Virgin Atlantic Lands £1.2 Billion Rescue Package

Virgin Atlantic has managed to secure its financial future thanks to a £1.2 billion ($1.5 billion) package that will assist the airline to navigate away from the financial turbulence caused by the COVID-19 pandemic, saving the company from collapsing into administration.

The news will bring relief to many of its employees who have managed to keep their jobs after the airline reduced its workforce by 3,150, roughly a third of its total workforce.

Virgin, which began operations in 1984, was one of the hardest-hit airlines across Europe as the carrier operates only long haul destinations to business and holiday destinations across the world. Prior to the COVID-19 outbreak, the airline was operating out of Heathrow, Gatwick and Manchester airports with a fleet comprising of the Airbus A330, A340, A350 and Boeing 747 and 787.

As part of a restructuring program based on the realization that demand may not return to pre-pandemic levels for some time, Virgin took the swift decision to retire the A340 and 747 quad-jets from its fleet. By Q1 2022, the airline will have retired seven 747s and 4 A330-200s.

Also, the airline decided to abandon Gatwick airport for the time being and concentrate future operations out of Heathrow and Manchester airports. Virgin will retain its Gatwick slot portfolio to “protect opportunities for future growth.”

Although Virgin Atlantic had stopped passenger operations, it has managed to maintain a flying program comprising of cargo-only flights to certain destinations in the United States and Asia utilizing some of its 787-9s.

A spokeswoman for the airline said: “Virgin Atlantic has been working on a comprehensive, solvent recapitalization of the airline to ensure that we can continue to provide essential connectivity and competition to consumers and businesses in Britain and beyond.

“Since the very beginning of the COVID-19 crisis, we have made difficult decisions and taken decisive action to reduce our costs, preserve cash and protect as many jobs as possible.

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

According to Sky News, Virgin Group, which owns the majority stake in the airline, will provide £200 million ($250 million) in cash. Davidson Kempner, a global hedge fund, will lend the airline £170 million ($212 million).

Delta Air Lines, the other shareholder, alongside Virgin Group will both defer approximately £400 million (500 million) in fees whilst hundreds of millions of pounds more secured in the form of deferrals and advances from payments companies and aircraft lessors.

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 recapitalization 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 canceled 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.”