Virgin Atlantic’s owners are investing £400 million into the airline to strengthen its financial position as it emerges from the pandemic.
The investment has been funded by Virgin Group and joint venture partner Delta Air Lines, which have invested £204 million and £196 million respectively and retain their 51% and 49% stakes.
Virgin Atlantic expects to return to “sustainable profitability” from 2023. This recovery will be driven by consumer demand and boosted by cost savings that have already been made to the tune of more than £300 million, the carrier said, as it noted the “decisive action” it had taken since Covid struck to reduce costs, preserve cash and raise capital.
Since Covid, Virgin has completed a £1.5bn recapitalisation. This included a £1.2bn privately-funded, solvent recapitalisation in September 2020, including a £200m investment from founder Sir Richard Branson; as well as cost savings and a 45% reduction in the size of its workforce. A further financing of about £300m came in the first quarter of 2021, including a financing of two Boeing 787s.
Virgin Atlantic chief executive Shai Weiss (pictured) hailed the “unwavering support” of shareholders Virgin Group, Delta, and its creditors.
He said: “Our story has been well-documented during the pandemic. Together with our people, we have proven that we have what it takes to emerge a stronger airline.
“We look forward to working together towards our vision of becoming the most loved travel company and becoming sustainably profitable, serving our customers with Virgin flair.”
Delta chief executive Ed Bastian said: “Virgin Atlantic’s business has transformed, allowing them to emerge from the pandemic a stronger airline.
“Their distinct and vibrant brand will be reconnecting and delighting its customers for years to come.”
Delta has also announced investment deals with Latin American carriers Aeromexico and LATAM.
The carrier’s total investment in the three airlines – Virgin Atlantic, Aeromexico and LATAM – is US$1.2 billion.
Delta has built partnerships with flagship airlines across Asia, Europe and Latin America over the last 10 years.
It is targeting a 20% equity stake in Aeromexico, a 10% equity stake in LATAM and will retain its 49% stake in Virgin Atlantic following the investment.