Richard Branson has hit a nerve with his request for a £ 500 million bailout for Virgin Atlantic. He is portrayed as a tax avoidant waster, living the great life in the Caribbean with a reputation for treating women carelessly.
All of this is true, and Virgin Money’s rescue of Northern Rock after the financial crisis cost the taxpayer £ 480 million, according to the National Audit Office.
None of this, however, should disqualify Virgin Atlantic from a bailout. The 51% -owned carrier of Branson (the remaining 49% owned by Delta, based in the United States) has transformed air travel into fashion, and for several decades, Virgin has kept BA’s feet on fire on transatlantic routes and long haul.
Fundraiser: Sir Richard Branson hit a nerve with his £ 500m bailout request for Virgin Atlantic
It has transformed entertainment and cabin service and, on the busiest American routes, is competitive in price. I say this as one of the writers who avoided the famous and watered inaugural or festive thefts where the big man stands.
Virgin Atlantic is a British employer with full-time staff of over 8,500 people whose livelihoods are directly threatened by Covid-19.
In the United States, all carriers have been bailed out regardless of complex ownership structures and past sins when many have gone bankrupt to get rid of their onerous obligations, including pensions.
As part of Trump’s bailout, Delta has already received £ 4.3 billion in “free money” and has just announced that it will seek an additional $ 3.7 billion in loan programs .
The goal of rescuing government businesses is to subdue the British economy and bring back normally profitable businesses. There shouldn’t be a special deal for Branson, but its British Virgin Atlantic employees should be entitled to authorization funds and the group to apply for credit under the Bank of England’s financing plan for the big enterprises.
If this does not work technically, the government should be ready to take a temporary stake as it has done with the banks.
Branson has created something good. There will be no economic benefit if the transatlantic routes are largely reduced to a code-sharing BA-American alliance against a United Airlines duopoly.
The coronavirus business interruption loan (CBILS) program has long been the most disappointing effect of the government’s sweeping bailout for trade.
Even if, as we learn today, loans now exceed £ 2 billion, it will be deeply disappointing and the long-term impact of its failure on the economy could be catastrophic.
Small and medium-sized businesses are the backbone of the UK’s free and entrepreneurial market economy, and we allow them to disappear under the waves at our own risk.
In the blame game, it’s always good to have a target. The hastily created plan is full of holes, including the dependence on the well-intentioned but neophyte British Business Bank, which has no experience of Kfw in Germany or the Small Business Administration in the United States.
Then there are the banks themselves. Some, including Natwest, have risen to the challenge. Others, like Lloyds and Barclays, have been far too rigid.
As I understand it, Santander received some 15,000 applications and in just a few weeks it only managed to process 2,000.
Blaming the client is one of the excuses used. Micro-enterprises, it is argued, are not used to borrowing, so lack business and other plans, which makes them dangerous.
Banks also have reservations about loans to small loan applicants due to consumer protection and want to avoid another RBS Global Restructuring Group-style debacle.
Three fundamental problems can be identified. The bureaucracy is too complex, the banks are unhappy with the 20% unsecured risk, and many small borrowers are inexperienced.
Everything could be settled quickly if the government assumed 100% of the risk and turned loan requests from smaller borrowers into grants. Expensive, but necessary.
Will Netflix’s 15.8 million additional Covid-19 subscribers be canceled when and if the lockout ends?
Some might, but I suspect they will find the flexibility and global variety of productions, such as the compelling and addictive brilliant Israel-Palestine thriller series Fauda.
Even those who hate the idea of paying come back. Maintaining production standards and originality, if the pandemic persists, could prove difficult.
But the real threat concerns traditional broadcast models – streamers are on top.
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