LONDON (Reuters) - Virgin Atlantic’s 1.2 billion pound rescue deal is set for completion this week after a London judge gave the go ahead to the airline’s restructuring plan in a court hearing on Wednesday.
The deal aims to secure Virgin Atlantic’s survival through the coronavirus crisis. The airline had projected it would run out of cash at the end of September unless the plan was approved.
Judge Richard Snowden sanctioned the recapitalisation plan after the remaining creditors voted to support it last week.
“This will allow you to make this plan effective by Friday which I understand is your aspiration,” Snowden told a remote hearing at London’s High Court.
The airline, which is 51% owned by Branson's Virgin Group and 49% by U.S. airline Delta DAL.N, has had to close its Gatwick base and cut more than 3,500 jobs to contend with the fallout from the COVID-19 pandemic, which has grounded planes and hammered demand for air travel.
“Achieving this significant milestone puts Virgin Atlantic in a position to rebuild its balance sheet, restore customer confidence and welcome passengers back to the skies, safely, as soon as they are ready to travel,” a spokeswoman for the airline said.
A procedural court hearing is scheduled for Thursday in the United States so that the deal can be recognised there, but Snowden said that the court order was not conditional on the U.S. process.
Virgin Atlantic, which is being advised by law firm Allen & Overy on the restructuring plan and the wider recapitalisation, in July agreed a private-only deal after the British government told it to exhaust other avenues before seeking state support.
That stands in contrast to the approaches in countries like Germany and United States, which have both given bailouts to major carriers.
Editing by Kate Holton and Stephen Addison
Our Standards: The Thomson Reuters Trust Principles.