Cornonavirus: Virgin Atlantic, in crisis, declares bankruptcy

0
103


Image copyright
PA Media

Virgin Atlantic has filed for bankruptcy in the United States as the global aviation industry feels the impact of the coronavirus pandemic.

The UK-based airline is seeking protection under Chapter 15 of the US Bankruptcy Code, which allows a foreign debtor to protect the country’s assets.

It is the second Virgin-branded airline to fight this year. Virgin Australia went into administration in April.

Meanwhile, Virgin Australia’s new owner, Bain Capital, is set to cut 3,000 jobs.

The Virgin Atlantic US bankruptcy court case said it had negotiated a deal with stakeholders “for a consensual recapitalization” that will take the debt off its balance sheet and “immediately position it for long-term sustainable growth.”

The move comes less than a month after the company announced it had struck a £ 1.2bn ($ 1.6bn) bailout deal to secure its future beyond the crisis coronaviruses.

As part of the plan, Richard Branson’s Virgin Group has injected £ 200million, with additional funds provided by investors and creditors.

The boss of billionaire Virgin has seen a request for funding from the British government rejected, leaving the airline in a race against time for new investments.

The US filing is linked to a separate action filed in a UK court, where Virgin Atlantic obtained approval on Tuesday to call meetings of affected creditors to vote on the plan on August 25.

In May, Virgin Atlantic, owned 51% by Virgin Group and 49% by US airline Delta, announced that it would cut more than 3,000 jobs in the UK and shut down operations at Gatwick airport.

Coupes Virgin Australia

Meanwhile, the new owner of Virgin Australia, US private equity group Bain Capital, has said it will cut 3,000 jobs, or about a third of the airline’s employees.

Australia’s second-largest airline’s turnaround plan will also see it withdraw the economy brand Tigerair.

“By working with Bain Capital, we will accelerate our plan to deliver a strong future in a challenging domestic and global aviation market,” said Virgin Australia Managing Director Paul Scurrah.

Media playback is not supported on your device

Media captionVirgin Australia flight attendant says goodbye on final international flight

In April, Virgin Australia went into voluntary administration, making it the first major victim of the coronavirus pandemic in Australia.

The following month it was bought by Bain Capital, which said it supported the airline’s current management team and its plan to turn the company around.

Bain also pledged a “significant injection of capital” that would help Virgin Australia recapitalize and keep thousands of jobs.

Carriers around the world are struggling to cope with the severe drop in air travel caused by the coronavirus pandemic.

The International Air Transport Association warned in June that the crisis would cause airline losses of more than $ 84 billion (£ 64 billion) this year.

LEAVE A REPLY

Please enter your comment!
Please enter your name here