BY Fraser Tennant
Following its Chapter 15 filing last week to protect itself from creditors in the US while undertaking a solvent recapitalisation in the UK, Virgin Atlantic has received support for its restructuring plan from a US court.
The restructuring is based on a five-year business plan and, with the support of shareholders Virgin Group and Delta, new private investors and existing creditors, paves the way for the airline to rebuild its balance sheet and return to profitability from 2022.
At the same time, the recapitalisation will deliver a refinancing package worth £1.2bn over the next 18 months, in addition to the self-help measures already taken, including cost savings of approximately £280m per year and £880m rephasing and financing of aircraft deliveries over the next five years.
The airline is one of many in the aviation industry to have been severely impacted by the coronavirus (COVID-19) pandemic, having closed its Gatwick base with the loss of 3500 jobs.
“Virgin Atlantic has reached another important milestone towards securing its future, undertaking a hearing in the US courts to support its plan for a private-only solvent recapitalisation of the airline, following the severe impact of the COVID-19 pandemic on the global economy, the nation and the travel and aviation industry,” said a Virgin Atlantic spokesperson. “The US proceedings were commenced under provisions that allow US courts to recognise foreign restructuring processes. In the case of Virgin Atlantic, the process we have asked to be recognised is a solvent restructuring of an English company under Part 26A of the UK Companies Act 2006.”
“The US court has supported the company’s restructuring plan,” continued Virgin Atlantic. “The US proceeding is a standard procedural step to protect the airline’s assets while Virgin Atlantic’s recapitalisation is completed in the UK. The US court has scheduled a hearing for 3 September 2020 to immediately follow the final hearing before the English court.
“With support already secured from the majority of our creditors and stakeholders, it is expected that the restructuring plan and solvent recapitalisation will come into effect in September. We remain confident in the plan.”
News: US Courts Support Virgin Atlantic’s UK Recapitalization Plan