Virgin Atlantic secures £1.2bn rescue deal after months of turbulence
Sir Richard Branson’s Virgin Atlantic has secured a £1.2bn rescue deal after nearly four months of uncertainty over its future.
The deal, which Sky News reported could be unveiled this afternoon, will save thousands of jobs at the embattled carrier.
In a statement, chief executive Shai Weiss hailed the deal, saying that 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”.
As part of the package, Virgin Atlantic is set to be one of the first companies to use a new court process introduced by the government in order to improve restructuring processes during the coronavirus pandemic.
The airline confirmed it had now secured the backing of payment processing platform First Data, clearing the way for the package to be approved.
The total package is made up of a number of sources, with Branson’s Virgin Group set to put in £200m, while hedge fund Davidson Kempner will lend £170m.
In addition, the company’s shareholders – parent company Virgin and US carrier Delta – will defer around £400m in fees.
The additional funding will be secured through further deferrals from lessors and payment firms worth £450m, as well as a £280m cost savings plan being drawn up by Weiss.
The airline said the deal would enable it to return to profitability in 2022.
Along with many airlines, Virgin was devastated by the coronavirus crisis, with the carrier forced to ground almost all of its flights for nearly four months.
As a result, the company announced that it would slash a third of its workforce – 3,550 jobs – and quit its base at Gatwick Airport.
It had been in negotiations with Treasury officials over a £500m bailout, but the funding failed to materialise.
It is set to begin flying again from next week, with further services slated to operate from August.
However, Virgin Atlantic warned that it did not expect flying to return to pre-coronavirus levels until 2023.