Virgin Atlantic set to announce £1bn rescue deal
Virgin Atlantic is reportedly finalising a £1bn rescue deal that would save thousands of aviation jobs in the UK.
The airline, founded by Richard Branson, is finalising a deal to release tens of millions of pounds in credit-card cash that was being withheld.
Sky News last night reported that Virgin was trying to resolve a demand for collateral from payment processing firm First Data.
The report claims chief executive Shai Weiss is looking to moderate the requests that it holds on to all the cash generated by future bookings to protect the risk of Virgin’s collapse.
A solution would then pave the way for hedge fund Davidson Kempner Capital Management to inject £200m of debt into Virgin.
However, it will not require shares in the airline with Branson and Delta Air Lines retaining their 51 per cent and 49 per cent respective holdings.
The Virgin Group recently completed the sale of 37.5m shares in Branson’s space tourism venture, Virgin Galactic, and intends to use some of the proceeds to help Virgin Atlantic.
Virgin Atlantic recently announced a restructuring of its operations in a bid to cut costs. It is cutting almost a third of its workforce – 3,150 jobs – and is stopping flights from London Gatwick.
The airline is also cutting the size of its fleet and retiring older plans like its Boeing 747.
Branson’s firm had pushed for direct support from the government, but the Chancellor in April said state aid would be available to airlines “only as a last resort”.
Virgin Atlantic declined to comment.