Virgin Atlantic has been rescued after creditors stepped in to support the airline. Virgin filed for bankruptcy protection in early August. The London-based carrier implored the UK Government to intervene but ministers rejected the appeal.
Yesterday it was announced Virgin Atlantic reached a significant milestone in safeguarding its future after it secured the support of all four creditor classes who voted on its restructuring plan.
This is based on a five-year business plan.
With the support of shareholders Virgin Group and Delta, new private investors and existing creditors, it “paves the way for the airline to successfully rebuild its balance sheet and return to profitability,” said Virgin in a statement.
The recapitalisation will deliver a refinancing package worth roughly £1.2billion over the next 18 months.
This is in addition to the self-help measures already taken, including cost savings of around £280million per year and circa £880million rephasing and financing of aircraft deliveries over the next five years.
An English High Court hearing is set to take place on September 2 to sanction the Restructuring Plan.
A Virgin Atlantic spokeswoman said: “In order to complete the private-only, solvent recapitalisation of the airline, our Restructuring Plan is going through a court-sanctioned process under Part 26A of the UK Companies Act 2006.”
“Today, Virgin Atlantic has reached a significant milestone in safeguarding its future, securing the overwhelming support of all four creditor classes, including 99 percent support from trade creditors who voted in favour of the Plan.”
The spokeswoman continued: “The next step is an English High Court hearing on September 2 to sanction the Restructuring Plan.
“We remain confident that the plan represents the best possible outcome for Virgin Atlantic and all its creditors and believe that the court will exercise its power to sanction the Restructuring Plan, at a hearing scheduled on September 2.
“A US Chapter 15 procedural hearing will follow on September 3, ensuring Virgin Atlantic’s Restructuring Plan is recognised in the US, paving the way for the £1.2billion private only, solvent recapitalisation of Virgin Atlantic.
“Achieving this milestone puts Virgin Atlantic in a position to rebuild its balance sheet, restore customer confidence and welcome passengers back to the skies as soon as they are ready to travel.”
Rory Boland, editor of Which? Travel, commented on the announcement and how it could affect customers.
“Virgin Atlantic has been one of the worst operators for processing refunds for cancelled flights over this period, he said.
“Which? [has heard] from countless passengers who have painstakingly been trying to claw their money back from the airline.
“With this rescue deal, it now has absolutely no excuse for continuing to leave its passengers out of pocket for months on end, and must immediately return any outstanding refunds to customers if it is to have any chance of regaining their trust.”
Virgin’s bailout news follows the launch of the company’s free insurance.
The complimentary coronavirus global insurance cover will be available on all new and existing bookings and applies automatically to all flights booked with Virgin Atlantic.
The policy is designed to complement existing travel insurance and provide additional peace of mind for upcoming trips.
In the event that you or someone else on your booking becomes ill with coronavirus while travelling, Virgin Atlantic COVID-19 Cover will ensure related costs are covered.
This will apply no matter how long the trip is or even if you’re visiting another destination on the same overseas trip.
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