Coronavirus: Virgin Atlantic finalises £1.2bn rescue plan

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Virgin Atlantic saw passenger numbers slump as countries closed borders and brought in travel bans

Troubled airline Virgin Atlantic has finalised a rescue deal worth £1.2bn.

The package includes support from its main shareholder, Virgin Group, and loans from outside investors.

It also includes deferring hundreds of millions of pounds owed both to Virgin Group and to fellow shareholder Delta Air Lines.

Virgin Atlantic had initially hoped to obtain emergency funding from the government, but ministers said any subsidies would be a last resort.

The funding comes largely from existing shareholders and a new investor, hedge fund Davidson Kempner Capital Management.

The company said the plan paved the way for the airline to rebuild its balance sheet and return to profitability in 2022.

The Covid-19 outbreak plunged Virgin Atlantic into an acute crisis.

Like other airlines, it was forced to ground most of its fleet for months and is not due to resume services until next week.

The company had initially hoped the government would step in, but ministers made it clear taxpayers’ money could only be considered once all other options had been exhausted.

Under the package announced on Tuesday, the airline will receive loans worth £170m from Davidson Kempner, while Virgin Group, its biggest shareholder, will put in a further £200m.

Both Virgin Group and its fellow shareholder Delta Air Lines will defer payment of money owed to them by the airline worth £400m. Other creditors are expected to defer payments worth £450m.

The plan will still require formal approval from Virgin Atlantic’s creditors, under a court-sanctioned process.

The airline said more than 3,500 jobs had been lost as part of a cost cutting drive that included the closure of its base at London Gatwick.

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