“Virgin Atlantic has reached a major milestone towards securing its future today, by announcing plans for a private-only solvent recapitalisation… following the severe impact of the COVID-19 pandemic on the global economy, the nation and the travel and aviation industry,” it said in a statement.
The news comes after Virgin Atlantic in May announced plans to axe more than 3,000 jobs as the pandemic grounded a large number of passenger jets.
Branson meanwhile warned that Virgin Atlantic would collapse unless it received financial aid from the UK government to weather the crisis.
With the state unwilling to help save the 36-year-old airline, Virgin scrambled around for a privately-funded package — which it has secured with the help of Delta Air Lines, which owns 49 percent of the carrier.
Restructuring, subject to creditor approval, “is based on a five year business plan, and with the support of shareholders Virgin Group and Delta, new private investors and existing creditors, it paves the way for the airline to rebuild its balance sheet and return to profitability from 2022”, Tuesday’s statement said.
The £1.2 billion package, comprising £200 million from Branson’s Virgin Group, will be delivered over the next 18 months.
It comes alongside the company’s plan to slash annual costs by £280 million per year and the refinancing of new aircraft deals.
“The solvent recapitalisation of Virgin Atlantic will ensure that we can continue to provide vital connectivity and competition to consumers and businesses in Britain and beyond,” Virgin Atlantic chief executive Shai Weiss said in the statement as the carrier prepares to restart passenger flights from Monday next week.
Airlines globally have been slammed by the coronavirus pandemic, resulting in bailouts and thousands of job losses.
Lufthansa has received a nine-billion euro ($10.1 billion) bailout from the German government, saving Europe’s largest airline group from bankruptcy.
“Global aviation was one of the first industries impacted by the COVID-19 pandemic and will be one of the last to fully recover,” Virgin said Tuesday, adding that pre-crisis levels of flying were unlikely until 2023.
Virgin has cut its workforce by 3,550 over the coronavirus fallout — comprising more than one-third of its staff — with the total including 400 workers who decided to take voluntary redundancy.