Virgin Atlantic’s £1.2-billion (US$1.6-billion) restructuring plan was approved Wednesday by the High Court in London, allowing the international airline to continue rebuilding its operations after the devastation caused by the coronavirus pandemic.
The deal, which has already been approved by creditors, must now be confirmed in the courts in the United States.
The airline announced the refinancing package in July to ensure its survival after passenger numbers dropped 98 per cent in the second quarter. It includes £600 million of support from the airline’s owners, Virgin Group and Delta Airlines, £450 million of deferred payments to creditors, and £170 million of financing from US-based Davidson Kempner Capital Management LP.
Virgin Atlantic, founded in 1984 by Richard Branson’s Virgin Group, has already cut 3,550 jobs, shuttered operations at London’s Gatwick Airport, and announced plans to retire 11 aircraft as it seeks to weather the slowdown in air travel. The airline says it doesn’t expect passenger volume to return to pre-pandemic levels until 2023.
“Achieving this significant milestone puts Virgin Atlantic in a position to rebuild its balance sheet, restore customer confidence and welcome passengers back to the skies, safely, as soon as they are ready to travel,” the company said in a statement.
Delta invested US$360 million in Virgin Atlantic in December 2012, acquiring a 49 per cent stake in the airline. Virgin Group owns the remaining shares.
Virgin flies from London’s Heathrow Airport and Manchester to destinations in the United States, China, India, Pakistan, South Africa, Nigeria, Israel and the Caribbean.