Virgin Atlantic airline files for US bankruptcy protection

VIRGIN Atlantic, the airline founded by British businessman Richard Branson, filed Tuesday, Aug. 4. for protection in US bankruptcy court as it tries to survive the virus pandemic that is hammering the airline industry.

The airline made the Chapter 15 filing in US federal bankruptcy court in New York after a proceeding in the United Kingdom.

A spokesperson for Virgin Atlantic said the bankruptcy filing is part of a court process in the United Kingdom (UK) to carry out a restructuring plan that the airline announced last month. The process is supported by a majority of the airline’s creditors, and the company hopes to emerge from the process in September, she said.

A Virgin Atlantic lawyer said in a court filing that the company needs an order from a US court to make terms of the restructuring apply in the US.

The airline is primarily a longhaul operator, including flights between the UK and the US. It stopped flying in April due to the pandemic and only resumed flights in July. It closed a base at London’s Gatwick Airport and cut about 3,500 jobs.

Branson appealed to the British

government for financial help earlier this year—even saying that he would pledge his Caribbean island resort as collateral for a loan—but was rebuffed.

Severely affected

Airlines have been slammed by the coronavirus outbreak that has led to travel restrictions and left many people afraid to fly.

The International Air Transport Association, a trade group for global airlines, estimated that the industry will lose US$84 billion this year and revenue will drop by half from 2019 levels.