The company said it is not technically insolvent and plans to continue as a restructuring, a process that is expected to be completed by the end of September. Nevertheless, Virgin Atlantic filed in a court that it would run out of cash and would have to close by the end of the month if it could not reach a deal earlier.
The company spokesman said in a statement, “With the prior support from a majority of stakeholders, it is expected that the restructuring plan and recapitalization will take effect in September.” “We remain confident in the plan.”
Virgin Atlantic, which provides long haul travel primarily between the United Kingdom and other parts of the world, had just over 8,500 employees at the end of 2018, according to company records. According to FactSet, the company had $ 630 million in cash and about $ 850 million in long-term debt, the latest publicly available financial record for the company.
Airline problems preceded the virus. In 2018, Virgin Atlantic lost about $ 75 million on revenue of $ 3 billion. Carrier, which is 49%, Has sought to negotiate a $ 1.6 billion refinance deal with its creditors and investors.
As part of the deal, Branson was looking to own or own all of its stake in the airline. They first asked the British. It is the second Branson airline to receive court protection since the onset of the epidemic. Virgin Australia filed for voluntary administration, another form of bankruptcy, in April.
Technically, Virgin Atlantic filed for Chapter 15 protection this week, a part of the US Bankruptcy Code for companies that plan to continue, but has both US and foreign investors and lenders. The company has previously announced that it plans to lay off 3,000 workers and reduce operations.
In April, due to the coronavirus Virgin Atlantic filled all its flights and only resumed flights in July. A Tuesday search of the Virgin Atlantic website revealed that flights were still available to fly from Newark to London in late September, with a round-trip economy ticket of about $ 900. But many of the tickets for sale on the site were for seats on flights operated by Delta and other airlines.
Virgin Atlantic’s bankruptcy results in the layoffs and possible furloughs of several airlines. Also on Tuesday, American Airlines announced that it was already offering early retirement packages to the pilots. Last week, regional carrier GoJet, which operates flights for United Express, said it planned to furlough all 1,185 employees, including management.
According to airline regulator Regulator, CBS News Transport correspondent Chris Van Cleave, about 83,000 airline employees are likely to face fake loopholes in the coming months.