Virgin Atlantic Airways Ltd, the airline founded by British businessman Richard Branson, on Tuesday filed for protection in US bankruptcy court as it tries to survive the COVID-19 pandemic, which 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 UK.
A spokeswoman for Virgin Atlantic said the bankruptcy filing is part of a court process in the UK to carry out a restructuring plan that the airline announced last month.
Photo: AP
The process is supported by a majority of the airline’s creditors, and the company hopes to emerge from the process next month, 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 stopped flying in April due to the pandemic and only resumed flights last month. 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.
Last month, Virgin Atlantic said that it had put together a deal to raise ￡1.2 billion (US$1.57 billion at the current exchange rate) from private sources, including ￡200 million from Branson’s Virgin Group.
Atlanta-based Delta Air Lines Inc, which owns 49 percent of the airline, agreed to defer payments it was owed, and hedge fund Davidson Kempner agreed to lend Virgin Atlantic ￡170 million.
Virgin Atlantic also delayed deliveries of Airbus SE jets.
Virgin Atlantic’s court moves follow bankruptcy filings in the US by Latin America’s two biggest airlines, LATAM Airlines Group SA and Avianca Holdings SA, and by Mexico’s Aeromexico since the start of the pandemic.
Virgin’s sister airline, Virgin Australia Holdings Ltd, filed for protection from creditors in its home country in April.
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