Ed Bastian, the chief executive of Delta Air Lines says his airline has no more money to pump into Virgin Atlantic to keep the struggling carrier afloat amid the Coronavirus crisis. Bastian made the remarks as the Atlanta-based airline revealed that it was currently burning through $100 million of cash every single day and had recorded a first-quarter pre-tax loss of $607 million because of the ongoing pandemic.
Delta owns a 49 per cent stake in Virgin Atlantic and along with the airline’s founder Sir Richard Branson has come under intense pressure to inject more liquidity into the embattled airline to either stave off collapse or avoid a taxpayer-funded bailout.
Bastian, however, poured cold water on the idea that his airline might be able to save the airline as easily as some critics claim. “We are not in a position to invest any more in Virgin Atlantic,” Bastian told CNBC earlier on Wednesday.
“We are already at the ownership cap of 49 per cent and candidly, with our crisis, with the cash we need to protect our own business, that’s what our focus is,” he continued.
Sir Richard has said Virgin Atlantic will “need” government help if it has any chance of surviving the current crisis but in an open letter to Virgin’s employees, the entrepreneur said any help “wouldn’t be free money and the airline would pay it back” – much in the same way that easyJet has already benefited from a £600 million commercial loan provided by the British government.
“I trust Virgin will work through its challenges with the government and with Richard,” Bastian told CNBC today, saying that the airline might need to follow in the footsteps of Virgin Australia by entering into voluntary administration – a process that will allow Virgin to recapitalise.
“If they are required to go through an administration process in the UK, I am confident they could re-emerge,” he continued.
“There’s a need for the Virgin brand in the UK market place and I’m confident once we… get to a point where people will feel safe to travel again, the Virgin brand will be strong once more.”
Virgin Atlantic has already submitted a bid for a government bailout to the tune of £500 million but was asked to reapply because their proposal “failed to impress” lawmakers.
Delta hopes to reduce its cash by half by May – at that point, the airline will be burning through just $50 million per day.
