Virgin Atlantic rescue deal sanctioned by High Court
Virgin Atlantic’s £1.2 billion rescue deal has been sanctioned by a High Court in London, leaving one final hurdle to clear in the US on Thursday.
A procedural hearing will be held in the US to make sure the airline’s financial restructure, announced on 14 July, is recognised on the other side of the Pond.
This will pave the way for completion of the £1.2 billion private recapitalisation of Virgin Atlantic, which is 51% owned by Sir Richard Branson and his family via the Virgin Group and 49% by US carrier Delta.
Creditors agreed in a court hearing in London last month to waive 20% of the airline’s debt in order to push through the restructure and prevent the airline’s collapse. Those who voted overwhelming in favour of the deal included trade creditors and its aircraft lessors.
"Today, Virgin Atlantic attended an English High Court hearing where the restructuring plan was formally sanctioned," Virgin said in a statement.
"A US procedural hearing will follow tomorrow, 3 September, ensuring the restructuring plan is recognised in the US, paving the way for completion of the £1.2bn private only, solvent recapitalisation of Virgin Atlantic.
"Achieving this significant milestone puts Virgin Atlantic in a position to rebuild its balance sheet, restore customer confidence and welcome passengers back to the skies, safely, as soon as they are ready to travel."
Virgin Atlantic’s recapitalisation is based on a five-year business plan. It includes costs savings of around £280m a year and around £880 million rephasing and financing of aircraft deliveries over the next five years.
Details of the refinancing package include:
- c.£600m in support over the life of the business plan including a £200m investment from Virgin Group, and c.£400m of shareholder deferrals and waivers
- new partner Davidson Kempner Capital Management LP, a global institutional investment management firm, is providing £170m of secured financing
- creditors have deferred over £450m of debt
Virgin said the recapitalisation plan also has the full support of credit card acquirers Lloyd’s Cardnet, First Data and American Express.
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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