Virgin Atlantic secures USD 1.5bn private-only rescue package

- A Monitor Desk Report 15 Jul, 2020 | 570 Views|-+
Dhaka: Richard Branson has finalised a USD 1.5 billion rescue deal for Virgin Atlantic on July 14 to keep the airline solvent just days before it is due to resume passenger flights.

The carrier said in a statement that the recapitalisation plan will be deployed over the next 18 months and has the support of shareholders, including Delta Air Lines (DAL), new investors and existing creditors.

Under the plan, existing shareholders will contribute USD 750.6 million, including USD 250 million from Virgin Group, founded by billionaire Branson. US hedge fund Davidson Kempner is providing an additional USD 188 million in secured financing and creditors have agreed to defer repayments worth USD 562.5 million.

"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," Shai Weiss, CEO, Virgin Atlantic said in a statement.

"We have taken painful measures, but we have accomplished what many thought impossible," he added.

The company said it expects to gain profit again from 2022.

Virgin Atlantic had previously sought a USD 626 million commercial loan from the UK government, which was reportedly unsatisfied with the airline's bid.

Virgin Australia was similarly unable to secure direct financial support from the Australian government, forcing it to enter voluntary administration in April. US private equity firm Bain Capital bought the airline last month, beating out Cyrus Capital Partners, another hedge fund.

Virgin Atlantic, which has only been operating cargo flights since April, plans to restart passenger flights from July 20.

The company has laid off 3,550 staff and closed its base at London's Gatwick airport, consolidating its operations at London Heathrow and Manchester Airport.

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