Virgin Atlantic seeks rescue package

Monday, June 29, 2020

Virgin Atlantic is attempting to secure a privately funded rescue deal worth up to £900m by the end of this week as it fights to survive after the slump in international travel during the coronavirus pandemic.

The airline is in talks with hedge funds about borrowing about £250m and is lining up more than £200m from shareholders including founder Sir Richard Branson and Delta Airlines, which owns 49% of the company.

Virgin Atlantic is also talking to plane manufacturers, credit card companies and leaseholders about the deferral or cancellation of payments worth hundreds of millions of pounds.

One source said there were as many as 60 separate discussions about potential funding lifelines.

Virgin has set an “informal deadline” of early July to finalise a deal, according to Sky News, but is understood to be able to stretch talks beyond that deadline if necessary.

Airlines across the world have been rocked by the grounding of flights amid pandemic lockdowns, which have jeopardised their business models.

Virgin said it could take three years for flight numbers to return to 2019 levels.

The company has been told by the government it must explore all private options for finance before any public bailout will be considered. Talks with the government also continue about a potential injection of as much as £100m, it is understood.

The company has already announced more than 3,000 job cuts, is reducing the size of its fleet, and ending flights from London’s Gatwick Airport.

Virgin Atlantic said that they continue to explore all available options to secure additional external funding as part of a comprehensive, solvent re-capitalisation of the airline. As per the chancellor’s letter of 24 March, HM government is considered as a lender of last resort, and rightly so.

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