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Virgin Atlantic boss: UK government should reverse course if pound tumbles

Virgin Atlantic has urged the government to consider a “reversal” after the mini-budget as the collapsing pound sends costs for airlines skyrocketing.

Chief Executive Shai Weiss said the economic situation was “hurting consumers” and the airline was deeply concerned, although it believed its own bookings would hold up.

The troubles of the falling pound will be the latest woes for the UK flight and travel industry, which has been battling Covid travel restrictions and a year of disruption as airport labor shortages have ravaged flights.

Weiss said Prime Minister Liz Truss should make a “difficult decision” to boost the pound after the slump from Chancellor Kwasi Kwarteng’s announced tax cuts on Friday – which are to be financed by additional government bonds.

Speaking at a press conference in London, he said: “Pound’s weakness hurts, not Virgin Atlantic, it hurts the economy and consumers because it actually fulfills or fuels the inflationary cycle we are in.

“The message to the government is pretty clear to me. They have to make a tougher decision to reverse the pound’s decline and ensure this country is not left with an unsustainable perceived weakness in international markets which then of course impacts interest rates, consumers, mortgage rates and the wider economy. “

He added, “If this is the answer to your decisions…thinking about what to do involves reversing.”

The comments were backed by an old Virgin rival, former British Airways chief Willie Walsh, now general secretary of global airline Iata.

Walsh said Weiss’s “criticism was well founded”. He said: “When you get volatility like the one you’ve seen over the last few days it definitely makes it a lot harder for UK based airlines with revenue in sterling and cost bases in dollars – for all airlines there.”

He added: “It’s going to be a challenging time there. It is very frustrating to see these knee-jerk reactions from governments trying to endear themselves to voters by making decisions that have massive economic implications for companies. I’m not sure all of these guidelines have been carefully thought out.”

Virgin had converted its sterling holding into dollars a few months ago, Weiss said, a “smart financial position” that is now worth a significant amount of money and protected it from the currency shock. About 60% of spending is in dollars, mostly aircraft purchases and jet fuel.

However, he warned the government: “You need to stabilize the economic affairs of this country – we have the worst performing currency in the G7; we don’t have to be at the bottom.”

Sales to US-based customers have grown to about 30-35% of Virgin Atlantic’s total revenue since the joint venture with Atlanta-based Delta, Weiss said, and he expects rising bookings from the US to cushion the airline would.

With the pound nearly equal to the dollar, Weiss said the UK is “on sale” for inbound tourists. “If you want to come and see the new king for half price, fly Virgin Atlantic,” he added.

However, Weiss insisted that Virgin Atlantic’s “fundamentals are solid” despite Sir Richard Branson’s airline on the financial brink during the pandemic before being saved by a huge cash injection from its shareholders.

Virgin and BA retired their largest aircraft, while Norwegian balked at the transatlantic market, which accounts for 70% of Virgin’s revenue. The company plans to launch a new route from Heathrow to Tampa next month with its new A330neo aircraft.

After years of speculation, Virgin has announced that it will join the SkyTeam airline alliance. The airline said it will open more routes, benefits and lounges for its customers.

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