Arab Press

بالشعب و للشعب
Saturday, Feb 22, 2025

Virgin Atlantic becomes billionaire Richard Branson's second airline to file for Chapter 15 bankruptcy protection as the industry continues to be ravaged by the pandemic and it's feared the carrier will run out of cash by next month

Virgin Atlantic filed for Chapter 15 bankruptcy in New York on Tuesday. Chapter 15 allows foreign debtors to protect U.S. assets from creditors. Company says it is pursuing a 'solvent restructuring' under British law.

Virgin Atlantic has become billionaire Richard Branson's second airline to file for Chapter 15 bankruptcy in the U.S. this year as the industry continues to be ravaged by the coronavirus pandemic.

Virgin Atlantic's filing on Tuesday in U.S. bankruptcy court in the Southern District of New York said it has negotiated a deal with stakeholders 'for a consensual recapitalization' that will get debt off its balance sheet and 'immediately position it for sustainable long-term growth.'

The U.S. filing is in addition to a proceeding filed in a British court, where Virgin Atlantic obtained approval Tuesday to convene meetings of affected creditors to vote on the plan on August 25.

A Virgin Atlantic spokesperson said that the company was pursuing a 'solvent restructuring' under British law. The filing means the airline is not yet going into liquidation or going out of business -- but the company warned that if a deal with creditors isn't reached, it could run out of cash by September.

Warned London court it would run out of cash next month if no deal is reached  . Virgin Atlantic is the second airline in the Virgin Group to file for Chapter 15 . Virgin Australia also sought protection after filing for voluntary administration.

The airline industry has been devastated by the pandemic as travel bans and border closures forced carriers to ground planes


The company's filing comes just a day after Branson announced he could launch into space aboard his Virgin Galactic aircraft as its first passenger early 2021, potentially blazing a path for commercial flights.

This marks yet another blow for Branson's Virgin brand, coming just months after sister airline Virgin Australia filed for voluntary administration there in April, as well as Chapter 15 protection in the U.S.

Virgin Australia said on Wednesday it would make permanent cuts to one-third of its workforce and focus on being a short-haul operator as part of a new business plan under the ownership of Bain Capital.

The country's second-biggest airline had entered voluntary administration in April owing nearly A$7 billion to creditors, having been unprofitable for seven consecutive years before the coronavirus pandemic hit.

Virgin said 3,000 of its 9,000 staff would be affected by the cuts.

Airlines have been some of the hardest hit by the pandemic as borders shuttered and travel bans issued when nations went into lockdown earlier this year.

Virgin Atlantic, which is based in London and 49 percent owned by Delta Air Lines, was forced to ground all passenger operations back in April.

The airline took its planes to the skies once more in July but, as travel restrictions continue and consumer confidence is low, it has failed to draw the crowds back in.

'The ongoing COVID-19 pandemic has had an adverse impact on not only [Virgin Atlantic], but the aviation industry as a whole, occasioning the near shutdown of the global passenger aviation industry,' the company's lawyers wrote in Tuesday's filing.

'While [Virgin Atlantic] has taken various measures to manage its liquidity in light of the unprecedented financial and operating conditions it faces, a more comprehensive recapitalization is necessary to secure the future of its business and ensure that it is able to meet its liabilities and funding requirements beyond mid-September 2020.'

Chapter 15 is a form of bankruptcy protection for companies that span multiple countries, providing a way for foreign businesses to protect U.S. assets from creditors.

The filing marks the latest in a string of dire warnings for the airline.

In a London court hearing earlier Tuesday, Virgin Atlantic said it will run out of cash as soon as September unless a rescue deal is quickly approved.

The company is seeking a $1.6 billion rescue package and said that, without it, available cash will plummet and it will be forced to fold.

The restructuring package was announced last month but, despite securing the backing of most stakeholders, it is yet to be finalized.

It would allow Branson, who was criticized for asking the UK government for a bailout, to retain his 51 percent stake in the firm.

Branson has also said he will sell his private island to save the ailing company.

A UK judge gave the green light for the firm to convene four creditor meetings for August 25 to vote on the restructuring plan.

'With support already secured from the majority of stakeholders, it's expected that the restructuring plan and recapitalization will come into effect in September,' a spokeswoman for Virgin Atlantic said.

'We remain confident in the plan.'

This comes off the back of various efforts to save the struggling company.

The airline, 51 percent owned by Branson´s Virgin Group and 49 percent by U.S. airline Delta, closed 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.

It said it needed to recapitalize 'to not only survive the exigent threats posed by the COVID-19 global pandemic but to thrive once the immediate global health crisis passes.'

In July, Virgin Atlantic said it has agreed a rescue deal with shareholders and creditors worth 1.2 billion pounds ($1.57 billion) to secure its future beyond the coronavirus crisis.

Virgin said in a court filing reservations are down 89 percent from a year ago and current demand for the second half of 2020 is at approximately 25 percent of 2019 levels. Virgin Atlantic also owns Virgin Atlantic Holidays, a tour operator business and Virgin Atlantic Cargo.

The high-profile Branson had attracted criticism after calling for government help for Virgin Atlantic to survive the downturn.

Delta CEO Ed Bastian has previously made it clear Delta will not offer a cash injection to save Virgin Atlantic from bankruptcy, according to Business Insider.

Virgin Atlantic mainly operates out of the UK and also has administrative offices in Atlanta, Georgia and New York.

On Monday, Branson said he could launch into space aboard his Virgin Galactic aircraft as its first passenger early 2021.

The firm has repeatedly pushed back the date it will take the first tourists outside Earth's atmosphere, but said 600 'future astronauts' have already paid $250,000 to reserve a seat.

Branson's trip to space hinges on the success of two upcoming test flight programs, Virgin Galactic Holdings Inc said, with the first powered spaceflight scheduled for this fall from Spaceport America.

Virgin Galactic competes with billionaire-backed ventures such as Jeff Bezo's Blue Origin, which are all vying to usher in a new era of space tourism, racing to be the first to offer sub-orbital flights to civilian space travelers.

Virgin Galactic offers zero-gravity experiences to customers with its centerpiece SpaceShipTwo plane and has long-term point-to-point travel plans to quickly transport passengers from city to city at near-space altitudes.

Virgin Galactic said Monday it 'expects to advance to the next phase of its test flight program' in the fall with two manned flights.

'Assuming both flights demonstrate the expected results, Virgin Galactic anticipates Sir Richard Branson's flight to occur in the first quarter of 2021,' the company said in a statement.

The groundbreaking flight by Branson, Virgin Galactic's founder, would pave the way for commercial voyages to begin.

The program has been hit by serious snags, however, with a devastating crash in 2014 caused by pilot error delaying the development of passenger aircraft SpaceShipTwo.

Getting tourists into space is not a simple exercise.

The spacecraft will be taken up by a special plane and released at high altitude. Seconds later, the spaceship will ignite its engine and blast upward with an acceleration of 3.5 g, meaning three and a half times that of Earth's gravitational force.

It will then cut off the engine, which will create a feeling of weightlessness for a few minutes as the spacecraft reaches its highest point, about 50 miles above the planet, and then begin its descent

Newsletter

Related Articles

Arab Press
0:00
0:00
Close
The negotiation teams of Trump and Putin meet directly, establishing the groundwork for a significant advance.
Israeli Minister Urges Hamas to Surrender and Depart from Gaza.
Iran Considers Moving Its Capital Due to Urban Difficulties
Israel and Hamas Finalize Sixth Exchange of Hostages and Prisoners During Continuing Gaza Ceasefire
Leaders of BRICS to Gather in Rio de Janeiro for July Summit
Muhsin Hendricks, a trailblazing openly gay imam, was killed in South Africa.
Trump's special envoy for hostage affairs cautions Hamas against challenging Trump before Saturday's deadline.
Two British citizens apprehended in Iran amid escalating tensions.
Israel Issues Threat of Military Action as Hostage Negotiations with Hamas Continue
Hamas Coordinates Worldwide Solidarity Marches in Reaction to U.S. and Israeli Initiative
Israel Warns of Ending Gaza Ceasefire Due to Hostage Situation
King Abdullah II Dismisses US Proposal to Relocate Palestinians, Commits to Welcoming Gaza Children.
Lebanon Installs New Government with Hezbollah's Impact on Key Ministries
Report: Iran Attempted to Assassinate Trump During Election Campaign
U.S. Authorizes $7.4 Billion Arms Sale to Israel
Iran's Supreme Leader Rejects Nuclear Negotiations with the U.S.
UN Chief Denounces Trump's Gaza Plan, Cautions Against Ethnic Cleansing
Pressure Intensifies for a Free Trade Agreement between the UK and GCC in Light of Economic Difficulties
Israel to Withdraw from UN Human Rights Council Due to Accusations of Anti-Semitism
EU Reaffirms Gaza's Essential Role in Future Palestinian State Following Trump's Proposal
Iranian Currency Reaches All-Time Low Amid US 'Maximum Pressure' Initiative.
UN Reaffirms Ban on Deportation from Occupied Territories Amid US Gaza Proposal
Palestinians Fear Repeat of 'Nakba' Amid Ongoing Crisis in Gaza
UAE Aids in the Exchange of 300 Prisoners Between Russia and Ukraine
Egypt Seeks Global Backing for Two-State Solution Following US Proposal for Gaza Plan
Trump's Suggestion to 'Seize Control' of Gaza Represents a Significant Shift in US Policy
French President is the first EU leader to extend congratulations to the new Syrian President.
Tunisian President Appoints New Finance Minister Amid Economic Crisis
Trump Suggests U.S. 'Takeover' of Gaza, Prompting Global Worries
Trump's Proposal for Gaza Provokes Global Debate
President Trump Suggests Moving Gaza's Palestinian Population
Aga Khan IV, Spiritual Leader and Philanthropist, Dies at 88
Erdogan and Syria's Sharaa Talk About Collaboration to Counter Kurdish Militants
Trump Suggests U.S. Control of Gaza Strip Amid Ongoing Conflict
Trump Resumes 'Maximum Pressure' Strategy to Limit Iran's Oil Exports.
Ex-British Soldier Sentenced for Espionage on Behalf of Iran and Fleeing from Prison
Gazans in Egypt Reject Displacement, Struggle with Return to War-Torn Home
Queen Rania Urges Protection of Children’s Rights at Vatican Summit
Hamas Officials Ready to Begin Negotiations for Phase Two of Gaza Truce
Trump Expresses Caution Over Gaza Ceasefire as Netanyahu Visits Washington
Oman to Host 18th Indian Ocean Conference on Maritime Security and Trade
Emir of Kuwait Meets BlackRock CEO for Talks on Investment Opportunities
Queen Rania of Jordan Calls for Global Action on Children’s Rights at Vatican Summit
Egyptian President El-Sisi Invited for White House Meeting Following Jordanian King’s Visit
Queen Rania Calls for Protection of Children’s Rights at Vatican Summit
Israeli Military Operations Continue on Lebanon Border Amid Ceasefire Tensions
Israeli Hostage's Release Highlights Uncertainty Over Family's Fate
Israeli Military Operations Escalate in Southern Lebanon Amid Hezbollah Tensions
Zayed Award for Human Fraternity Announces 2025 Honorees
Kuwait Anticipates a 12% Increase in Budget Deficit for the 2025-2026 Fiscal Year
×