Virgin Atlantic files for bankruptcy amid coronavirus pandemic

Virgin Atlantic files for bankruptcy amid coronavirus pandemic

Virgin Atlantic has filed for bankruptcy in the United States as it claims it will run out of dollars up coming thirty day period without a rescue deal.

The funds-strapped airline filed for Chapter 15 personal bankruptcy security in New York, a transfer that will allow a overseas business with US assets to secure itself from creditors as it will work to secure a non-public rescue program.

The move coincides with its stablemate Virgin Australia’s unrelated announcement it will axe 3000 workers – about a 3rd of its workforce – and ditch Tigerair Australia below its program to arise from voluntary administration.

London-based Virgin Atlantic, which is co-owned by Richard Branson’s Virgin Team and US airline Delta, has been specially hard-strike by the COVID-19 pandemic as it flies only extensive-haul routes.

It suspended all its passenger operations in April, closing its London Gatwick base and cutting 3500 jobs, and only resumed some flights past thirty day period.

Linked: Abide by our live Victoria coronavirus updates

Relevant: Tigerair Australia to be killed off

The pandemic has observed Virgin Atlantic’s reservations fall about 89 per cent on previous yr, with desire for the 2nd half of 2020 only a quarter of what it was in 2019.

This 7 days Virgin Atlantic advised a London courtroom it risked operating out of hard cash by September if it did not safe approval for a £1.2 billion ($A2.2 billion) rescue deal declared final month, Bloomberg described.

The airline said without the rescue resources, its offered income would drop down below the amount specified in bondholder contracts, which could force it to market its Heathrow Airport slots and set off its collapse.

READ  Heartless scammers steal $100k off WA spouse and children as NBN Co difficulties warn over two new scams concentrating on citizens

Virgin Atlantic attained acceptance to convene meetings of affected collectors to vote on a restricting strategy on August 25.

The airline explained it necessary to recapitalise “to not only endure the exigent threats posed by the COVID-19 world-wide pandemic but to thrive after the immediate world wellness crisis passes,” Reuters described.

Richard Branson had drawn criticism for calling on governments – both of those in the British isles and Australia – to support his airlines endure the pandemic.

In April, the billionaire wrote a prolonged open letter warning Australia faced a Qantas monopoly if Virgin Australia, which was 10 for each cent owned by the Virgin Group, disappeared.

In a growth unrelated to Virgin Atlantic’s woes, Virgin Australia declared today it would get rid of 3000 positions and axe its lower-price subsidiary Tigerair Australia as it planned to re-arise “stronger, far more worthwhile and competitive” from voluntary administration.

The employment will be slash across cabin crew, floor crew, engineers, baggage handlers and some global head business office staff.

Virgin Australia chief government Paul Scurrah stated the airline would concentrate on domestic and small-haul intercontinental flights, even though those people overseas locations have not been verified.

“Demand for domestic and shorter-haul worldwide vacation is probably to take at least three a long time to return to pre-COVID-19 levels, with the true likelihood it could be extended, which means as a small business we need to make changes to assure the Virgin Australia Group is productive in this new globe,” Mr Scurrah claimed.

“Our original concentration will be on investing in the core Virgin Australia domestic and limited-haul international operation alongside our 10-million-member powerful Velocity Recurrent Flyer program, continuing to offer an substantial network of locations, a domestic lounge community and value for revenue for consumers.”

READ  Mamamia founder to be kicked out of $12m Sydney mansion

You May Also Like

Sarah Gracie

About the Author: Sarah Gracie

Sarahis a reporter covering Amazon. She previously covered tech and transportation, and she broke stories on Uber's finances, self-driving car program, and cultural crisis. Before that, she covered cybersecurity in finance. Sarah's work has appeared in The Wall Street Journal, Bloomberg, Politico, and the Houston Chronicle.

Leave a Reply

Your email address will not be published. Required fields are marked *