Virgin Atlantic set to raise £160m amid ongoing travel restrictions
Virgin Atlantic is in discussions to raise £160m from shareholders and creditors as the airline seeks to shore up its finances ahead of the planned reopening of travel in the coming months.
Billionaire businessman Sir Richard Branson is set to provide the bulk of the funding through Virgin Group, which is expected to inject around £100m into the ailing carrier. The rest will come from existing shareholders and deferrals.
The deal, which was first reported by Sky News, is expected to be finalised in the coming days.
In a statement, a Virgin Atlantic spokesperson said: “We continue to bolster our balance sheet in anticipation of the lifting of international travel restrictions during the second quarter of 2021.
“This latest £160m financing provides further resilience against a slower revenue recovery in 2021… We remain confident that Virgin Atlantic will emerge a sustainably profitable airline and would like to thank our creditors and shareholders, Virgin Group and Delta, for their ongoing support and unwavering belief in our future.”
It comes just six months after Virgin Atlantic secured a £1.2bn rescue deal to help it weather months of turbulence during the pandemic.
Branson’s parent firm injected around £200m in the recapitalisation, while shareholders and investment firm Davidson Kempner Capital Management provided the rest. Creditors also supported the airline with more than £450m of deferrals.
In January, the airline raised $230m from the sale of two Boeing 787s, which the firm said “allowed us to pay down debt and strengthen our cash position.”
Virgin Atlantic has slashed around 45 per cent of its workforce since the start of the pandemic, and shuttered its operations at London’s Gatwick Airport.
The aviation industry has been battered by nationwide lockdowns around the globe during the pandemic, with major airlines warning that the sector will struggle to restart once restrictions are lifted.
Trade bodies accused the chancellor of ignoring the industry in his Budget announcement last week and demanded further support while the sector remains grounded.
Airport Operators’ Association (AOA) boss Karen Dee said: “Aviation has been the hardest-hit sector in the pandemic, but the Budget is blind to the impact of the near-complete shutdown of international travel.
“While the extensions of the Job Retention Scheme and airport business rates relief are very welcome, they are not nearly enough given the scale of Covid-19’s impact.”
The current ban on non-essential international travel is not set to expire until at least 17 May, with countries across Europe mulling the introduction of vaccine passports to resume foreign travel.
The Prime Minister last month announced a global travel taskforce will report options for resuming international travel to the government by mid-April to “give people time to make plans for the summer”.