Virgin Atlantic set to keep flying as £1.2billion rescue deal is approved
VIRGIN Atlantic has been saved from going bankrupt after creditors voted to approve a £1.2 billion bailout package this afternoon.
In a statement, the carrier said that its creditors had voted "overwhelmingly" in favour of the proposal.
The airline said: “Today, Virgin Atlantic has reached a significant milestone in safeguarding its future, securing the overwhelming support of all four creditor classes, including 99% support from trade creditors who voted in favour of the plan.
"Achieving this milestone puts Virgin Atlantic in a position to rebuild its balance sheet, restore customer confidence and welcome passengers back to the skies as soon as they are ready to travel."
Another UK court hearing will be held on Sept 2 to approve the plan, and a procedural hearing is scheduled for Sept 3 in the United States.
Richard Branson’s airline filed for bankruptcy protection in the US at the start of the month in an effort to save the company and thousands of jobs after it fell into administration.
Virgin Atlantic has been hit hard by the pandemic, with thousands of planes grounded worldwide in April due to fears over the spread of the virus.
Today the company’s creditors voted on the £1.2 billion rescue plan originally agreed in July.
It included a £170million cash injection from US hedge fund Davidson Kempner and means Sir Richard Branson maintains a controlling stake in the businesses.
The deal means 170 of the airline's suppliers have agreed to take a 20% cut in the money owed to them. The rest will be paid back in installments.
The airline, which is 51% owned by Richard Branson's Virgin Group and 49% by U.S. airline Delta, said it “remains confident” in the restructuring plan and is on track to become solvent again by September.
Creditors needed to support the vote if the airline was to keep flying.
At an earlier hearing Virgin Atlantic lawyer David Allison QC told the High Court passenger demand had "plummeted to a level that would until recently have been unthinkable".
He added the company would “run out of money altogether” by the final week of the month if help wasn’t granted.
Globally, the travel and aviation industry is feeling the financial hit following months of lockdown and cancelled flights and holidays.
It is expected that nearly three million British travel and tourism jobs are on the verge of disappearing — while the economy is close to losing £142billion from the travel sector.
There are fears that closures of airlines and travel firms will push up the cost of taking a holiday in the future.
British Airways are slashing up to 12,000 jobs from its 42,000-strong workforce due to a collapse in flight numbers.
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At the start of the month, Hays travel announced 878 employees out of 4,500 could lose their jobs.
STA Travel UK has gone out of business leaving thousands of customers chasing refunds.
Branson, who has a personal wealth of almost £4 billion, faced criticism after calling on the UK government to help prop up the firm.
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He previously lobbied for a £500million loan funded by public cash to help keep the airline alive.
The billionaire said he was prepared to put his private Caribbean hideaway Necker Island up as collateral to save the business.