- IATA/ICAO Code:
- Airline Type:
- Full Service Carrier
- London Heathrow Airport
- Year Founded:
- Shai Weiss
- United Kingdom
Virgin Atlantic chief executive Shai Weiss has called upon the government to “reverse course” on its mini-budget tax cuts as the pound continues to plummet.
During Tuesday’s press conference to announce the airline’s entry into SkyTeam, Weiss noted the growing costs hitting airlines and its economic impact on consumers.
“The weakness of the pound is hurting, not Virgin Atlantic, it’s hurting the economy and it’s hurting consumers because it’s actually fulfilling or fuelling the inflation vicious cycle that we’re in,” said Weiss on Tuesday.
The pound hit a record low of $1.03 on Monday following the release of Chancellor Kwasi Kwarteng’s mini budget on Friday.
Kwarteng’s proposed tax cuts, including the abolition of the 45% tax rate on incomes over £150,000, and a cap on household energy prices will require the government to borrow an additional £72 billion across the next six months. Investors remain skeptical, fearing that the decrease in public finances could undermine long-term growth for the United Kingdom. The pound currently sits at around $1.07.
Virgin’s criticisms were backed by IATA secretary general Willie Walsh who referred to Weiss’ statements as “well-founded,” adding that the market volatility poses significant challenges for UK-based airlines. Photo: Getty Images.
“The message to government is pretty clear in my mind. You need to take a more difficult decision to reverse the declining pound and ensure that this country is not left with unsustainable perceived weakness in international markets, which of course then impact interest rates, impact consumers, impact mortgage rates, impact the entire economy,” said Weiss.
Despite the downturn, Weiss assured that the airline is in a comfortable financial position, having converted its pound holdings into dollars earlier this year. Around 60% of the airline’s outgoing costs are in US dollars.
Weiss also expects an increase in US-based customers, having grown to around 35% during its partnership with legacy carrier Delta Air Lines. Weiss added the pound’s near parity with the dollar has effectively put UK tourism on sale for Americans.
“If you want to come and see the new King for half price, fly Virgin Atlantic,” joked Weiss.
No impact (yet)
Ryanair DAT chief executive Eddie Wilson has largely shrugged off financial concerns. Speaking to Reuters on Wednesday, Wilson confirmed that the low-cost carrier had not seen an impact on bookings in the United Kingdom, though he noted the potential to change.
The low-cost carrier has no plans to remove capacity in the United Kingdom, though Wilson noted that the option exists. Photo: Ryanair
“We’re not currently seeing an impact, but it would be foolish not to say that if interest rates are heading up and household bills are heading up, you’re going to have less money spent,” said Wilson.
Wilson believes Ryanair remains in a strong position, noting that the airline often gains passengers from full-service rivals during economic downturn.
“The UK is going to be challenging but we have more options and we are better planned than our competitors,” he added.
Ryanair Group chief executive Michael O’Leary voiced a separate opinion on the plummeting pound, slamming the mini budget’s proposals.
“I think what they have done in the UK is nuts,” said O’Leary during a Dublin press conference.
“You can’t have an energy guarantee that runs for two years. It’s completely uncosted. I think they could bankrupt the UK economy in the next two years,” he warned.
What are your thoughts on the recent comments from Virgin Atlantic and Ryanair? Let us know in the comments.
Source: Reuters, The Guardian, The Independent