Ed Bastian, the Chief Executive Officer of Delta Air Lines, has today announced that his carrier would not be offering any kind of support to alleviate the financial situation of Virgin Atlantic. Delta Air Lines owns 49% of Virgin Atlantic, yet due to a recent $534m Q1 loss isn't in a position to help Virgin Atlantic.

Is it worth the sacrifice?

Richard Branson had published an open letter to Virgin Atlantic employees on Tuesday in which he mentioned that, without any financial support from the UK government, the airline would collapse.

Since the ownership of the airline is divided almost equally between Delta Airlines and the Virgin Group, aviation analysts had expected that there might be some sort of help from the US-carrier. Above that, Delta has, in the last month, been successful in cutting costs and also been awarded a US$5.4 bn grant by the US government.

However, Delta recorded a loss of $534 million in the first quarter of 2020. Hence, any kind of support to Virgin Atlantic might put at stake its own chances of surviving this crisis.

Delta Air Lines grounded planes
Delta plans to fly nearly three million passengers this weekend. Photo: Getty Images

Ed Bastian elaborated more on this in an interview with CNBC:

"Well, on the Delta front, we are not in a position to invest any more money into Virgin. We’re already at the ownership cap of 49%. And candidly with the cash that we need to protect our own business, that’s where our focus is. I trust Virgin will work through its challenges with the government and with Richard."

Nevertheless, Mr. Bastian was confident that this would not be the end of Virgin Atlantic. He insisted that although the airline might have to undergo an administration process, it will re-emerge in the British airline industry.

The news comes after Virgin Australia, in which Richard Branson has a 10% ownership, went into administration. The airline had repeatedly made requests to the Australian government for financial support. However, its attempts were unsuccessful.

What are the possible options?

Apparently, a £500 million (US$615 million) loan request from Virgin Atlantic has not been able to convince the British government. It is believed that the government was not satisfied with the efforts the airline had made to obtain finances using alternate methods. This caused Richard Branson to point out government bias as it had recently approved a £600 million (US$738 million) loan to easyJet.

easyJet grounding grounded aircraft

The UK government had last month announced that it might provide individual financial support to the airlines of the country only if no other solution was found. As of now, it is unclear if it will make special accommodations to support Virgin Atlantic.

Have you flown on Virgin Atlantic? Do you think Delta or the British government should intervene? Let us know in the comments.