Virgin Atlantic could run out of money by the end of September if creditors do not approve a £1.2 billion bailout package, a court has heard.
Without a restructuring and injection of new cash, it is projected that the airline’s cash flow would drop to “critical levels” by the middle of next month and it will “run out of money altogether” by the week beginning September 28.
The airline unveiled a restructuring plan to secure its future, involving only private funds, last month. The proposal needs to secure approval from creditors under a court-sanction process. Announcing the bailout package last month, the airline said the plan includes £200 million provided by founder Sir Richard Branson’s Virgin Group and support from Delta Air Lines – which owns 49% of Virgin Atlantic.
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The package is worth £1.2 billion over the next 18 months and is in addition to measures already taken, such as cost savings of around £280 million per year and amending aircraft deliveries over the next five years. Virgin Atlantic has previously said it does not expect demand for air travel to return to pre-coronavirus pandemic levels until 2023.
In a statement after the hearing, a Virgin Atlantic spokesperson said: “In order to progress the private-only solvent recapitalisation of the airline, the restructuring plan is going through a court-sanctioned process under Part 26A of the Companies Act 2006, to secure approval from all relevant creditors before implementation.
“With support already secured from the majority of stakeholders, it’s expected that the Restructuring Plan and recapitalisation will come into effect in September. We remain confident in the plan.”
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