While the future of Virgin Australia appears to be sorted, unfortunately the same can’t be said for Virgin Atlantic.
The UK-based airline is seeking protection from creditors under chapter 15 of the US bankruptcy code, according to Bloomberg, after telling a London court it would run out of money next month if a rescue deal didn’t come through.
The filing, which was submitted in the US bankruptcy court in the Southern District of New York, gives the airline’s US assets protection while it finalizes a rescue plan involving a 1.2 billion pound rescue.
A majority of the airline’s stakeholders have indicated they support the plan.
Virgin Atlantic said in a court filing that reservations are down 89 per cent from a year ago.
The airline only flies long-haul international flights and has had its services suspended since April due to COVID-19 restrictions.
“The process we have asked to be recognized is a solvent restructuring of an English company,” a Virgin Atlantic spokesperson told Bloomberg.
According to The Guardian, the airline said it needed to recapitalise not only to survive the threats posed by COVID-19, but to allow it to get back on its feet once the global health crisis eases.
Travel Weekly has contacted Virgin Atlantic for comment.
The news comes after Virgin Australia Group revealed yesterday it would cut thousands of jobs and axe the Tigerair brand once the company emerges from administration under new ownership.
The second meeting of Virgin Australia creditors is due to take place on 26 August, where they will vote on Bain Capital’s proposed deed of company arrangement.
While it’s expected that the private equity firm will become the new owner of Virgin, bondholders may end up tabling an alternative DOCA proposal to creditors, with the Federal Court recently ruling that they are well within their right to make a play for the beleaguered airline.