Virgin Atlantic has been saved in a massive vote of confidence in the airline’s founder Sir Richard Branson.
The recapitalisation of Virgin Atlantic will deliver a refinancing package worth £1.2 billion over the next 18 months.
“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,” said Shai Weiss, the CEO of Virgin Atlantic.
“The solvent recapitalisation 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 cancelled 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.”
Sir Richard Branson, a billionaire, will inject £200 million into the airline he founded, with a further £400 million from deferrals and waivers of fees owed to shareholders.
US hedge fund Davidson Kempner will inject £170 million into the airline through fresh loans.
It is thought that the backing of a new investor and Sir Richard Branson’s own cash injection were crucial in convincing other creditors to delay repayment of £450 million which they are owed, the Telegraph reported.
A further £400 million will come from either waiving or deferring fees owed to Sir Richard Branson‘s parent business Virgin Group and Delta, the US airline that owns a 49% stake in the airline.
Virgin Atlantic has implemented cost savings of £280 million per year and savings of £880 million rephasing and financing of aircraft deliveries over the next five years.
Virgin Atlantic was founded by Sir Richard Branson 36 years ago. In 2019, Virgin Atlantic carried 5.4 million customers and was voted Britain’s only Global Five Star Airline by APEX for the third year running in the Official Airline Ratings. Headquartered in London, Virgin Atlantic and its holiday business, Virgin Atlantic Holidays, employs 6,500 people worldwide, serving 25 destinations across four continents.