Virgin to spend £1bn on planes

Jun 23 2009 by Iain Laing, The Journal

VIRGIN Atlantic Airways owner Richard Branson announced he was ordering £1bn worth of new planes as he urged the Government not to bail out British Airways.

British Airways, which has more than 700 staff at its Newcastle call centre and Newcastle International Airport, quickly stressed it was opposed to state aid as it denied rumours that it had been in talks over government support as its finances plunged.

Billionaire Branson, who has just ordered 10 Airbus SAS A330 aircraft to handle further expansion of transatlantic services, said he had no plans to bid for the carrier as it has too many liabilities.

“If they do go bust the Government should let them go bust,” he said.

“Just because they were once the flag carrier doesn’t mean the Government should come in and bail them out.”

British Airways shares fell as much as 8.5%, the biggest drop in a month is rumoured to be considering the sale of its OpenSkies subsidiary only a year after acquiring it.

Chief Executive Officer Willie Walsh is cutting jobs and curbing pay after the airline reported a £401m loss for the 12 months ended March 31, its first full-year deficit since 2002.

“Willie Walsh is saying they are in a fight for survival and asking his staff to work for a month without pay,” Branson said. “These are obviously fairly desperate measures.” Asked if BA would survive the slump, he said: “I really don’t know.”

It is looking to reduce its 40,600-strong workforce by a further 3,000 on top of the 2,500 jobs which have already been cut since last summer. Staff pay has been frozen.

Virgin and BA both operate out of Heathrow on the fiercely competitive transatlantic routes and Branson has long been a thorn in BA's side.

Branson was speaking shortly before a special flight to New York marking his airline's 25th anniversary. He will be joined on the flight by cricketers Kevin Pietersen and Ian Botham, as well as fashion designer Vivienne Westwood.