Virgin Atlantic announced on Friday the completion of a private-only £1.2 billion recapitalization of the airline and holiday business. The carrier’s restructuring plan has now been approved by the English High Court under Part 26A of the UK Companies Act of 2006.
Virgin Atlantic announced the completion of their solvent recapitalization plan with a £1.2 billion private-only capital infusion, and approval by the English High Court under Part 26 A of the UK Companies Act of 2006, including formal recognition in the US court. The final step in the legal process places the carrier on firm footing to emerge in the post-pandemic era as a sustainably profitable airline. Today’s milestone will allow Virgin Atlantic to rebuild their balance sheet, restore customer confidence and welcome guests safely onboard once again, when they are ready to travel. The carrier will now implement their Restructuring Plan with the support of the Virgin Group. Delta Air Lines, existing creditors and new private investors. In Friday’s announcement, Virgin Atlantic’s CEO, Shai Weiss said,
“Together, we have achieved what many thought impossible and that is down to the efforts and sacrifices of so many across the Company. The completion of the private-only, solvent recapitalization of Virgin Atlantic removes much of the uncertainty we faced and represents a major step forward in our fight for survival. We greatly appreciate the support of our shareholders, creditors and new private investors and together, we will ensure that the airline continues to provide vital connectivity and competition.
“Now we must focus our efforts on securing our long-term future, by ensuring that Virgin Atlantic not only survives but thrives as passenger demand returns. It’s clear that the introduction of passenger testing is the only way to enable the removal of travel restrictions and open up flying to key markets, while protecting public health. We will continue to work with our industry partners to press for urgent government action.
“After the sacrifices so many of our people have made, further reducing the number of people we employ is heart-breaking but essential for survival. I truly hope that as demand returns, we will see many members of our team returning to us. The unique spirit of our people, the passion we have for our customers and each other, and the drive to do things better has been tested but not broken. There will be a recovery, the timing and speed of which is uncertain. When our customers return to the skies, we will be there to welcome them onboard with belief in our future. It is then that we will appreciate that everything we have done, painful to so many, was worth it.”
Virgin Atlantic’s recapitalization plan includes a £1.2 billion refinancing package over the next 18 months, annual cost saving measures of £280 million, and an £880 million fleet CAPEX reduction over the next five years. Additionally, shareholders Virgin Group and Delta will provide approximately £600 million over the life of the plan, including a £200 million investment from Virgin Group and around £400 million in deferred stakeholder payments. The airline has the continued support of credit card merchant providers including Lloyd’s Cardnet, First Data and American Express. The global investment firm Davidson Kempner Capital Management is providing £170 million in secured financing, while the carrier’s largest creditors and suppliers will contribute an additional £450 million by way of deferrals.
Source: Virgin Atlantic