Virgin Atlantic files for bankruptcy due to low air travel demand
Author : Saipriya Iyer | Published Date : 2020-08-06
Virgin Atlantic, a British airline, is currently seeking protection under Chapter 15 of the United States bankruptcy code.
This announcement also marks the struggle faced by numerous carriers, including Australia’s 2nd largest airline, Virgin Australia, to survive amid severe decline in air travel demand due to the COVID-19 pandemic. Virgin Australia has been taken under the management of an administrator since April 2020. Reports claimed that Bain Capital, the new owner of Virgin Australia, is set to lay off 3,000 jobs, which is around 1/3rd of its employees. Additionally, Virgin Australia is likely to retire Tigerair, its budget brand, as a part of its turnaround plan.
The recent court filing for bankruptcy states that the airline had negotiated a deal with its stakeholders to ensure consensual recapitalization, which will help debt off its balance sheet and effectively position it for sustainable growth in the long-term. This move comes along the heels of the airline signing a rescue deal of $1.6 billion (£1.2 billion) to secure its position and increase profitability after the COVID-19 crisis.
The recent US filing is tied to a separate filing made by Virgin Atlantic to a British court, where the airline had gained approval to arrange meetings of the affected creditors to vote on the protection plan on 25th August. The airline, which is owned 51% by Virgin Group and the remaining percent by Delta, has announced its plan to cut around 3,000 jobs in the UK as well as close operations at its Gatwick airport.
According to Paul Scurrah, CEO of Virgin Australia, the airline will strengthen its position and drive its future business growth in the challenging global and domestic aviation market by collaborating with Bain Capital, which has supported its management team & turnaround plan. Bain also has assured the airline of a significant capital injection to recapitalize and retain several jobs.
The International Air Transport Association had previously warned airlines that the severe plunge in air travel demand will lead to revenue losses of over $84 billion (£64 billion) in 2020.
Source credit:
About Author
Saipriya Iyer . .
Saipriya Iyer presently works as a content developer for fractovia.org. Having dabbled with the domain of content creation for nearly half a decade, she now boasts of an enviable portfolio, holding substantial experience in penning down pieces related to technology, finance, and a wide spectrum of other industry verticals. A qualified computer engineering graduate from the University of Pune, Saipriya can often be found leveraging her knowledge of software technology and electronics in her write-ups. She can be contacted at- [email protected] | https://twitter.com/saipriya_i
Related News
Hero MotoCorp under investigation by Ministry of Corporate Affairs
The Indian Ministry of Corporate Affairs has reportedly ordered a probe into Hero MotoCorp to examine its association with an external vendor regarding alleged fund diversion. The objective of the investigation, conducted in the "public interest," is to evaluate the Hero MotoCorp owners... Read More>>
UK: Residents receive bills of up to £49,000 after Ovo acquires SSE
Customers of Ovo, the energy supplier were reportedly left shocked when they received energy bills of up to £49,000, due to data errors that led to overinflated energy bills for some residents. Ovo accepted that some of its customers have been affected by erroneous meter readings, and it bl... Read More>>
Bob Iger returns to Disney as CEO less than a year post retirement
Bob Iger, the ex-CEO of Walt Disney Co., is reportedly coming back to the mass media giant less than a year after his retirement. The surprise announcement comes at a time when Disney is struggling to earn profits from its streaming TV services. According to a statement released by Disney late Su... Read More>>