Virgin Atlantic circles another £ 160million Covid support package
Sir Richard Branson’s Virgin Group is set to pour £ 100million in new money into Virgin Atlantic to help the carrier survive until mass travel resumes as the Covid-19 pandemic abates.
The loan from Virgin Group, which owns 51% of the airline, is part of a £ 160million support package that is about to be finalized, Virgin Atlantic has confirmed. The agreement also includes deferrals of payments with the company’s creditors.
“We continue to strengthen our balance sheet in anticipation of the lifting of international travel restrictions in the second quarter of 2021,” the airline said. The £ 160million funding will provide “additional resistance against a slower recovery in income” this year, he added.
Like the rest of the industry, Virgin Atlantic has been forced to ground much of its fleet as the disruption caused by the pandemic continues into a second year.
The airline’s business model is based on long-haul flights and in particular the lucrative US-UK routes, which have been virtually closed since March – leaving it desperately exposed during the crisis.
Branson raised eyebrows last year, when it asked for government support for its cash-strapped businesses, and unlike rivals such as British Airways and easyJet, Virgin did not have access to UK government funds at its strongest. of the crisis after the government. repulsed a first request for rescue.
Instead the airline put together a £ 1.2bn private sector bailout last summer, including £ 200m in cash from Virgin Group and £ 170m in debt financing from US hedge fund Davidson Kempner Capital Management.
This funding was based on a forecast that people would start traveling in large numbers again by Easter, but the first time UK borders will be opened for non-essential travel is May 17, while US borders are still closed to many passengers.
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The £ 160million new financing, first reported by Sky News, follows $ 230million raised in January through the sale and lease of two Boeing 787 Dreamliners. The airline has also cut costs by £ 335million since the start of the crisis, including thousands of jobs.
Even with stranded recreational flights, Virgin has managed to earn revenue this year from strong demand for cargo flights, including sending its heavy planes on the short route between the UK and Brussels.
The airline also continues to operate some passenger flights and has reported strong demand from the South Asian Diaspora in UK traveling to see friends and relatives in India and Pakistan.