Virgin Atlantic Secures Rescue Deal
Sir Richard Branson’s Virgin Atlantic is on the brink of announcing a £1.2bn rescue deal after nearly four months of uncertainty over its future. The deal, which Sky News reported could be unveiled this afternoon, will save thousands of jobs at the embattled carrier. As part of the package, Virgin Atlantic is set to be one of the first companies to use a new court process introduced by the government in order to improve restructuring processes during the coronavirus pandemic.
It is understood that the airline has now secured the backing of payment processing platform First Data, clearing the way for the package to be approved. The total package is made up of a number of sources, with Branson’s Virgin Group set to put in £200m, while hedge fund Davidson Kempner will lend £170m.
In addition, the company’s shareholders – parent company Virgin and US carrier Delta – will defer around £400m in fees. The additional funding will be secured through further deferrals from lessors and payment firms, as well as a £200m cost savings plan being drawn up by chief executive Shai Weiss.
If announced, the deal will enable the transatlantic flier to continue operating for the medium term. Along with many airlines, Virgin was devastated by the coronavirus crisis, with the carrier forced to ground almost all of its flights for nearly four months. As a result, the company announced that it would slash a third of its workforce – 3,150 jobs – and quit its base at Gatwick Airport.
It had been in negotiations with Treasury officials over a £500m bailout, but the funding failed to materialise. It is set to begin flying again from next week, with further services slated to operate from August.
