Virgin Atlantic creditors back $1.6bn rescue deal

Virgin Atlantic (VS, London Heathrow) secured its creditors’ backing in a vote on August 25 in favour of a GBP1.2 billion pound (USD1.6 billion) rescue plan that will secure its future for at least 18 months and, for now, save 6,500 jobs. The vote garnered “99% support from trade creditors who voted in favour of the plan,” a spokeswoman said, and brings the airline a step closer to completing a restructuring designed to keep it operating beyond the coronavirus crisis. In the ballot, the smaller suppliers the transatlantic specialist owed money to approved the plan, which means that all four creditor classes – shareholders, banks, lessors, and suppliers – have now approved it. The creditors agreed in the vote to waive 20% of what they are owed, with the rest paid back in instalments, the BBC reported. “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 spokeswoman assured. Virgin Atlantic had warned that without the deal it would run out of cash by September. A hearing at the High Court of Justice in London is now scheduled for September 2 to approve the plan, followed by a Chapter 15 procedural hearing in the United States the following day so the deal can be recognised there. The deal involves GBP400 million (USD526 million) in fresh capital, half of it coming from its 51% shareholder, Richard Branson’s Virgin Group, and about GBP170 million (USD224 million) from New York-based alternative investment management firm Davidson Kempner.