Richard Branson pours money into Virgin Atlantic as tourism prospects darken

Sir Richard Branson has poured money into Virgin Atlantic in a £400m funding round to support the airline as the travel sector’s prospects darken.

Branson’s Virgin Group, which owns a 51 per cent stake in the airline, has invested £204 million, while US airline Delta Air Lines has committed £196 million, maintaining its 49 per cent stake in Airline British.

The new funding agreed on Monday comes as the emergence of the coronavirus variant Omicron and Travel restrictions Many parts of the world have begun to hold back the fragile recovery of tourism.

Virgin Atlantic chief executive Shai Weiss told the Financial Times bookings for transatlantic flights have increased by 30 to 50 percent following the explosion of the new variant and travel restrictions.

“This has had an impact, and I would say it is reducing demand physically,” he said.

The disruption comes at a difficult time for Virgin Atlantic, which had hoped the full reopening of its transatlantic cruise line on November 8 would mark the beginning of a full recovery. total number of passengers.

The airline’s long-haul model has taken its toll, and the company has had to raise cash several times over the past two years.

But Weiss said he expects £400m to be a “long-term solution” to the company’s financial problems and profitability to come in 2023.

“I don’t like predicting the future, but this is meant to establish companies for long-term success. . . We’ve been doing pretty well over the past few months and especially since opening the border with the US,” he said.

Virgin has raised nearly £2 billion in funding from the private sector because, unlike some of its major rivals, it was not given access to government funds after ministers denied a bailout request.

Airline executives had hoped to inject new money through a public output earlier this year, but shelved those plans for now.

Some industry executives and analysts have privately questioned the listing’s ability to succeed, given the uncertainty facing the travel industry.

Weiss, who will not be included in the viable list, said Virgin Group and Delta shareholders have shown “solid support” throughout the crisis.

“They don’t have to fund Virgin Atlantic. This is a testament that our story is a powerful one,” he said.

Delta said on Monday it would maintain its stake in the UK carrier at 49 per cent, even as it shrinks its stake in Airlines in Latam, the largest carrier in Latin America and Aeromexico.

It formed a joint venture with Virgin Atlantic in 2013 to improve its service on lucrative routes between the US and UK, particularly New York to London’s Heathrow. Delta’s total investment in all three airlines will total about $1.2 billion.

“Investing in our partners now – even as we continue to navigate the pandemic – is the right choice to support Delta’s long-term strategy,” said Dan Janki, chief financial officer. “.

Additional reporting by Claire Bushey in Chicago

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