By Bev Fearis, published 15/07/20
Virgin Atlantic has confirmed a rescue deal and a five-year business plan designed to see it through the pandemic crisis and back to profitability from 2022.
The £1.2 billion package includes support from its main shareholder, Virgin Group, and loans from outside investors, including a new investor, hedge fund Davidson Kempner Capital Management.
The deal will also see the airline defer £400 million owed both to Virgin Group and to fellow shareholder Delta Air Lines. Other creditors are expected to defer payments worth £450 million.
The airline had initially hoped to get emergency funding from the UK Government but ministers insisted it had to exhaust all other options before they would step in.
With support already secured from the majority of its stakeholders, the rescue deal is expected to come into effect late summer 2020.
CEO Shai Weiss said: “Few could have predicted the scale of the Covid-19 crisis we have witnessed and undoubtedly the last six months have been the toughest we have faced in our 36-year history. We have taken painful measures, but we have accomplished what many thought impossible.
“The solvent recapitalisation of Virgin Atlantic will ensure that we can continue to provide vital connectivity and competition to consumers and businesses in Britain and beyond. We greatly appreciate the support of our shareholders, creditors and new private investors and together, we will ensure that Virgin Atlantic can emerge a sustainably profitable airline, with a healthy balance sheet.
“Once our plan is approved, we will continue to focus on providing our customers with the service they have come to expect. Despite the incredible efforts of our teams, through cancelled flights and delayed refunds we have not lived up to the high standards we set ourselves, but we will do everything in our power to earn back their trust.
“While we must not underestimate the challenges ahead and the need to continuously respond to this crisis, I know that now, more than ever before, our people are what sets us apart. I have been humbled by their support and unwavering solidarity throughout. The pursuit of our vision continues and that is down to each one of them.”
Virgin Atlantic, which will restart passenger flying on July 20, said that by 2022 it plans to fly the same number of sectors as it flew in 2019 but with a streamlined fleet of 37 twin engine aircraft following the retirement of seven 747s and four A332s, with rescheduled delivery of outstanding A350s and A339s.