Virgin Atlantic faces key creditor vote as it battles to survive

Virgin Atlantic, the airline owned by billionaire Richard Branson, faces a key survival test today when trade creditors vote on a £1.2bn restructuring plan.

The airline has been crippled by the slump in air travel caused by the coronavirus pandemic.

A warning from Virgin Atlantic last month said it would run out of money by the end of September unless the restructuring plan is approved.

Creditors owed £50,000 or more by the airline are taking part in the vote with approval need from the equivalent of 75% of the money owed.

If approved there will be another court hearing on 2 September to approve the plan followed by a US procedural hearing.

The plan can still go ahead even if creditors reject if the judge rules it is in their best interests.

Branson owns 51% of the airline US airline Delta 49%.

The knighted billionaire has agreed to inject an additional £200mln and arranged loans of £170mln and deferrals of fees from Virgin and Delta of a further £400mln as part of the rescue deal.

Virgin was turned down by the British government when it asked for a loan to help to ease its difficulties.

The UK said it would only help in the last resort situation, a stance in sharp contrast to other countries.

Lufthansa has received a €9bn package from the German government, AirFrance-KLM got €10bn while President Trump set up a US$25bn rescue fund for its airline industry.

In response to the crisis, Virgin Atlantic has closed its base at Gatwick Airport and axed more than 3,500 jobs.

Story by ProactiveInvestors