Virgin Atlantic secures £1.2 billion rescue funding

Virgin Atlantic Airbus A350-1000. Photo: © Anna Zvereva

Virgin Atlantic’s future has been agreed with a private-sector bail-out worth £1.2 billion (US $1.51 billion). Along with most other airlines, Britain’s second largest carrier has been in financial difficulty for some time due to the Covid-19 pandemic, which has seen passenger numbers fall to all time lows, partly due to international travel restrictions.

The deal is set to be finalised by ‘late-summer’ and is set to unfold over an 18 month period. The airline states that the deal is in addition to existing measures “including cost savings of c.£280m per year and c.£880m rephasing and financing of aircraft deliveries over the next five years.”

The money is explained to be coming from existing investors, shareholders of the Virgin Group and Delta Air Lines (which owns a 49% stake in Virgin Atlantic), and new investor Davidson Kempner Capital Management LP. Virgin Atlantic says it aims to return to profitability in 2022, and that it will resume passenger flights from 20th July, after temporarily suspending all scheduled passenger services in late April.

Virgin Group founder Sir Richard Branson has been vocal about seeking a rescue deal for some time, including pleads to the UK Government for a public deal. The UK Government has been notably lacking in its efforts to assist the aviation sector during the crisis, with UK based jobs at Rolls-Royce, Airbus and a number of airlines being cut, including 3,500 at Virgin Atlantic, which has also closed its operations from London Gatwick Airport.