Virgin Atlantic likely to finalise GBP 1bn rescue package

- A Monitor Desk Report 14 Jul, 2020 | 415 Views|-+
Dhaka: Virgin Atlantic could confirm a GBP 1 billion rescue deal on July 14 to save the airline from collapse during the coronavirus crisis.

Shai Weiss, Chief Executive of the airline has drawn up a four-year plan that will allow the carrier to survive even if flights to the US do not return until 2021.

The deal, without government aid, would be rubber-stamped by creditors shortly afterwards, Virgin Atlantic was, at the time of writing, racing to agree on terms to release tens of millions of pounds in credit card payments.

The Discussions reportedly centred on demands from the credit card merchant First Data to hold onto all cash generated from future bookings to protect itself against the risk of the carrier collapsing. An agreement to resolve the issue would pave the way for the outline rescue package, which would see the airline pledge to return to profit by 2022.

Wall Street hedge fund Davidson Kempner Capital Management is tipped to provide loans of up to GBP 200 million, a figure to be matched by founder Sir Richard Branson after raising USD 500 million from the sale of a stake in space venture Virgin Galactic in May.

Another GBP 400 million will come from the deferral of fees owed to the Virgin Group and the airline’s minority shareholder Delta Air Lines over the next three to five years after all this has been agreed then credit card firms and aircraft leasing companies have agreed to defer payments of GBP 200 million.

The airline’s battle against the impact of COVID-19 on global travel involves cutting 3,150 jobs, withdrawing from Gatwick in favour of Heathrow and retiring older aircraft such as Boeing 747s.

“Virgin Atlantic has been working on a comprehensive, solvent recapitalisation. Since the very beginning of the COVID-19 crisis, we have made difficult decisions and taken decisive action to reduce our costs, preserve cash and protect as many jobs as possible," the airline said in a statement.

“We greatly appreciate the support of our shareholders, creditors and private investors and, by working together, we will ensure that Virgin Atlantic can emerge from the crisis a sustainably profitable airline with a healthy balance sheet,” it added.

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