20 JULY 2020
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For the time being a Heathrow Airport only airline Virgin Atlantic has reached a major milestone towards securing its future by announcing plans for a private-only solvent recapitalisation of the airline.
The Restructuring Plan is based on a five-year business proposal with the support of shareholders Virgin Group and Delta, fresh private investors and existing creditors. It paves the way for the airline to rebuild its balance sheet and return to profitability from 2022.
New partner Davidson Kempner Capital Management LP, a global institutional investment management firm, is providing £170m of secured financing. A £200m investment comes from Virgin Group and creditors are supporting the airline with over £450m of deferrals as is its credit card acquirers Lloyd’s Cardnet and First Data.
It is expected that the Restructuring Plan and recapitalisation will come into effect late Summer 2020.
In May, a decision was taken by management to reshape and resize in order to emerge from the crisis sustainably profitable. The airline is reducing the number of people it employs by 3,550 across all functions.
Having closed its Gatwick base, while retaining a slot portfolio at the airport to protect opportunities for future growth, flying is now consolidated at Heathrow and Manchester airports.
By 2022 Virgin Atlantic will fly the same number of sectors as 2019 despite its smaller scale and will operate a streamlined fleet of 37 twin-engine aircraft following aircraft retirements and rescheduled deliveries.
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