Virgin Atlantic secures $1.5 billion rescue deal

After many months of closed borders, grounded flights, and increasing concern of a complete collapse, Virgin Atlantic, the UK’s second-largest airline, is set to be offered a crucial lifeline to keep the airline alive following the devastating effects of the coronavirus pandemic.

A Virgin Atlantic 747-400 arriving at KLAS. Photo by Karam Sodhi |. AeroNewsX

The carrier will receive $750.6 million from shareholders including a $250 million injection from the Virgin Group. Additional funds have been secured in forms of deferrals and advances from payments companies and aircraft lessors, amounting to $562.5 million, while US hedge fund Davidson Kempner will contribute $188 million.

This much-needed bailout comes after the UK government refused to assist funding relief when Virgin Atlantic was grounded by the pandemic. The airline previously axed 3,150 jobs and cease operations at London Gatwick Airport as it struggled to survive. Chief Executive Shai Weiss previously said:

“We have weathered many storms since our first flight 36 years ago, but none has been as devastating as COVID-19 and the associated loss of life and livelihood for so many. However, to safeguard our future and emerge a sustainably profitable business, now is the time for further action to reduce our costs, preserve cash and to protect as many jobs as possible. It is crucial that we return to profitability in 2021. I wish it was not the case, but we will have to reduce the number of people we employ.”

With the latest announcement, the airline will remove 7 Boeing 747s and 4 Airbus A330-200s by the first quarter of 2022. It will also be deferring deliveries of outstanding Airbus A350s and A330-900neos, it says.The carrier is anticipating that customer demand will be at least 40% lower during 2020 but expects a gradual recovery over time.

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