Virgin Atlantic faces key creditor vote as it battles to survive

Virgin Atlantic, billionaire Richard Branson's flagship airline, 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 coronavirus restrictions and has warned it will run out of money by the end of September unless the restructuring plan is approved. Creditors owed £50,000 or more are taking part in the vote, with approval needed from those speaking for the equivalent of 75% of the money outstanding. If approved, there will be another UK 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 it if the judge rules it is the best outcome. Virgin Atlantic is 51% owned by Branson's Virgin Group and 49% by US airline Delta.. As part of the rescue package, Branson has agreed to inject an additional £200mln and arranged loans of £170mln with deferrals of fees from Virgin and Delta to add a further £400mln. Virgin was turned down by the British government when it asked for a loan to help to ease its difficulties. The UK administration said it would only help in a 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 teh US airline industry. In response to the crisis, Virgin Atlantic has closed its base at Gatwick Airport and axed more than 3,500 jobs.