Virgin files for bankruptcy
Virgin Atlantic, the airline founded by British businessman Richard Branson, filed Tuesday for protection in U.S. Bankruptcy Court as it tries to survive the COVID-19 pandemic that is hammering the airline industry.
The airline made the Chapter 15 filing in bankruptcy court in New York after a proceeding in the United Kingdom.
A spokeswoman for Virgin Atlantic said the bankruptcy filing is part of a court process in the United Kingdom to carry out a restructuring plan that the airline announced last month. The action 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 U.S. court to make terms of the restructuring apply in the U.S.
The airline is primarily a long-haul operator, including flights between the U.K. and the U.S. It stopped flying in April because of 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 this year — even saying that he would pledge his Caribbean island resort as collateral for a loan — but was rebuffed.
Last month, Virgin Atlantic announced that it had put together a deal to raise nearly $1.6 billion from private sources, including about $260 million from
Branson’s Virgin Group.
Atlanta-based Delta Air Lines, which owns 49% of the airline, agreed to defer payments it was owed, and hedge fund Davidson Kempner agreed to lend Virgin Atlantic about $220 million. Virgin Atlantic also delayed deliveries of Airbus jets.
Virgin Atlantic’s court moves follow bankruptcy filings in the U.S. by Latin America’s two biggest airlines, Latam and Avianca, as well as by Mexico’s Aeromexico, since the start of the pandemic. Virgin sister airline Virgin Australia filed for protection from creditors in its home country in April.