Virgin Atlantic unveils coronavirus insurance package on eve of crunch bailout vote
Virgin Atlantic has today unveiled a comprehensive new coronavirus insurance package for all new and existing bookings up until the end of March next year.
The new offer was revealed on the eve of a crunch High Court vote on a £1.2bn bailout package that could keep the carrier flying if it is approved.
The free cover will apply to all flights booked with the carrier, which says it is the most comprehensive such package yet offered by an airline.
The scheme, which Virgin Atlantic has developed in partnership with Allianz, covers expenses up to £500,000 should a customer get coronavirus while on a trip, as well as expenses up to £3,000 if denied boarding or required to quarantine on their trip due to Covid-19.
Chief commercial officer Juha Jarvinen said that the initiative would give passengers more confidence to fly with the airline, which has been battered by the coronavirus pandemic.
If creditors do not support the deal at tomorrow’s vote, the airline has said that it could run out of cash by the end of September.
Under the terms of the deal, which was agreed in July, 170 of Virgin Atlantic’s suppliers have been asked to accept a 20 per cent reduction in the money that they are owed by the carrier.
They will also receive the rest of what they are owed in a series of staggered instalments.
However, even if creditors vote against the deal, judges will be able to force it through under a new type of insolvency proceeding.
Under these conditions, judges can overrule creditors if they believe that they are voting against the best interests of the majority.
Jonathan Dunkley, a managing associate at law firm Womble Bond Dickinson, told the FT that the scheme “mitigates the possibility of an otherwise viable plan failing due to a dissenting creditor class”.
Long road to bailout nears end for Virgin Atlantic
The route to the bailout deal has been far from straightforward for Virgin Atlantic, which has undergone a tumultuous six months due to the spread of the disease.
Back in April, it was reported that the government had rejected a plea from the carrier for a £500m rescue package because it had not exhausted all other fund raising options.
Billionaire founder Sir Richard Branson subsequently poured £200m of parent firm Virgin’s cash into the embattled flyer, while US hedge fund Davidson Kempner Capital Management has also put £170m in as part of the bailout deal.
A spokesperson for the airline said it was “confident” in the bailout plan.
Even if the deal is approved, the airline will shed a third of its 10,000 strong workforce, as well as closing its base at Gatwick Airport.
Although the airline has since July begun to fly again, ongoing travel bans have hampered the recovery of the lucrative transatlantic market on which Virgin’s business model is built.
Most airlines predict that the market will not recover to 2019 levels until 2023 at the earliest.