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Shareholders come to the rescue of Virgin

[ July 15, 2020   //   ]

Shareholders have pumped millions of pounds into Virgin Atlantic in a bid to save the troubled airline from bankruptcy. It announced a “solvent recapitalisation” from private interests only including a restructuring plan based on a five year business plan, 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, it said.

The recapitalisation will deliver a refinancing package worth about £1.2bn over the next 18 months in addition to cost savings of around £280m per year and some £880m rephasing and financing of aircraft deliveries over the next five years.Shareholders are providing c.£600m in support over the life of The Plan including a £200m investment from Virgin Group, and the deferral of about £400m of shareholder deferrals and waivers

Global institutional investment management firm Davidson Kempner Capital Management is providing £170m of secured financing.

Cost saving measures including closing the London Gatwick base, while retaining a slot portfolio at the airport and consolidating services on London Heathrow and Manchester. The carrier says that by 2022 it will fly the same number of sectors as 2019 despite its smaller scale, with a streamlined fleet of 37 twin engine aircraft. Seven 747s and four A332s will be retired while deliveries of A350s and A339s will be rescheduled.

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