Virgin Atlantic was especially badly impacted by the global health crisis and was looking to obtain monetary support from either the British government or private groups in the last couple of months.
Due to its long-haul route network from the UK, which is heavily dependent on the transatlantic market, Virgin Atlantic has been more affected. With the US being closed to most U.K. and isolation in the other direction, the market does not look poised to rebound any time soon.
Virgin Atlantic Airways Ltd. has disclosed a 1.2 billion-pound ($1.5 billion) bailout in a huge triumph for Richard Branson, who saved his U.K. carrier from the edge of bankruptcy under the dark shadows of the coronavirus pandemic.
The group said the refinancing covered the next five years of operations and set the stage for the airline to restructure its balance sheet and return to profitability in 2022. The overhaul of the airlines' finances will use a new court-sanctioned process and is seen to take effect this summer.
Investment firm Davidson Kempner Capital Management, its new partner, will allocate around 170 million pounds in secured financing, a statement revealed on Tuesday, while Branson will raise around 200 million pounds after securing funding from space venture Virgin Galactic Holdings Inc.
Lenders and suppliers will also defer around 450 million pounds, and credit card operators have concurred on ensuring funds from bookings will not be withheld from Virgin Atlantic. Branson and his team, spearheaded by CEO Shai Weiss, raised the private stimulus after the U.K. declined to contribute taxpayer funds when the airline was grounded by the virus.
The British carrier's plan is understood to have been hinged on a worst-case projection and it is not estimating to have to secure fresh funding should international travel approach normal, pre-crisis levels by 2023.
According to Weiss, they have taken painful measures, "but we've accomplished what many thought was impossible," Hanna Ziady of CNN Business quoted the chief executive as saying. The group said that it expects to be profitable again from 2022, the report added.
The airline, which has only been conducting freight operations since April, plans to restart commercial flights from July 20. Virgin Atlantic has terminated or furloughed 3,550 employees and shuttered its base at London's Gatwick airport, merging its ground operations at London Heathrow and Manchester Airport.
As with other airline companies, the pandemic pushed Virgin Atlantic deep into a financial hole as global demand for air travel plummeted. Virgin grounded a large portion of its fleet for months but is set to resume some services in the coming days.
