Virgin Atlantic hails ‘significant milestone in safeguarding its future’ after creditors vote to approve £1.2bn bailout
Virgin Atlantic hailed ‘a significant milestone in safeguarding its future’ after creditors voted to approve a £1.2billion bailout.
The airline, which is closing its Gatwick airport base and cutting 3,550 jobs, said that shareholders, banks, aircraft owners and suppliers owed money had backed the plan.
The deal involves a £400m cash injection including £200m from its main shareholder, Sir Richard Branson’s Virgin Group.
Strapped for cash: The airline had warned it would run out of cash by September without a deal
The airline had warned it would run out of cash by September without a deal.
The company will now need approval from the High Court in London on September 2.
‘Today, Virgin Atlantic has reached a significant milestone in safeguarding its future, securing the overwhelming support of all four creditor classes, including 99 per cent support from trade creditors who voted in favour of the plan,’ it said.
Like other airlines, Virgin Atlantic has been hit hard by the collapse in demand caused by the coronavirus pandemic.
British Airways is cutting 12,000 positions while American Airlines yesterday announced plans to get rid of 19,000. Other operators including Easyjet, Ryanair, United Airlines and Lufthansa are also shedding employees.
The £1.2billion rescue involves only private funds after Branson’s pleas for a Government bailout fell on deaf ears.
Creditors are being asked to accept 20 per cent less than they are owed, and for the repayments to be rescheduled.
The airline insists that without a ‘solvent recapitalisation’ its directors would have no choice but to place it into administration, which would ‘result in a poor outcome for the company’s creditors’.
Virgin Atlantic has said that it does not expect demand for air travel to return to pre-pandemic levels until 2023.