Virgin Atlantic has taken a big step forward in securing its future, by launching a court-backed process as part of a solvent recapitalization of the airline and holiday business, with a restructuring plan that, once approved and implemented, will keep Virgin Atlantic flying.
The restructuring plan is based on a five-year business plan, and with the support of shareholders, Virgin Group, and Delta, new private investors and existing creditors, it paves the way for the airline to rebuild its balance sheet and return to profitability from 2022.
The recapitalization will deliver a refinancing package worth £1.2 billion over the next 18 months in addition to the self-help measures already taken, including cost savings of £280 million per year and £880 million rephasing and financing of aircraft deliveries over the next five years.
Shareholders are providing £600 million in support over the life of the plan including a £200 million investment from Virgin Group, and the deferral of £400 million of shareholder deferrals and waivers.
Virgin Atlantic welcomes new partner Davidson Kempner Capital Management LP, a global institutional investment management firm which is providing £170 million of secured financing
Creditors will support the airline with over £450 million of deferrals
The airline continues to have the support of credit card acquirers (Merchant Service Providers) Lloyd's Cardnet and First Data.
To secure approval from all relevant creditors before implementation, the restructuring plan will go through a court-sanctioned process under Part 26A of the Companies Act 2006 (the restructuring plan). With support already secured from the majority of stakeholders, it is expected that the restructuring plan and recapitalization will come into effect late summer 2020. (£1.00 = US$1.26 at time of publication.)
