We should take heart from BP’s £5.1 billion second-quarter loss, accompanied by a halving of its dividend. What’s good about that? Nothing — except that the loss reflects a write-down of the value of oil and gas assets that shifts the company to a more realistic footing for an extended period of low oil prices and reduced demand, indicating resilience rather than impending doom. In recent times, BP has lived through Deepwater Horizon, history’s most politicised oil-rig disaster, and extricated itself from TNK-BP, history’s nastiest Russian joint-venture. It operated when oil was below $20 a barrel in 2001 and when it hit $147 in 2008. It has plans to achieve net zero carbon by 2050. And it’s still paying half a dividend when many companies are paying none. It is, I suggest, a beacon of the survival instinct that will see most of big capitalism through this crisis.
Branson against the odds
I say ‘most of’ in that last sentence because I’m less confident for the airline sector, facing a catastrophic absence of passengers and scant hope of revival before 2023. But even here, deals are on the table. For IAG, parent of British Airways, one possible lifeline is a capital injection from Qatar — and it won’t surprise me if HM Treasury eventually steps in as a shareholder to underpin what’s still seen as the national flag-carrier. By contrast, Virgin Atlantic — owned by Sir Richard Branson and Delta Airlines of the US — can’t expect a taxpayer bailout, has warned that cash is running out, and filed for a form of bankruptcy in New York on Tuesday. But its wily founder is still working on a £1.2 billion rescue plan to renegotiate plane leases and debt as well as inject new equity. After 50 years in the capitalist game, Branson may yet beat even these impossible odds.
Comments
Join the debate for just £1 a month
Be part of the conversation with other Spectator readers by getting your first three months for £3.
UNLOCK ACCESS Just £1 a monthAlready a subscriber? Log in