Virgin Atlantic files for US bankruptcy protection
Virgin Atlantic has filed for bankruptcy protection in New York amid fears it will run out of cash in September if a planned rescue deal were to fail.
The airline…
Virgin Atlantic has filed for bankruptcy protection in New York amid fears it will run out of cash in September if a planned rescue deal were to fail.
The airline is 49 per cent owned by US carrier Delta with the remainder owned by Sir Richard Branson’s Virgin Group. Virgin Atlantic filed under Chapter 15 of the US Bankruptcy Code, which facilitates the protection of investment and preservation of employment protection for its US assets against creditors. The action will have no direct implications for staff or passengers’ future bookings or awaited refunds.
The bankruptcy protection filing is in addition to proceedings filed in a British court, where Virgin Atlantic obtained this week to convene meetings of affected creditors to vote on the plan on August 25. A Virgin Atlantic spokesperson said that the company was pursuing a ‘solvent restructuring’ under British law.
Filing comes just days after Virgin Galactic space and aircraft reveals
The company’s US filing comes just days after initial unveiling of Virgin Galactic’s high speed aircraft and space vehicle cabin interior. Virgin Galactic aircraft could start operating in 2021, paving the way for its first commercial passenger flights .
Last month, the airline announced it has secured a £1.2bn bailout deal after securing the backing of key financial stakeholders and investors. The protective move in the US has no direct implications for staff or passengers.
The transatlantic airline, which only operates long-haul flights, has been particularly badly hit by border restrictions and quarantine measures put in place due to the coronavirus pandemic. The carrier has also been handing back hundreds of millions of pounds in passenger refunds.
Airline seeks approval for £1.2bn restructure deal
In May, Virgin Atlantic announced it was set to cut more than 3,000 jobs and would end operations at London Gatwick Airport to cut costs, consolidating its operations at Heathrow. The airline is seeking approval for a five-year, £1.2bn restructuring deal, including fresh funding from investors and the wider Virgin Group, and renegotiations on aircraft leases.
The court filing said: “The ongoing Covid-19 pandemic has had an adverse impact on not only [the airline], but the aviation industry as a whole, occasioning the near-shutdown of the global passenger aviation industry.
“A more comprehensive recapitalisation is necessary to secure the future of its business and ensure that it is able to meet its liabilities and funding requirements beyond mid-September.”
Virgin Australia went into administration in April with more than £2.5bn of debts.
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