Virgin Atlantic is seeking a £500 million bailout from the UK government comprising a loan and credit guarantee which would make it the first UK carrier to receive state aid in the current crisis.

Senior representatives of Virgin Atlantic met Rothschilds, the financial advisory group working with the government on support for aviation, late last week and talks with ministers and officials were due this week.

The carrier is seeking a loan to cover its fixed costs while flights are grounded and a credit guarantee to stop credit card companies withholding payments.


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Leading aviation manufacturers Rolls Royce and Airbus have written to UK transport secretary Grant Shapps to support Virgin Atlantic’s case.

Airbus general counsel and board member John Harrison called on the government to “do it all it can to support Virgin”, and Rolls Royce chief executive Warren East told Shapps: “Virgin’s business is of significant importance to Rolls-Royce, our extensive UK supply chain and manufacturing operations.”

Heathrow airport has also written to the Department for Transport in support.

The government is set to demand any loan at least be matched by funds from existing investors and is expected take a stake in the airline to reflect the extent of taxpayers’ liability.

Virgin Group chairman Sir Richards Branson offered to put $250 million into Virgin Group businesses last week, with more than $200 million to go to the airline.

Delta Air Lines, which holds a 49% stake in Virgin Atlantic, is understood to be prepared to provide an additional $100 million subject to conditions attached to a $58-billion US government bail-out of American carriers.

Virgin Atlantic declined to comment. However, an aviation industry source said: “The ball is now in the government’s court. It remains to be seen what they deem appropriate [and] what conditions are attached.”

Business newspaper the Financial Times reported ministers are concerned about the political ramifications of aiding Virgin.

It quoted a government source as saying: “There are perennial questions over Richard Branson’s tax affairs. The optics aren’t great.”

Any bailout of Virgin Atlantic can be expected to trigger demands for equal treatment from other carriers. It could also lead to legal challenges from rivals.