Virgin Atlantic Airways is racing to stitch together a £900m privately funded rescue deal within days after concluding that it was unlikely to secure an emergency government bailout. Sky News report more.
Virgin Atlantic puts advisers on standby
Restructuring specialist, Alvarez & Marsal has been appointed to prepare for the potential insolvency of Sir Richard Branson’s Virgin Atlantic Airways.
Contingency plans are in place, with options being looked into, focused around a pre-pack administration which would see a restructured and financially viable carrier emerge from the COVID-19 crisis. A pre-pack would also see the equity of existing shareholders; Sir Richard Branson’s holding company and Delta Air Lines, wiped out.
Virgin Atlantic’s board is in discussions with the government and private investors about providing new capital which would allow the restructuring plans to be implemented. Ideally, a £500m rescue deal needs to be secured. Chancellor Rishi Sunak states support would only be given as a ‘’last resort’’.
Though A&M has been appointed it does not mean insolvency is inevitable it just reflects the legal obligation of the companies’ directors to prepare for the potential outcome.
This comes after the struggling airline said it would axe more than 3,000 jobs in order for it to survive. Additional plans for survival include ending its 36-year residence at Gatwick Airport, reducing its fleet size and putting its Boeing 747s into early retirement.
Mr Branson himself made an impassioned defence of his group’s financial affairs, warning that the transatlantic airline, founded in the 1980s, was near to collapse if no government support was offered.
Already he has seen Virgin Atlantic fall into a voluntary administration, leaving thousands of jobs at risk.
‘’We continue to take decisive action to reduce our costs, preserve cash and protect as many jobs as possible. Discussions with a number of stakeholders continue and are constructive, meanwhile the airline remains in a stable position. Virgin Atlantic is committed to continuing to provide essential connectivity on competitive terms to consumers and businesses in Britain and beyond, once we emerge from this crisis.’’