Virgin Atlantic’s future is set to be determined tomorrow when creditors of Sir Richard Branson’s airline meet.
They must decide whether to back a £1.2 billion refinancing of the coronavirus-battered carrier.
The airline has warned it could run out of cash if the bailout package is not approved.
Support at the vote, due at the High Court in London on Tuesday, would be the final stage of a complex rescue package.
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About 170 of Virgin Atlantic’s top suppliers, ranging from aircraft lessors to media buying agencies, are being asked to accept a 20% reduction on the money the airline owes them, and to receive the rest in staggered payments.
The airline “remains confident” that it will be able to win support from the creditors.
The restructuring plan was originally announced in July, followed by court hearings in the UK and US earlier this month.
The US hearing was under Chapter 15 provisions which allow a US court to recognise a foreign restructuring process and offer protection against creditors while the restructuring is underway.
Virgin Atlantic went to court in the UK as part of the recapitalisation process agreed by creditors under the UK Companies Act.
Lawyers for the airline told the High Court that it would face a critical cash flow situation in September if the bailout funds were not released, and that it would “run out of money altogether” by the final week of the month.
The restructuring is based on a five-year business plan which envisages the carrier returning to profitability from 2022.
The refinancing includes cost savings of about £280 million a year and £880 million in re-phasing and financing of aircraft deliveries over the next five years.
Virgin Group, which owns 51% of the carrier, and 49% shareholder Delta Air Lines (49%) will provide £600 million in support, including a £200 million investment by Virgin Group and £400 million in shareholder deferrals and waivers of payments.
US hedge fund Davidson Kempner Capital Management will provide £170 million in financing.
The airline’s creditors “will support the airline with over £450 million of deferrals”.
The airline is cutting 3,150 jobs, about one third of the total, having shut down its operation at Gatwick having been refused a £500 million bailout from the government.
Virgin Atlantic resumed operations in July as part of a phased reintroduction of routes from Heathrow and Manchester through to October.