Delta owns a 49% stake in Virgin Atlantic, with the other 51% retained by Richard Branson’s Virgin Group. Branson had proposed selling 30% of his share to Air France-KLM but decided late last year to retain his controlling stake.
However, Virgin Atlantic has been hit hard by the coronavirus pandemic, leading to Branson’s carrier seeking support from the UK government. In an open letter to employees this week, Branson said without state intervention, Virgin Atlantic was at risk of collapse.
He said any cash received from the government would not be "free money" and would instead be provided on a commercial basis, citing the £600 million commercial loan granted to easyJet under the government’s Covid Corporate Financing Facility.
While easyJet appears to be the first major carrier to benefit from the fund, Virgin is understood to have been the first to make an application for support, but was told – according to the Financial Times – by the government to rethink its bid.
Delta, meanwhile, has been awarded a $5.4 billion US government grant to cover its wage bill during April, May and June, and is seeking a further $4.6 billion in government loans.
It posted a quarterly pre-tax loss of 607 million on Wednesday (22 April), which chief executive Ed Bastian revealed came despite the carrier halving its operating costs over the past month to $50 million a day after placing nearly 40,000 employees on voluntary unpaid leave and grounding the majority of its fleet.
Delta now expects revenues for the three months to June to plummet 90% year-on-year and in a CNBC interview, Bastian said this would likely impact its ability to offer Virgin Atlantic any support.
"We are not in a position to invest any more in Virgin Atlantic," said Bastian, adding Delta was already at the ownership cap of 49% and any cash in the business would be required to protect itself first and foremost.
"I trust Virgin will work through its challenges with the government and with Richard," said Bastian, who also stressed that if Virgin Atlantic did have to enter administration, he was confident Virgin brand would re-emerge in aviation.
