The UK-based airline Virgin Atlantic has filed for bankruptcy in the United States. Here because
Virgin Atlantic filed for bankruptcy protection in the United States this week. The British airline thus hopes to get to the validation of its $ 1.5 billion bailout plan which will be put to the vote of its creditors on August 25th.
Virgin Atlantic follows the other airline of the Virgin group in the abyss of the crisis of air carriers at the time of the Covid-19 pandemic . Already in April, Virgin Australia had filed for voluntary administration.
All the details.
WITHOUT LIQUIDITY IN SEPTEMBER
At a hearing in a London court on Tuesday, a Virgin Atlantic lawyer explained that the company could run out of liquidity by the end of September if the recapitalization plan was not validated, given the collapse of air traffic. The court allowed creditors to meet on August 25 to decide on the plan.
According to the company, Virgin Atlantic has not technically gone bankrupt. The company plans to continue operations during the restructuring.
THE BRANSON RESCUE PLAN
Virgin Atlantic has already reached an agreement to raise $ 1.5 billion in private funds to avoid bankruptcy.
The airline, founded by billionaire Richard Branson in 1984, is 51% owned by Virgin Group and 49% by the US airline Delta. Branson, majority shareholder with 51% stake, will contribute $ 262 million.
The plan has the support of shareholders, including Delta Air Lines and existing creditors. US hedge fund Davidson Kempner is providing $ 188 million in guaranteed loans as part of the recapitalization plan.
WHY VIRGIN IS USED IN CHAPTER 15 (AND NOT 11)
As Finimize explained, usually “American companies filing for bankruptcy ask for Chapter 11, which allows them to reorganize themselves and ensure that all the money owed to them is repaid. But Virgin has filed for Chapter 15 bankruptcy protection, which is designed to protect the US assets of foreign companies undergoing restructuring in their home country. ”
You may have read reports about a filing that has been made under the US Chapter 15 process, in support of our solvent recapitalization plan. Let us explain what it means for you. pic.twitter.com/xN1FxV8XkK
– virginatlantic (@VirginAtlantic) August 5, 2020
THE CRISIS OF THE AERIAL COMPANIES
Although airlines worldwide have increased flight capacity last month, demand for international flights remains low. Virgin Atlantic, which only flies on long-haul international routes, suspended passenger flights in April due to the coronavirus pandemic and resumed them in July. But the future remains dark on the horizon.
In fact, the International Air Transport Association (IATA) predicts that air traffic will probably not return to normal until 2024.
LACK OF REGIONAL SUCCESS WITH FLYBE
As Business Insider points out , in 2019 the Branson airline had planned to build a home network so as not to focus exclusively on international routes. In 2019 Virgin Atlantic led the consortium that acquired a regional airline, Flybe. But that carrier became the first airline victim of the pandemic, collapsing in early March.
THE DOOR CLOSED BY DOWNING STREET
At the end of April, as Forbes points out , the Branson empire was collapsing.
In an attempt to raise the necessary funds for Virgin Atlantic and Virgin Australia, Branson had asked for help from both the British and Australian governments.
In the latter case, the Canberra government has granted aid, albeit lower than that requested. But the appeal for a bailout from the Johnson government was unsuccessful . The billionaire founder of the Virgin Group, who has a net worth of over $ 4 billion, had offered his private island as collateral for a £ 500m rescue or loan.
However public opinion has mumbled that Branson does not pay income tax in the United Kingdom because his primary residence is on the island of Necker, outside the United Kingdom. The move called "tax exile" would have saved millions of pounds from the assets of the Virgin Group founder.
WHAT SISTER VIRGIN AUSTRALIA DOES
In April, Sister Virgin Australia entered voluntary administration, Australia's first major corporate victim of the coronavirus pandemic.
The airline was purchased by Bain Capital the following month, which said it supported the airline's current management team and its recovery plan. The airline is cutting 3,000 jobs, about a third of its workforce, as well as stopping the operations of its low-cost carrier, Tigerair Australia.
WHILE VIRGIN GALACTIC TAKES OFF
As the Financial Times said , Branson had sold more than $ 500 million worth of shares in Virgin Galactic, his space travel company, in May to help fund other Virgin activities that were hit hard by the coronavirus pandemic.
The company competes with other initiatives supported by billionaires such as Jeff Bezos' Blue Origin who challenge each other to usher in a new era of space tourism, racing to be the first to offer sub-orbital flights to civilian space travelers.
If Virgin Group airlines risk being left on the ground, Virgin Galactic warms up the engines.
The company reported Monday that Richard Branson will fly into space on the Virgin Galactic spacecraft early next year. Adding that Virgin Galactic would raise new funds with an equity offer.
Branson's journey through space depends on the success of two upcoming test flight programs, said Virgin Galactic, with the first enhanced space flight scheduled for this fall by Spaceport America.
In early June, Virgin Galactic signed an agreement with NASA to develop a program to promote private missions to the International Space Station.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/virgin-atlantic/ on Thu, 06 Aug 2020 05:55:03 +0000.