Virgin Atlantic tells court it expects to run out of cash by next month
RICHARD Branson and Virgin Atlantic told a London court they will run out of money by next month unless it secures approval for a US$1
RICHARD Branson and Virgin Atlantic told a London court they will run out of money by next month unless it secures approval for a US$1.6 billion rescue package announced in July.
Without the support, available funds will drop to $64 million by late September, below the $98 million specified in bondholder contracts. If funds aren't secured, the airport will be forced to fold.
'With support already secured from the majority of stakeholders, it's expected that the restructuring plan and recapitalisation will come into effect in September. We remain confident in the plan,' said a Virgin Atlantic spokeswoman.
The process needs to be approved by September 2 or it'll be placed into administration mid-September with any assets sold.
The carrier has been hit hard by the Covid-19 pandemic. The lucrative North Atlantic market on which it depends is still largely wiped out as the outbreak.
Since January 1, bookings are down 89 per cent year on year, and second-half demand is at about 25 per cent of 2019 levels, according to court papers.
Virgin Atlantic announced the rescue plan on July 14 amid the Covid-19 crisis caused disruption in the industry. The company's credit ratings disqualified it from support through a state-backed loan programme.
The company is hoping to receive $223 million in secured financing from US hedge fund Davidson Kempner Capital Management, while Branson will contribute $262 million after raising money from space venture Virgin Galactic Holdings.
The plan also includes $590 million of creditor deferrals, as well as $525 million of payment delays and waivers from Branson's Virgin Group and co-owner Delta Air Lines.