A BBC report has claimed that Virgin Atlantic will be approaching the United Kingdom government for a bailout package worth hundreds of millions of pounds soon as it is hit very hard by the coronavirus pandemic.
Other airlines also expected to ask the government for help.
The government has said that it will intervene to help out struggling airlines only “as a last resort” as well as a case-by-case basis. However the possibility of the UK government taking up a stake in struggling airlines that have been hard by the pandemic was not ruled out by the UK Transport Secretary in his conversations with MPs.
The planned response of the government for the aviation sector has not ruled out anything, said Grant Shapps to MPs on the Transport Select Committee.
“It was important to save companies that would survive in normal times”, said Shapps when he was asked by Labour MP Ruth Cadbury whether the government was considering picking up a share of UK airlines that face collapse.
However, the current shareholders “must be part of the solution”, the Transport Secretary said.
Measures such as temporarily laying-off staff have already been announced by UK-based airlines to save money.
Suggestions that the UK government should offer £7.5 billion in credit facilities to UK airlines had been previously made by Virgin Atlantic. A financial infusion of £250 million into the Virgin Group was offered by the airline’s founder Sir Richard Branson this week with most of the capital infusion to be given for the airline.
UK airlines have been hit as governments across the world have restricted international flight tro prevent spread of the coronavirus pandemic and hence the majority of flights to and from the UK have been grounded. Some airlines such as British Airways are still operating a number of flights to rescued stranded Brits home.
No financial package would be offered for the aviation industry, the UK government announced earlier this week, even though a number of its emergency business measures, including a scheme by the Bank of England for companies to raise capital and subsidies of employee salaries could be availed by the UK airlines.
However warning of “apocalypse” in the aviation sector and a call for help to governments all around the world was issued by the industry group the International Air Transport Association (IATA).
A $58 billion aid package for the United States airline industry was passed on Wednesday by the US Senate which included cash payments to pilots, crew and staff salaries.
The UK government has said that only bespoke financial support will be provided to the UK airlines on a case-by-case basis. However such support will only be provided after airlines have used up all other alternatives. This is because the government wants to ensure that enough is done by the wealthy shareholders of the airlines.
(Adapted from BBC.com)