Virgin Atlantic gets approval for rescue plan from creditors

Virgin Atlantic has moved closer to a long-term restructuring deal after trade creditors approved a £1.2bn rescue package yesterday. The Richard Branson-owned airline had warned it would run out of cash by the end of September if the rescue package was not approved but received approval from 99% of its suppliers. Shareholders, lenders and major creditors had already approved the plan in July. Virgin Atlantic said the vote was a significant milestone towards safeguarding its future and had received overwhelming support from all four creditor classes. “Achieving this milestone puts Virgin Atlantic in a position to rebuild its balance sheet, restore customer confidence and welcome passengers back to the skies as soon as they are ready to travel,” it said. According to one consultant speaking to the BBC, Virgin’s creditors will most likely have to take a 20% cut in the money they are owed by the airline. Virgin Atlantic is 51% owned by Branson’s Virgin Group and 49% by US airline Delta. As part of the rescue package, the billionaire has agreed to inject an additional £200mln and arranged loans of £170mln with deferrals of fees from Virgin and Delta worth a further £400mln. Virgin was turned down by the British government when it asked for a £500mln loan to help to ease its difficulties. A court hearing is scheduled for 2 September in London to rubber-stamp the plan, with a hearing in the US to follow a day after to ratify the plan there. “We remain confident that the plan represents the best possible outcome for Virgin Atlantic and all its creditors and believe that the court will exercise its power to sanction the restructuring plan,” the airline said.