Having received backing for a £1.2 billion rescue deal back in August 2020 which Virgin Atlantic claimed would secure its future for approximately 18 months, the struggling carrier has announced it is raising a further £160 million in new financing to help combat the effects of the global pandemic on demand for flights.
It is understood that Richard Branson’s Virgin Group will provide about £100 million and the remaining £60 million would include deferrals. “We continue to bolster our balance sheet in anticipation of the lifting of international travel restrictions during the second quarter of 2021”, a Virgin Atlantic spokeswoman said, adding: “This latest £160 million financing provides further resilience against a slower revenue recovery in 2021.”
This latest fundraising exercise follows on from the sale and leaseback of a pair of Boeing 787s in January in a £165 million deal with Griffin Global Asset management to shore up the carrier’s balance sheet. Since the COVID-19 pandemic hit the travel industry Virgin Atlantic shed 4,650 jobs and reduced costs by £335 million last year. The £1.2 billion rescue package announced in July 2020 involved only private funds with no government backing involved.
Virgin Group provided £200 million, the Davidson Kempner hedge fund loaned Virgin Atlantic £170 million, and both Delta Air Lines, a 49% stakeholder in the carrier, and Virgin Group, agreed to defer £400 million in fees. Creditors also agreed to defer £450 million in payments. Aircraft deliveries over the next five years were amended, while all operations at Gatwick airport were closed down, accounting for over 3,000 of 2020’s job losses. (£1.00 = US$1.39 at time of publication.)