Virgin Atlantic Airways is drawing up plans for a fresh £400m funding injection as prospects fade for an initial public offering (IPO) of Sir Richard Branson’s flagship company.
Sky News has learnt that the transatlantic carrier is in talks with its shareholders and other financial stakeholders about raising additional capital to see it through the traditionally quieter winter months.
City sources said the amount being sought by Virgin Atlantic’s management was still being finalised, but would inevitably involve Sir Richard contributing another chunk of his fortune to the pandemic-battered airline.
It is expected to be announced by the end of the year.
This week, the Virgin Group tycoon sold $300m of stock in New York-listed Virgin Galactic – bringing the total he has raised from selling shares in the space tourism business during the pandemic to more than $1bn.
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Virgin Atlantic has been helped by the recent resumption of flights between the UK and US – the most profitable part of its business – but is braced for a difficult winter amid oil price volatility and other inflationary pressures.
Virgin Atlantic lost more than £650m last year as the COVID-19 crisis decimated the global aviation industry, and it expects to have made a further substantial loss in 2021.
Sky News revealed in August that Sir Richard was plotting a surprise listing on the London Stock Exchange as it pinned its hopes on a glut of demand for transatlantic travel.
However, despite positive talks with institutional investors, the need to return to normalised trading patterns has prompted them to shelve the plan indefinitely.
A significant improvement in the airline’s financial performance could yet pave the way for it to be revived, although that is unlikely for at least a year, according to one fund manager who held discussions with the company.
An IPO would have marked the first time since Virgin Atlantic’s launch in 1984 that it has sold shares to the public – and would almost certainly see Sir Richard relinquish overall control of the business.
Virgin Atlantic has sought several rounds of funding since the start of the pandemic, the most notable of which was a £1.2bn solvent rescue package in September last year which included £200m from Sir Richard, a loan from the American hedge fund Davidson Kempner Capital Management, and substantial contributions from creditors.
It has also landed hundreds of millions of pounds more – in multiple instalments – from the sale of several Dreamliner aircraft and a further loan from Virgin Group.
The latest financial injection includes payment deferrals and other creditor assistance as well as cash, according to a City source.
Virgin Atlantic, which is majority-owned by Sir Richard’s Virgin Group, was forced to place administrators on standby last year as the pandemic-induced crisis deepened.
Delta Air Lines owns the remaining 49%, with the company having scrapped a deal in late 2019 that would have seen Air France-KLM acquiring a 31% shareholding from Sir Richard.
Virgin Atlantic has nearly halved its workforce since the start of the pandemic – a move that has helped to drive significant longer-term cost savings.
Image: The company has been cushioned by Virgin Galactic’s stock price
The airline is not the only part of Sir Richard’s business empire which has felt the pressure of the pandemic.
The UK arm of Virgin Active also came close to collapse after putting a restructuring deal to landlords, lenders and shareholders.
His Virgin Voyages cruise operation finally embarked on its maiden journey during the summer after more than a year of setbacks.
Nevertheless, the billionaire tycoon has been cushioned by Virgin Galactic’s stock price.
A Virgin Group spokesperson said this week that the latest sale would allow him to support his “portfolio of global leisure, holiday and travel businesses that continue to be affected by the impact of the COVID-19 pandemic, in addition to supporting the development and growth of new and existing businesses”.
In July, Sir Richard flew aboard a Virgin Galactic trip to the edge of space, days before his even-wealthier rival, the Amazon founder Jeff Bezos, did the same on a Blue Origin vehicle.
Sir Richard is now taking Virgin Orbit – the commercial satellite launch group – public through a merger with a US-listed special purpose acquisition company (SPAC).
A Virgin Atlantic spokesman said the airline did not comment on speculation.
Tens of thousands of Vodafone users are reporting problems with their internet
The outages began on Monday afternoon, according to the monitoring website DownDetector, which reported more than 130,000 issues with Vodafone connections.
A spokeswoman for the company said: “We are aware of a major issue on our network currently affecting broadband, 4G and 5G services.
“We appreciate our customers’ patience while we work to resolve this as soon as possible.”
The company has more than 18 million UK customers, with nearly 700,000 of those using Vodafone’s home broadband connection.
Vodafone users vented their frustration on social media.
“It’s like Vodafone has just been wiped off the earth. Not a single thing works,” said one X user.
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Image: Vodafone users were shown an error message when trying to access the internet provider’s app
The Vodafone app also appeared to be down for users, with the company’s website briefly going down too.
The ‘network status checker’ on the website was also down, and when Sky News tried to test the customer helpline, it did not ring.
“There’s Vodafone down and then there’s Vodafone wiped off the face of the f***ing planet,” posted another X user.
Jake Moore, global cybersecurity advisor at ESET, said the outage shows how reliant we are on modern infrastructure like mobile networks.
“Outages will always naturally raise early suspicions of a potential cyber incident, though current evidence points more towards an internal network failure than a confirmed attack,” said Mr Moore.
“The sudden outage, combined with the inability to access customer service lines, mirrors classic symptoms of a distributed denial-of-service (DDoS) attack, where attackers overwhelm the network so the site or systems collapse.
“However, malicious or not, this once again highlights our heavy reliance on digital infrastructure, especially in an age where we increasingly depend on mobile networks for everything,” he said.
“Ultimately, resilience is essential, whether the cause is a direct cyberattack, a supply chain issue or a critical internal error.”
Lloyds Banking Group has set aside a further £800m to cover estimated costs associated with the car finance mis-selling scandal.
The bank said the sum took its total provision to £1.95bn.
It had been assessing the impact since the Financial Conduct Authority (FCA) revealed last week it was consulting on a compensation scheme, with up to 14.2 million car finance agreements potentially eligible for payouts.
The regulator had previously found that many lenders failed to disclose commission paid to brokers, which could have led to customers paying more than they should have between April 2007 and November 2024.
Eligible customers could receive an average of £700 each under the proposals.
Lloyds said on Monday that it would be contributing to the consultation to argue a number of points.
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It said: “The Group remains committed to ensuring customers receive appropriate redress where they suffered loss, however the Group does not believe that the proposed redress methodology outlined in the consultation document reflects the actual loss to the customer. Nor does it meet the objective of ensuring that consumers are compensated proportionately and reasonably where harm has been demonstrated.
“In addition, the approach to unfairness in the redress scheme does not align with the legal clarity provided by the recent Supreme Court judgment in Johnson, in which unfairness was assessed on a fact specific basis and against a non-exhaustive list of multiple factors. The Group will make representations to the FCA accordingly.”
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0:58
Car finance: ‘Don’t use a claims firm – here’s why’
Shares in Lloyds, which fell last week when the bank warned of a potential “material” increase in its provisions, gained more than 0.5% on Monday.
The estimated compensation figure came in below the sum some financial analysts had predicted.
The shares remain more 50% up in the year to date.
Another listed lender exposed to car loan mis-selling is also expected to raise the amount it has set aside.
Close Brothers, which has a £165m provision currently, saw its shares tumble 7% when it admitted an increase was likely once its analysis of the compensation consultation documents was completed.
Car finance makes up approximately a quarter of its total loan book.
The budget may still be more than six weeks away, but rumours of U-turns and changes are already in full swing.
Over the last few days, there have been multiple reports that those inside Whitehall are considering tweaks to the controversial inheritance tax (IHT) reforms on farms announced this time last year.
Plans to introduce a 20% tax on estates worth more than £1m drew tens of thousands to protest in London, many fearing huge tax bills that would force small farms to sell up for good.
Now there are reports the tax threshold could be increased from £1m to £5m (£10m for a married couple) – a shift that would remove smaller farms from being liable to pay.
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0:43
From February: Farmers continue tax protest
Senior figures in farming have long believed a rise could be the solution to save the smaller farms and it would satisfy most.
However under the proposals, the 50% relief on IHT would be removed for farms above the new threshold.
That means bigger farms, responsible for producing a large amount of produce in our supermarkets, could bear the brunt of the tax burden with the Treasury potentially increasing revenues.
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Two senior farming figures told me today that while a threshold increase is welcome, it does nothing to solve an “insolvable” problem.
Big farms have more land to sell, but then they become smaller farms and either produce less, or even divide up, to avoid the tax entirely.
Richard Cornock runs a small dairy farm in south Gloucestershire, which has been in his family since 1822.
Image: Richard Cornock plans to pass his farm on to his son
He hopes to pass it on to his son Harry, who is now 14 and training to become a farm manager.
“I’ve been under so much stress like most farmers worrying about this tax,” he said. “And I really hope they do push the boundaries on the thresholds, because the million pounds they propose at the moment is ridiculous.
“It’s been on my mind the whole time to be honest. I even looked into getting life insurance to insure my life and I can’t get it because I had a heart condition. And that was one way I thought I might be able to cover my kids…”
We paused our chat as he was too upset to continue – an illustration of the stress farmers like him have been under over the last 12 months.
Image: Tens of thousands from the farming community took part in protests in London. Pic: Reuters
The government says it won’t comment on “speculation” about any possible changes, but it has previously defended the IHT reform, saying most estates would not pay and that those who will be liable can spread payments over a decade.
Labour is under pressure to do something to appease the angry farmers, a rural vote that turned from the Conservatives at the last election.
I ask Richard whether any tweak or row back on IHT will restore faith in Labour?