Remaining Virgin Atlantic creditors back $1.6 billion rescue plan
LONDON: Virgin Atlantic’s trade creditors voted on Tuesday in favor of a 1.2 billion pound ($1.6 billion) rescue plan, moving the airline a step closer to completing a restructuring designed to secure its future beyond the coronavirus crisis.
Virgin Atlantic agreed the deal with shareholders and financial and other major creditors in July, and on Tuesday smaller suppliers that the carrier owed money to also approved it.
“Today, Virgin Atlantic has reached a significant milestone in safeguarding its future, securing the overwhelming support of all four creditor classes, including 99% support from trade creditors who voted in favor of the plan,” a spokeswoman said.
“Achieving this milestone puts Virgin Atlantic in a position to rebuild its balance sheet, restore customer confidence and welcome passengers back to the skies as soon as they are ready to travel.”
The airline, 51% owned by Richard Branson’s Virgin Group and 49% by U.S. airline Delta, has had to close its base at London’s Gatwick Airport and cut more than 3,500 jobs to contend with fallout from COVID-19.
The pandemic has grounded planes and hammered demand for air travel.
Virgin Atlantic had said in a court filing in August it would run out of cash by the end of September unless the recapitalisation plan was approved.
A hearing at London’s High Court is scheduled for Sept 2 to approve the plan.
“We remain confident that the plan represents the best possible outcome for Virgin Atlantic and all its creditors and believe that the court will exercise its power to sanction the restructuring plan,” the spokeswoman said.
A procedural hearing is scheduled for Sept 3 in the United States so that the deal can be recognised there.
Source: Reuters, Reporting by Alistair Smout; Editing by Kirsten Donovan and John Stonestreet