covid-19 and are working with Houlihan Lokey to approach private investors about the investment opportunity.”Read MoreTravel bans, lockdowns and border closures implemented to slow the spread of coronavirus have decimated the travel industry, prompting dozens of airlines to ground planes and place workers on unpaid leave. The International Air Transport Association said earlier this month that airline passenger revenues will be cut in half this year, tumbling by $314 billion from 2019.While US airlines will receive tens of billions of dollars in support as part of the country’s stimulus package, governments in Europe have not promised wholesale bailouts to their carriers. Instead, individual airlines are tapping government support to pay staff salaries and raise debt.Branson previously pumped $250 million into Virgin Group companies in response to the pandemic, but he said the airlines would need more money to survive. On Monday, Branson said in an open letter to employees that he would offer his Necker Island estate in the Caribbean as collateral “to raise as much money against the island as possible to save as many jobs as possible around the group.” He said in the letter the company would seek a commercial loan from the UK government, which it will repay, though he did not specify how much money it needs. “The challenge right now is that there is no money coming in and lots going out,” Branson said in the letter. Virgin Group employs 70,000 people in 35 countries.
He also called for assistance from the Australian government for Virgin Australia. But on Tuesday, Virgin Australia entered voluntary administration, becoming the first major airline in Asia Pacific to succumb to the loss of business from the pandemic.As for finding financial investors for Virgin Atlantic, the spokesperson said discussions “with a number of stakeholders continue and are constructive, meanwhile the airline remains in a stable position.” In the meantime, the airline continues “to take decisive action to reduce our costs, preserve cash and protect jobs,” the spokesperson said.
Source: edition.cnn.com