Virgin Atlantic has announced it has secured a £1.2 billion/US$1.5 billion recapitalisation package to safeguard its future following crippling damage from the coronavirus (Covid-19) crisis.

The recapitalisation deal, pre-empted by several UK national newspapers today ahead of the announcement today (14 July), will help to safeguard jobs, although £280m worth of cost savings will need to be made per year.

Financing for the airline founded by tycoon Richard Branson will be delivered over the coming 18 months as part of a five-year restructuring plan with support from shareholders Virgin Group and Delta.

This will go through a court-sanctioned process and expects to come to fruition in late summer.

It was widely reported that Virgin Atlantic had previously called on the UK government for support, but the request was turned down.

FLIGHT TO RESTART THIS MONTH

The package includes a £600m injection from shareholders, including £200m from Virgin Group, and the deferral of £400m worth of shareholder deferrals and waivers.

Investment management firm Davidson Kempner Capital Management LP will pledge £170m of secured funding and creditors will accommodate the airline with more than £450m worth of deferrals.

Virgin Atlantic will restart passenger flights on 20 July having shed 3,550 jobs in May to stay solvent.

Flights will operate from London Heathrow and Manchester Airports. The airline closed its London Gatwick base, but retains slots for future opportunities.

Shai Weiss, CEO, Virgin Atlantic commented: “Few could have predicted the scale of the Covid-19 crisis we have witnessed and undoubtedly, 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.

 

“We greatly appreciate the support of our shareholders, creditors and new private investors and together, we will ensure that Virgin Atlantic can emerge a sustainably profitable airline, with a healthy balance sheet.

“Once our plan is approved, we will continue to focus on providing our customers with the service they have come to expect. Despite the incredible efforts of our teams, through cancelled flights and delayed refunds we have not lived up to the high standards we set ourselves, but we will do everything in our power to earn back their trust.

“While we must not underestimate the challenges ahead and the need to continuously respond to this crisis, I know that now, more than ever before, our people are what sets us apart. I have been humbled by their support and unwavering solidarity throughout. The pursuit of our vision continues and that is down to each one of them.”