British business magnate Sir Richard Branson had reportedly announced that he intends to contribute a sum of £200 million as part of the £1 billion plan to stabilize Virgin Atlantic without taxpayers’ money. Sources state that he will use the funds raised by selling a £396 million stake in its space tourism subsidiary Virgin Galactic in May 2020.
The Chief Executive at Virgin Atlantic, Shai Weiss, has reportedly set up a four-year plan to ensure the survival of the airline even if there are no return on flights to the United States until 2021. Several states in the U.S. have been retrenching into lockdown following a spike in the number of COVID-19 cases and this has been evidently forcing Virginia Atlantic to keep a back-up plan.
Davidson Kempner Capital Management, a U.S. hedge fund, has decided to furnish £200 million keeping Virgin’s assets as a security. The company’s assets comprise 27 pairs of Heathrow landing slots.
Virgin Atlantic has decided to raise an additional £400 million from the deferral of fees. It has also planned to cut 3,150 jobs, placing around 80 per cent of its employees on furlough and stopping flights from Gatwick. The deal is a solvent and comprehensive re-capitalization initiative, stated the company.
Reliable sources state that the third-party funding round in addition to Sir Richard’s cash injection have been crucial in convincing other creditors to come to the airline’s rescue. The UK Government had turned down the company’s request for bespoke support at the peak of the pandemic. While a rescue deal would have been a remarkable triumph for Sir Richard, ministers told him to consider private options instead of asking the UK taxpayer for support.
Virgin Atlantic was founded in 1984 under the Virgin Group. The airline has its headquarters in Crawley, England, and its subsidiaries include Virgin Atlantic Airways Limited, Virgin Holidays, Threesixty Aerospace Limited, and others.
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