Virgin Atlantic announces £1.2 billion funding boost to secure post Covid-19 future

16/07/2020

Airline announces recapitalisation plan comprising shareholder funding, deferrals and fresh investment

Virgin Atlantic has announced a £1.2 billion restructuring package that will prime the airline to return to profit again in 2022.

The Restructuring Plan includes a £600m boost in shareholder funding, a £200m investment from the Virgin Group and £400m in deferrals among creditors.

The rescue deal has won majority shareholder backing, but must now achieve court approval, Virgin Atlantic said. The agreement is expected to come into effect later this summer, the airline stated.

Shai Weiss, CEO, Virgin Atlantic described the Covid-19 hit start to 2020 as the toughest period in the airline’s 36-year history.

Weiss said: “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.”

Virgin’s Restructuring Plan will deliver additional finances over the next 18 months, the airline said.

Key components of the £1.2billion agreement include:
  • £600m in support from shareholders including a £200m investment from Virgin Group and the deferral of c.£400m of shareholder deferrals and waivers
  • A £170m investment from new partner Davidson Kempner Capital Management LP, a global institutional investment management firm
  • £450m in deferrals from creditors
  • Ongoing support from credit card acquirers (Merchant Service Providers) Lloyd’s Cardnet and First Data.
The agreement comes after Virgin announced 3,550 redundancies as a result of Covid-19 hit volumes in May.

Virgin committed to fly the same number of sectors in 2022 as 2019 despite a smaller footprint as a result of productivity and efficiency improvements.