Virgin Atlantic said it has “reached a significant milestone”
in securing its future after receiving support from all four creditor classes
that voted on a £1.2 billion turn-around plan for the airline today.
A spokesperson for the carrier said: “In order to complete
the private-only, solvent recapitalisation of the airline, our restructuring
plan is going through a court-sanctioned process under Part 26A of the UK
Companies Act 2006.
“Today, Virgin Atlantic has reached a significant milestone
in safeguarding its future, securing the overwhelming support of all four
creditor classes, including 99 per cent support from trade creditors who voted
in favour of the plan.
“The next step is an English High Court hearing on 2
September to sanction the restructuring plan. We remain confident that the plan
represents the best possible outcome for Virgin Atlantic and all its creditors…
A US Chapter 15 procedural hearing will follow on 3 September, ensuring Virgin
Atlantic’s restructuring plan is recognised in the US, paving the way for the
£1.2 billion private-only, solvent recapitalisation of Virgin Atlantic.
“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.”
Virgin Atlantic’s restructuring plan is based on a five-year
business plan, which includes shareholders providing around £600 million in
extra cash – including £200 million from its largest shareholder, Sir Richard
Branson’s Virgin Group, and £400 million of shareholder deferrals and waivers.
In addition, new shareholder Davidson Kempner Capital
Management LP has agreed to provide £170 million of secured financing, while
creditors have agreed to more than £450 million of deferrals. In all, the
rescue package is worth £1.2 billion over the next 18 months.
Virgin Atlantic filed for Chapter 15 protection in the US
earlier this month after struggling to raise extra funding to survive the
coronavirus pandemic, having been turned down for a UK government-backed loan. At
the time, the airline’s lawyers said it risked running out of cash by the end
of September if the restructuring plan did not receive creditor approval.
The airline is planning to cut more than 3,000 jobs in its restructuring and will cease flying from London’s
Gatwick airport in the short-term.