Virgin Atlantic £1.2bn rescue package gets court approval
Virgin Atlantic’s £1.2bn bailout deal was approved in the High Court this morning, all but sealing the struggling carrier’s survival after months of turbulence caused by coronavirus.
The bailout deal was given the backing of an overwhelming majority of Virgin’s creditors last week, with a court sanction needed for the deal to go ahead.
Judge Richard Snowdon gave the deal his seal of approval, paving the way for the restructuring process to begin on Friday.
A separate procedural hearing will take place in the US tomorrow to ensure the deal is recognised there, the very last step in the process.
“Achieving this significant milestone puts Virgin Atlantic in a position to rebuild its balance sheet, restore customer confidence and welcome passengers back to the skies, safely, as soon as they are ready to travel”, a company spokesperson said.
Had the rescue package not been approved, Virgin Atlantic had warned that it would run out of cash by the end of the month.
The new funding will give the Sir Richard Branson-founded carrier enough cash to operate for the next 18 months, and forms part of a five-year plan to return the airline to profitability.
The deal, which was agreed in July, will see shareholders provide £600m in support, with parent firm Virgin providing £200m.
Investment firm Davidson Kempner Capital Management will also provide £170m in financing, while creditors have also supported the airline with over £450m of deferrals.
The last six months have been harrowing for the global air travel industry, with airlines forced to ground planes, cancel flights and make sweeping job cuts to cope with the sudden plunge in demand.
Virgin Atlantic, which had an appeal for a £500m bailout turned down by the government back in April, will cut 3,500 jobs as a result of the pandemic.
It will also quit its base at Gatwick Airport in West Sussex.