The perilous state of Virgin Atlantic’s finances have been laid bare in new documents as it battles to open its key US routes this summer.
The papers reveal the airline’s survival would be at risk if travel restrictions are lifted more slowly than expected or if the UK faces another lockdown this year.
Directors called this a ‘severe but plausible’ worst case scenario and said it could force the airline to raise more cash from shareholders or go through ‘significant restructuring’. The comments were made before Virgin Atlantic knew which countries would be on the green list for travel, announced on Friday.
Turbulence: Virgin Atlantic’s survival would be at risk if travel restrictions are lifted more slowly than expected or if the UK faces another lockdown this year
Israel, one of Virgin’s top three markets, was among the 12 countries and territories on the list. But the US, which made up 70 per cent of Virgin Atlantic’s network and just over half its pre-pandemic £2.9billion revenues in 2019, was on the amber list.
Last night, chief executive Shai Weiss said: ‘There is no reason for the US to be absent from the green list. We urge the UK Government to expedite talks with Joe Biden’s administration to lead the way in opening the skies. There is no reason to delay.’
Virgin Atlantic drew up its worst-case scenario earlier this year and said it was now fully funded until the end of 2021, with no current plans for a restructuring.
In documents published just days ago with Virgin Atlantic’s annual accounts for 2020, its auditor KPMG said: ‘As a result of the pandemic and its long-term impact on travel there is a risk as to whether Virgin Atlantic Group is able to meet liquidity requirements. These events constitute a material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern.’
Industry sources expect the US to reopen its borders to British visitors in June as part of a bilateral agreement when Biden visits the UK for the G7 summit. Virgin Atlantic’s models allow for the US remaining closed until July.
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