Virgin Atlantic Hires Investment Bank To Secure Additional Funding
Sir Richard Branson’s Virgin Atlantic has called investment bank Houlihan Lokey to help secure additional funds from investors as it looks to all options to avoid entering administration.
The airline, like many other organisations - particularly in the aviation industry - has been hit staggeringly hard by the impact of the COVID-19 pandemic, and is looking for cash injections after its application for a government bail-out was rejected.
The Virgin Atlantic group is 51% owned by Richard Branson’s Virgin Group, and 49% owned by American company Delta Airlines, who says it is unwilling to inject more cash into the airline due to their own cash crisis.
A spokesperson for Richard Branson has issued a statement saying that the “Virgin Group is providing liquidity to help support its companies and save jobs,” adding that the company has contacted around 100 potential investors.
“Richard and the Virgin Group are committed to the airline and are not looking to sell Virgin Atlantic. They recognise 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.”
Branson’s call for a tax-payer bailout was met with fierce criticism of the fact that Virgin hasn’t paid income tax in more than a decade after moving to the tax-free British Virgin Islands. He has addressed some of these points with the statement that “I’ve seen lots of comments about my net worth, but that is calculated on the value of the Virgin businesses around the world before the crisis, not sitting as cash in a bank account ready to withdraw.”
The statement dismissed reports speculating in UK media that Branson had
“Because of significant costs to our business caused by unprecedented market conditions which the COVID-10 crisis has brought with it, we are exploring all available options to obtain additional external funding. Houlihan Lokey has been appointed to assist the process, focussing on private sector funding. Meanwhile, we continue to take decisive action to reduce our costs, preserve cash and protect jobs.”
Earlier last week, Branson issued an open letter to employees and stakeholders, stating that “we are operating in many of the hardest hit sectors, including aviation, leisure, hotels and cruises, and we have more than 70,000 people in 35 countries working in Virgin companies.”
“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,” he added. “This would be in the form of a commercial loan- it wouldn’t be free money and the airline would pay it back (as easyJet will do for the £600m loan the government recently gave them.”
“We’re doing all we can to keep those businesses afloat and I am so thankful to all of you who have continued to work so hard in these difficult times. We have already committed a quarter of a billion dollars to help our businesses and protect jobs, and will continue to invest all we can,” Branson concluded.